(10) Systematic Management: Production Control
- Jon Smart
- Apr 1
- 13 min read
This is the 10th blog post in the Organising for Outcomes series. It is helpful to understand where we’ve come from, how today’s ways of working have evolved, and the context that those ways of working evolved in. This helps us to understand why we’re working the way we’re working and what we might want to change in today’s context, which is significantly different compared to previous technology-led revolutions.
In the previous post we took a closer look at the first one of three key systems that were developed as part of Systematic Management: Cost Accounting. Many of the management innovations introduced in the time period from 1870 to 1900 are still in use today, sub-optimally, in a very different context.
In this post we'll take a deeper dive into the second one of three key systems that were developed as part of Systematic Management: Production Control. The next post will take a closer look at the final of three key systems: Wage Systems.
Production Control
Before and during this period, manufacturing was chaotic and disorganised. Horace Arnold, a US engineer, wrote in 1897 that there were frequent theft, losses, and misplaced work, while Captain Metcalfe, machine shop leader at US government arsenals noted in 1886 that managers relied on memory, with constantly backtracking to track orders. Without a structured system, orders were lost, lead times were long, and oversight was minimal.
The literature of the time describes orders being lost, long lead times due to orders waiting between departments with little to no oversight, uncertainty as to where an order should go next and an inability to determine order status. Manufacturing firms were growing fast, with increased specialisation, meaning that fewer people had a view of the end to end flow of value. Complexity was growing and the ability to have oversight was shrinking. In response to this, in order to run a commercially feasible business, there was a clear incentive to improve how work was done, to introduce a system of work, rather than managing by Rule of Thumb, as was the case prior to Systematic Management.
Why we work the way we do today
Between 1870 and 1900, Production Control brought order to chaotic industrial manufacturing. These practices, designed for predictable, repetitive work, still influence organisations today, 150 years later, despite vastly different contexts.
In the Age of Digital, where work is increasingly unique and emergent, outdated methods persist. The following current state is common today:
Deterministic Approach: requirements are defined up front in a big batch manner. Project plans are put together at the point of having learnt the least, treating complex, unknowable work as if it is predictable. The focus is not on outcomes. The focus is on ‘did you implement the predetermined requirements (output) by the date, within the cost and to quality’. This is the old ‘iron triangle’ (iron being an appropriate word given when it originated), which even the Project Management Institute (PMI) now acknowledges is not fit for purpose in today's context: "At PMI, we believe that assessing projects by meeting their triple constraints is no longer fully relevant." (source)
Autocracy Over Autonomy: The prevailing relationships are order-giver and order-taker, passing work down the line, with specialisation in role silos, a way of working from 1771 in a very different context of repetitive mass production of textiles. Both the work and who is going to do the work is defined up front.
A project manager plans without input from those doing the work. A budget and "drop dead date" is agreed, with analogies of death. Business Analysts document requirements (new labels on same old behaviours would be 'Product write user stories for Engineering'), Architects define the architecture in the Architecture team, and Engineers develop software in the Engineering team, as per the requirements and architecture passed down the line, without speaking to or having knowledge of the customer.
Software is eventually thrown over the fence to a Release Manager in the IT Ops team who merges hundreds of long lived code branches, introducing new defects. The merged code is passed to testers in the QA team who test. Engineers are busy with the next big batch of requirements with no time to fit in defect fixing. The bug fixing delays progress on the plan. People work unsustainable hours. The mood is low. There is finger pointing and ‘unplanned work’ as quality issues are resolved, whilst battling to the ‘drop dead date’ milestone in the predetermined plan. “The hole is on your side of the boat”. The incentive is to do your bit and pass it down the line.
‘The business’ whose last contact with the project was 12 to 18 months ago are asked to do User Acceptance Testing. Not surprisingly, as the work is unique and unknowable, it’s not quite what was wanted and it’s taken so long that the world has moved on. More finger pointing. Eventually software is realised in a production environment. There are 3 months of incidents, outages, fire fighting, more finger pointing and talk of releasing software less frequently as releasing is hard. ‘The business’ view Information Technology as being incompetent.
