Chapter 6

p1 - Children don’t dream of growing up to be efficiency experts.

p1 - This perspective, while perhaps not entirely mistaken, misses the larger picture. Finding ways to produce goods and services with fewer resources—improving what we’ll call production efficiency—is the force behind some of the largest and most consequential changes in human history. Efficiency is the engine that powers human civilization.

p3 - Yes, penicillin was a miracle drug—but without a way to produce it in large quantities, it was of little use.

p4 - In 1941, the United States did not have sufficient stock of penicillin to treat a single patient. At the end of 1942, enough penicillin was available to treat fewer than 100 patients

p5 - enicillin production reached 80 million units per month in1943. By early 1944, it had risen by a factor of 200 to over 18 billion units per month. By 1945, manufacturers around the world were producing 5 tons of penicillin annually.19 And as production volumes rose, the price of penicillin fell. In 1943, a 600-milligram vial of penicillin cost $200; by 1952, the same vial cost just $1.30.20

p5 - The initial discovery of penicillin was, of course, necessary to these later achievements. But it was only by making antibiotics cheap and widely available—that is, by producing them efficiently—that this miracle medicine was able to save millions of lives.

p8 - a Roman toga required roughly 900 hours of labor simply to spin the thread for it and another 200 hours to weave it.36

p8 - Preindustrial societies, therefore, devoted an enormous amount of time and effort to spinning thread

p8 - To produce the sail for a Viking ship,385 days of labor

p9 - Assuming a preindustrial spinner could produce on the order of 100 pounds of fiber a year, supplying enough thread for US consumption using preindustrial methods would require on the order of 230 million people just to spin the thread.44

p11 - In his book on daily life in medieval Europe, Jeffrey Forgeng notes that “it is hard to envision how much effort it takes to produce even the simplest of goods when each piece must be transformed by hand from raw materials to finished product… In all cases the amount of human labor involved was enormous.”59

p11 - What had previously been a luxury item limited to a small number of universities, monasteries,and the very wealthy became a good a merchant or craftsman might own.

p13 - A 1,000-megawatt coal plant burns over 7,000 tons of coal a day; a 1,000-megawatt nuclear plant, on the other hand, uses just0.07 tons of nuclear fuel (uranium pellets) a day.65 By essentially eliminating the cost of fuel, nuclear power was expected to produce electricity that was “too cheap to meter.”66 But more than 60 years after the construction of the first civilian nuclear reactor, this hasn’t happened. Nuclear power plant construction projects routinely go massively over budget, and since the 1970s, the cost of nuclear power in the United States has gone up nearly tenfold.67 This is due in part to burdensome regulations that have prevented nuclear power from reaching its potential. But even setting those obstacles aside, nuclear power has trouble producing electricity for less than the coal-fired plants it was predicted to replace.68

p16 - a process more reliably

p16 - finding cheaper inputs

p16 - lowering production costs by increasing production volume

p16 - new production technology that requires fewer inputs

p16 - redesigning the product

p16 - removing unnecessary steps

Chapter 7

p12 - a process with no buffers.

p12 - no variability.

p13 - a process that acts at as large a scale as the technology and market will allow. Fixed costs are spread over as much output as possible, and the process takes maximum advantage of scale effects.

p13 - a process with inputs that are as cheap as possible and no wasted outputs.

p13 - a process with no unnecessary or wasteful steps.

Chapter 8

p2 - making more nails meant hiring more smiths

p2 - they were so valuable that colonial buildings were occasionally burned down to recover the nails. As late as 1810, nails made up an estimated 0.4 percent of the United States’ GDP

p3 - a single worker overseeing multiple machines.111 Because cut nails were made by a repetitive mechanical motion, each nail was nearly identical, resulting in much less variation

p6 - overlapping S curves as a technology is invented, improved, and ultimately replaced by some successor technology.

p8 - solving one problem tended to reveal another right behind it

p11 - In just 36 years, maximum aircraft speed increased from 6.8mph (achieved by the Wright Flyer in 1903)137 to 466 mph (achieved by the Heinkel He 100 in 1939)

p12 - . In 1969, 30 years after the He 100, piston-driven aircraft had reached a speed of 483 mph, less than a 4 percent improvement from 1939

p15 - nologies often have many relevant axes of performance that can’t be captured by a single S curve

p17 - In his book The Innovator’s Dilemma, Clayton Christensen notes that multiple axes of performance often play an important role in the development and spread of new technology. An S-curve pattern means that early on, a new technology often performs significantly worse than an established technology along the most important measures of performance, even if its theoretical performance ceiling is much higher. But the new technology is often superior along some other axis of performance that, while not important to mainstream users of the technology, is important to some particular set of customers, giving the technology a foothold in the market

p18 - technological development has often been funded by the military

p21 - design for manufacturing, or DFM

p21 - most modern corn, cotton, and soybeans grown in the US have been genetically modified to make them more resistant to herbicides.

