In initial phase of car manufacturing industry same person used to do many works in the process of assembling a car. This was inefficient and time consuming. Henry Ford implemented the concept of specialization in car manufacturing. That is each person will do one specific job. So they will be extremely good at it, resulting in high efficiency. He also introduced time limit for each task, so that every task should be completed in an allotted maximum time.
He also introduced the concept of assembly belt arrangement. The vehicle parts will move along the belt and have specific assigned time for crossing each assigned points. Along the way each individual workers are allotted specific positions with specific task. Since the belt is moving everyone has to finish the job before each part crossing the point.
The major advantage was that efficiency of the plant increased considerably resulting in high level of outputs. So accordingly the production cost of the cars came down and Ford was able to sell cars at much lower prices compared to other car manufacturers. Previously cars were only for rich people. But Ford’s experiment helped to introduce budget cars which were affordable even by common people. The sales and profit of Ford company went up considerably after the change in manufacturing system.
There was a negative side also for this system. The pressure on the workers was high compared to initial system, so many left the company. But with growing sales Ford was able to counter this trend by increasing wages to a level which no other companies could offer. So workers became happy and company continued to grow.
The visionary leadership by Henry Ford helped the Ford company to become one of the large companies of world at that time. His decision to change the production system entirely helped not only Ford, but entire industry and even common people benefited from it. So this decision can be considered as a path breaking one in the business history.