Procurement and Suppliers
In many cases organisations today inflict this way of working on their third party suppliers, forcing, via procurement and deterministic contracts, a way of working which is outdated, does not optimise for the context of the work and significantly increases delivery risk and financial loss to one or both parties.
Suppliers, most of whom have investors who want a return on investment in a capitalist economy, are incentivised internally to hit revenue targets. Suppliers bid for and accept work, knowing that the approach is sub-optimal and then some might try to influence the client to adopt better ways of working, often unsuccessfully. Revenue for many suppliers remains the primary incentive, leading to perverse incentives. You want to pay that much for a 90 page Powerpoint deck? No problem. You want one vendor to do design and another to do delivery, in a stage gate manner? It's not ideal, but if that's what you're asking for, then no problem, we'll bid.
This way of working is prevalent today in both public and private sectors, globally. Finance, procurement or a government treasury department demands a 5 year detailed project plan, with output deliverables and milestone ‘deadlines’, with change control, in a deterministic manner, with penalties for not delivering the output deliverables by the milestone date, with acceptance criteria and change control slowing change, treating unknowable work in an emergent domain as if it is deterministic, knowable and in an ordered domain. The result: higher risk, higher cost, and greater Expected Opportunity Loss (EOL: the cost of being wrong x the probability of being wrong). The above results in a colossal waste of money, including tax payers money for the public sector.
Instead of optimising for outcomes with multidisciplinary teams and iterative learning, the Ways of Working in many organisations today are largely unchanged from the 1880s, two technology-led revolutions ago.
Centralisation: today’s Project Management Office (PMO), previously known as the Planning Department or the Planning Office, is a carry over from the 1880s to today. The Planning Department would plan everything to do with an order, and hand the plan out for people to follow. If your PMO today is autocratic and centralises a lot of the planning, for unique, unknowable work, it is closer to the 1880s.
In the context of change in the Age of Digital, there is absolutely a role for the PMO (or its modern version, the Value Realisation Office) today, and that role is coaching teams on outcomes over output, with measurable leading and lagging indicators, supporting teams in their own outcome and output planning (i.e. alignment over cascade) and ensuring that portfolio controls, such as strategy to execution alignment, data feedback loops, cadences and limiting work in progress, are implemented and are effective
Other centralised functions, such as Finance, HR and Procurement, also reflect this historic evolution. The more centralised and autocratic they are, the closer they resemble the 1880s. At a medium and large scale, more evolved central teams operate in a federated manner. There is more of an emphasis on supporting and partnering, sharing in optimising for the desired outcomes, within minimal viable guardrails and with common shared incentives.
It is interesting to see just how close to the 1880s and 1890s our ways of working are today in most organisations, in a very different context.
How we got here
The first problem to solve for Production Control was connecting the office and the plant, with a goal of orders flowing smoothly through the company. This requires clarity on who needs to do what, in what order and ensuring a suitable supply of materials so that work is not held up.
1882, Henry R. Towne, Stamford, Connecticut, US
Henry R. Towne detailed one of the first production control systems in an 1882 American Machinist article, based on practices at Yale Lock Manufacturing, which he co-founded in 1868.
Born into an industrial family, Towne worked at his father’s Port Richmond Iron Works, Philadelphia before co-founding Yale with Linus Yale Jr., combining Towne’s management with Yale’s inventions.
In 1882, 14 years after founding Yale, Towne described his production control system in American Machinist. Orders for goods were written on an 'order blank' in a central office and sent to the superintendent, who forwarded them to department foremen. Foremen provided a promised shipping date, retaining part of the order while returning the rest for tracking. This system ensured timely deliveries, a crucial factor in manufacturing. Orders were tracked, prioritised, and seldom delayed.
However, the system was limited to individual foremen and did not extend to coordination across multiple department foremen or to the workers.
