The Expanded and Annotated My Life and Work

Waste Includes the Cost of Idleness
Ford (1922, p. 329) wrote that there are exactly three kinds of waste: waste 
of time, waste of material, and waste of energy:
* * *
You can waste time, you can waste labor, you can waste material—and that 
is about all. … Time, energy, and material are worth more than money, 
because they cannot be purchased by money. Not one hour of yesterday, nor 
one hour of today can be bought back. Not one ounce of energy can be bought 
back. Material wasted, is wasted beyond recovery.
* * *
Waste of time includes (1) waste of the time of people, (2) waste of the 
time of the product or service, as in cycle time, and (3) waste of the time 
of assets for which value-adding work is available. This does not mean that 
a business should produce inventory to keep equipment busy, but rather 

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152  •  The Expanded and Annotated My Life and Work
that the business should look for value-adding work to keep its assets busy. 
The cost of idleness is, therefore, the opportunity cost of not doing busi-
ness when the resources are available to do so.
The following material also hints at an element of Goldratt’s drum–
buffer–rope (DBR) production control system, in which the capacity-
constraining resource or constraint “beats the drum” to set the pace 
for the entire process or even supply chain. An information “rope” con-
nects the constraint to production starts, while a buffer of inventory at 
or in transit to the constraint prevents the constraint from running out 
of work.
Ford used clockwork synchronization to run his operations, so there 
was no identifiable drum or rope. The following material suggests, how-
ever, that Ford may have treated the market itself as the constraint, which 
is a perfectly legitimate application of DBR. In this case, a buffer of fin-
ished goods that is actually in transit prevents stock-outs, or the external 
counterpart of starving the constraint. The subsequent discussion recog-
nizes that failure to anticipate the market’s needs will result either in mil-
lions of dollars of inventory or unfilled orders.
* * *
A considerable part of finance is in the overcoming of seasonal operation. 
The flow of money ought to be nearly continuous. One must work steadily 
in order to work profitably. Shutting down involves great waste. It brings 
the waste of unemployment of men, the waste of unemployment of equip-
ment, and the waste of restricted future sales through the higher prices of 
interrupted production. That has been one of the problems we had to meet. 
We could not manufacture cars to stock during the winter months when pur-
chases are less than in spring or summer. Where or how could any one store 
half a million cars? And if stored, how could they be shipped in the rush 
season? And who would find the money to carry such a stock of cars even if 
they could be stored?
Seasonal work is hard on the working force. Good mechanics will not 
accept jobs that are good for only part of the year. To work in full force twelve 
months of the year guarantees workmen of ability, builds up a permanent 
manufacturing organization, and continually improves the product—the 
men in the factory, through uninterrupted service, become more familiar 
with the operations.
The factory must build, the sales department must sell, and the dealer 
must buy cars all the year through, if each would enjoy the maximum profit 
to be derived from the business. If the retail buyer will not consider purchas-
ing except in “seasons,” a campaign of education needs to be waged, proving 

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Money and Goods  •  153
the all-the-year-around value of a car rather than the limited-season value. 
And while the educating is being done, the manufacturer must build, and the 
dealer must buy, in anticipation of business.
We were the first to meet the problem in the automobile business. The sell-
ing of Ford cars is a merchandising proposition. In the days when every car 
was built to order and 50 cars a month a big output, it was reasonable to wait 
for the sale before ordering. The manufacturer waited for the order before 
building.
We very shortly found that we could not do business on order. The factory 
could not be built large enough—even were it desirable—to make between 
March and August all the cars that were ordered during those months. 
Therefore, years ago began the campaign of education to demonstrate that 
a Ford was not a summer luxury but a year-round necessity. Coupled with 
that came the education of the dealer into the knowledge that even if he could 
not sell so many cars in winter as in summer it would pay him to stock in 
winter for the summer and thus be able to make instant delivery. Both plans 
have worked out; in most parts of the country cars are used almost as much 
in winter as in summer. It has been found that they will run in snow, ice, or 
mud—in anything. Hence the winter sales are constantly growing larger and 
the seasonal demand is in part lifted from the dealer. And he finds it profit-
able to buy ahead in anticipation of needs. Thus we have no seasons in the 
plant; the production, up until the last couple of years, has been continuous 
excepting for the annual shut downs for inventory. We have had an interrup-
tion during the period of extreme depression but it was an interruption made 
necessary in the process of readjusting ourselves to the market conditions.
In order to attain continuous production and hence a continuous turn-
ing over of money we have had to plan our operations with extreme care. 
The plan of production is worked out very carefully each month between the 
sales and production departments, with the object of producing enough cars 
so that those in transit will take care of the orders in hand. Formerly, when 
we assembled and shipped cars, this was of the highest importance because 
we had no place in which to store finished cars. Now we ship parts instead of 
cars and assemble only those required for the Detroit district. That makes the 
planning no less important, for if the production stream and the order stream 
are not approximately equal we should be either jammed with unsold parts 
or behind in our orders. When you are turning out the parts to make 4,000 
cars a day, just a very little carelessness in overestimating orders will pile up 
a finished inventory running into the millions. That makes the balancing of 
operations an exceedingly delicate matter.

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154  •  The Expanded and Annotated My Life and Work