Abstract: Hand-to-Mouth Inventory and the Model T: Outside Supply at the Ford Motor Company, 1908-1927

Damon Yarnell

Abstract

Between 1908 and 1923, annual production at Ford exploded from 6,000 to 1,800,000 automobiles. Henry Ford, the integrated assembly line, and the company's sprawling plant at Highland Park became icons of mass production. Most scholars have understood the Ford system as a textbook case of vertical integration. Recently, however, business historians have demonstrated that the trend at Ford has been overstated. Through 1916—several years after the introduction of the assembly line—Ford relied on outside suppliers for about half the 5,000 parts in each Model T. Moreover, company policy limited stocks for many components to only a few days' supply, a practice that actors called "hand-to-mouth inventory." In this paper, I draw on archival documents and oral histories in the Ford archives to reconstruct the daily practice of the company's procurement team. From the beginning, mass production was "networked production." Ford's purchasing agents and their colleagues developed sophisticated strategies to deal with issues such as stock turn, process innovation, short- versus long-term contracts, and distributed risk. Moreover, these workers repeatedly assigned credit to suppliers for many of Ford's celebrated price reductions.