1886, Metcalfe, Albany, NY, US
The next step was to include all departments involved in fulfilling an order, documenting the workflow and acting as a coordination tool. This approach was detailed in 1886 by Captain Metcalfe in The Shop Order System of Accounts paper presented at an American Society of Mechanical Engineers (ASME) meeting in Chicago. He described a system where orders were tracked through racks in each foreman’s office, with progress marked and tickets passed along until completion, ensuring accountability and coordination.
In this system a department foreman is responsible for passing the work and the order on to the next functional department foreman, clearly marked on the order ticket. This approach results in a local visualisation of the system of work, where a department foreman’s unfinished work is always visible.
Metcalfe also advised superintendents to have a duplicate copy of all foremen’s tickets visible in a rack, so that it is possible to see the whole system of work, to visualise work in progress, work aging, bottlenecks and so on across the plant.
1886, Taylor, Philadelphia, US
Frederick Winslow Taylor’s response to Metcalfe’s paper at the 1886 ASME meeting is notable. Taylor explains how Midvale Steel went further by breaking down tasks to individual workers:
“Orders are sent from the central office to departmental offices. These department offices write, under the direction of the foreman of the department, written orders stating what work is to be done, and how it is to be done; what order number to charge it to, and what drawings and tools are to be used, etc.
These orders are locked up in suitable bulletin-boards with glass doors in front, so that the men can see but not handle them. Each man in the shop receives from the shop clerk a note or a card for every job that he is to undertake, which refers him to the more elaborate order.
These notes are also the means of conveying all desired information about the work to which they refer, both from the foreman and from the man who is doing the work, for keeping the records in the small offices as well as in the main office.”
This system goes beyond verbal instructions, with a department clerk writing out detailed orders under the foreman’s guidance, tracking progress. Though not yet time and motion studies, this marks the start of Scientific Management, reducing workers’ autonomy with clear directives and an order-giver, order-taker behavioural norm which is still prevalent today.
1891, Tregoning, Providence, Rhode Island, US
In 1891, John Tregoning described using tags on a large physical shop order board, in the superintendent's office, to visualise factory orders, a practice that improved clarity on the system of work, with data feedback loops for foremen, superintendents and the office. It would be clear at a glance of the board as to the status of visible and not yet visible (not started) work across the factory.
Today, in software engineering, visualising work and data remains a key success factor, yet many teams fail to apply this lesson. Metcalfe emphasised the value of such records, enabling comparison and continuous improvement in management.
1896, J. Slater Lewis, Manchester, UK
A decade later, a key development occurred where the foreman assembles all materials for an order before distributing it to workers. In The Commercial Organisation of Factories, Lewis describes a system where the foreman breaks down work orders into job orders, determines the materials needed, and collects them in the Assembly Room, marking them with the job order number. Only when all materials are gathered is the job assigned to a worker, reducing delays and improving efficiency.
Lewis also introduced a weekly meeting with a multidisciplinary team (MDT) to review the status of open orders, a forward-thinking approach. The meeting included foremen, the chief draughtsman, warehouseman, storekeeper, and others, all focused on assessing and improving order progress. This weekly 'stand up' with a MDT, to inspect and adapt, was ahead of it's time.
1899, R. F. Van Doom, Pennsylvania, US
Three years later, in 1899, R. F. Van Doom described the work system at Struthers, Wells & Company. Two key developments emerged: both the coordination of work and inventory management were centralised, removing responsibility from department foremen. A foreman now only receives an order when materials are ready, with a supply clerk handling routing between departments.
Customer orders are approved by the superintendent, who passes them to the assistant superintendent for production orders. These are sent to the head draughtsman for detailed drawings, and if materials are missing, the order is held in the drawing office until they arrive. The foreman no longer has this responsibility, a trend of the reducing responsibilities of foremen, with increased centralisation of tasks.
