The Expanded and Annotated My Life and Work

TRANSPORTATION AND CYCLE TIME
Ford described previously how elimination of variation in transportation 
time removes the need to carry protective inventory. The following mate-
rial shows very explicitly how a superior logistics system could reduce cycle 
time by a third and, thus, release $20 million (in the money of the early 
1920s) in cash. The lesson is that it is often possible to find cash within the 
business, which eliminates the need to borrow.
* * *
We discovered, after a little experimenting, that freight service could be 
improved sufficiently to reduce the cycle of manufacture from twenty-two 
to fourteen days. That is, raw material could be bought, manufactured, and 
the finished product put into the hands of the distributor in (roughly) 33 per 
cent less time than before. We had been carrying an inventory of around 

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160  •  The Expanded and Annotated My Life and Work
$60,000,000 to insure [sic] uninterrupted production. Cutting down 
the time one third released $20,000,000, or $1,200,000 a year in inter-
est. Counting the finished inventory, we saved approximately $8,000,000 
more—that is, we were able to release $28,000,000 in capital and save the 
interest on that sum.
On January 1st we had $20,000,000. On April 1st we had $87,300,000, or 
$27,300,000 more than we needed to wipe out all our indebtedness. That is 
what boring into the business did for us! This amount came to us in these 
items:
Cash on hand, January 
$20,000,000
 Stock on hand turned into cash, January 1 to April 1 
24,700,000
 Speeding up transit of goods released
28,000,000
 Collected from agents in foreign countries
 3,000,000
 Sale of by-products
3,700,000
 Sale of Liberty Bonds
7,900,000
TOTAL
$87,300,000
Now I have told about all this not in the way of an exploit, but to point out 
how a business may find resources within itself instead of borrowing, and 
also to start a little thinking as to whether the form of our money may not 
put a premium on borrowing and thus give far too great a place in life to the 
bankers.