Cards are sent to the supply clerk, who tracks the order with a serial number and routes it between departments. The process becomes sequential, with cards moving between departments, ensuring clarity, continuous improvement, and there was an element of a pull-based system with foremen pulling orders when capacity allows.
Van Doom also discusses visualising orders in progress across the factory to highlight bottlenecks and show status at a glance, recommending a revolving cabinet to display order statuses.
He explains that production orders are broken down into the smallest components, each represented by a card. For example, building an engine would involve separate cards for each part—flywheel, pulley, crankshaft, etc.
This system breaks the customer order into its most basic parts, with each stage tracked by the supply clerk, who sends cards to the relevant department once each step is complete. In today's terms, this is akin to specifying detailed requirements upfront, with each part processed sequentially, with a central planning office.
1900, Hugo Diemer, Pennsylvania, US
Diemer, an American engineer and professor at Penn State, described a system of work with a dedicated bill of materials clerk in a July 1900 article in The Engineering Magazine. This role takes the responsibility from the drawing office to a dedicated bill of materials department, ensuring that all necessary materials are available before an order is sent to a department to be worked on, representing further centralisation and specialisation.
Diemer also discussed order scheduling, recommending grouping identical orders for efficiency, a concept not yet explored by other writers at the time and a key area of future development.
1903, Taylor, Pennsylvania, US
Over time, the foreman's role diminished as planning became separate from execution, and workers transitioned from autonomy to being told exactly what to do and how fast to do it. In Shop Management (1903), based on his time at Midvale Steel from 1878 to 1890, at Bethlehem Steel from 1898 to 1901, and consulting engagements in between, Frederick Taylor describes a function he called the Planning Department (previously called the Rate Fixing Department)
Taylor describes a system where the dedicated planning department outlines tasks for each worker a day ahead, providing detailed instructions on every operation, including time, tools, and materials required.
"All possible brain work should be removed from the shop and centered in the planning or laying-out department.
The shop, and indeed the whole works, should be managed, not by the manager, superintendent, or foreman, but by the planning department. The daily routine of running the entire works should be carried on by the various functional elements of this department, so that, in theory at least, the works could run smoothly even if the manager, superintendent and their assistants outside the planning room were all to be away for a month at a time"
This is the strongest statement and practice yet regarding the centralisation of production control. Taylor goes on to describe the scope of the Planning Department to include cost analysis, tracking balance of raw materials and work ahead, pay, standards and ‘improvement of the system or plant’. With the Planning Department at the end of the 19th Century we see the origins of the Project Management Office (PMO) which is ubiquitous in medium and large organisations today.
Production Control Summary
And so, within a twenty year period from the late 1870s to the late 1890s, we see all the elements of traditional ways of working which are still being applied at many organisations today, sub-optimally, in a very different context.
Having evolved in the context of repetitive manufacturing of large physical products, we see:
up-front detailed planning
specification of detailed requirements (output, pre-determined)
work being passed sequentially between functional department silos (matching the process of physically building products such as engines and boilers)
planning separated from execution with “brain work removed from the shop” to quote Taylor
the Planning Department defining tasks to a very detailed level to hand to workers to execute
autocratic order-giver and order-taker relationships
a focus on costs and output (rather than value and outcomes)
increased specialisation
increased centralisation such that fewer people have a full view of the end-to-end flow of value
Autonomy, purpose and mastery were all reduced with a goal of increasing output, with people increasingly becoming cogs in the machine, following orders. If you were not in the planning department Taylor was explicit about not bringing your brain to work.
On the positive side, lessons to apply today include (1) better data feedback loops and (2) visualising the system of work and the work in it. A wealth of data was gathered for improvement, and most practitioners implemented ways to visualize work for greater efficiency.
In the next post we'll take a deeper dive into Wage Systems developed as part of Systematic Management, to understand why we work the way we do today and what lessons we can (re)learn from the past to optimise for outcomes today and for the future.
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Also see:
Previous: (9) Systematic Management: Cost Accounting
Next: (11) Systematic Management: Wage Systems
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