p24 - practitioners of lean production suggest that fully adopting lean production methods,which are almost entirely organizational and require little to no new equipment, often takes five to 10 years

p25 - a production process, like any technology, doesn’t stand on its own but is always embedded in a particular context

p26 - drawings would be interpreted by an experienced foreman as opposed to factory workers

p28 - During the Industrial Revolution, some considered it best practice to start children working in textile mills as early as age 10 to allow them to develop the instinctual knowledge of fiber behavior that was necessary to successfully operate spinning mules as an adult.192

p31 - resistance has been with us for as long as people have been building machines.

p31 - threatened to imprison anyone who sold the lathe

p33 - A technology thought to be at its limit will often continue to improve, in many cases due to pressure from a new,supposedly superior technology, while a technology that’s promising on paper may fail to pan out in practice.

p36 - one specific type of technological progress that has had an outsize effect on making production processes more efficient:mechanization, or the replacement of manual labor with machines.

p38 - mechanizing a production process often requires a change in the design of the product.

p43 - worker expertise remains valuable in keeping the machine operational and responding to variation the machine can’t handle

p44 - even as they eliminated the labor required by previous manual methods; the operation of automated bulb blank machines required constant intervention by skilled workers

p45 - in many cases, the new technology supplants the old technology, though the process might take years or decades (and even then, the old technology will often still be used in certain niches where it maintains an advantage over the new one)

p45 - there is a chaotic and unpredictable period of transition

p45 - The whole process then repeats in a messy, lurching progression.

Chapter 9

p5 - Value analysis or engineering works by systematically investigating the design of a product.

p7 - Designing a product to be easy and cheap to manufacture, therefore, requires attending to both the ease of fabrication and assembly.

p7 - tailoring the design of a product to the constraints of a specific process

p9 - operations research, or OR, a field of study that uses scientific and analytical methods to find ways to optimally allocate resources

p18 - But Ford’s enormous production machine was built specifically for the Model T and couldn’t easily adapt to the evolving car market,where models changed yearly. When Ford decided to switch to a new model, the Model A, in 1927, the Rouge had to be shut down for six months to retool at a cost of $100 million (the equivalent of $1.7billion in 2022), not including sales lost during the shutdown,

p19 - ebbs and flows of integration

p20 - cost and availability of inputs are often a function of geography:

p27 - cost minimization can’t be done by considering each item in isolation

p31 - nderstanding each one individually doesn’t mean we understand how a large collection of them working together will behave.

p32 - Technological development often involves exploring the adjacent possible: the set of possibilities outside but near current possibilities.

p38 - Finding an undiscovered location on the map of technological possibility is important, but it’s only useful if we can find an efficient way of getting there

p38 - what comes after the invention is often as important as the invention itself, if not more so.

Chapter 10

p7 - cost cliffs, where costs suddenly jump when the capacity of some process, such as a machine’s output or a container’s volume, is exceeded and more equipment needs to be purchased.

p9 - Geometric scaling is typically the result of area-volume relationships. The volume of a sphere rises in proportion to its radius cubed, while its surface area rises in proportion to its radius squared

p10 - a six-tenths rule, where the scaling exponent is assumed to be0.6: Each doubling of size increases total costs by 2^0.6,

p10 - unit costs falling by around 25 percent for every doubling of capacity.

p12 - In his memoir, Sixty Years with Men and Machines,machinist and journalist Fred Colvin describes the proliferation of spare parts in a railroad machine shop that resulted from there being no standard locomotive type:

p17 - an organization with n employees, every new hire adds n – 1 potential lines of communication. The 10th employee adds nine potential lines of communication, but the1,000th adds 999.

p17 - coordination costs within a company increase disproportionately to company size due to what we might think of as a reverse network effect.

p19 - proportional to the beam’s length squared; its deflection, or how much it sags under load, is proportional to its length to the fourth power

p23 - Division of labor

p30 - it’s better to have cheaper lower-capacity equipment that matches the necessary rate of production than more expensive higher–capacity equipment that manufactures more parts than needed,even if the per-unit costs are lower for the latter machine when operating at full capacity

p33 - bottleneck step in the process had a large enough buffer

Chapter 11

p1 - the most efficient process step is no step at all

p3 - Most business processes, Liker finds, are “only 10 percent value-added work.”

p4 - the total time required to produce an aluminum soda can,from mining the raw materials to putting the filled can on store shelves, is around 319 days. But the actual value-adding time—the time spent on physically transforming raw bauxite, step by step, into an aluminum soda can—is just three hours, or 0.04 percent of the overall process time.459

p11 - A Gilbreth chronocyclegraph.

p12 - The system, based on extensive research designed “to eliminate human judgment in setting output rates,”

p17 - Poka-yokes are devices that prevent an error from happening or make the error immediately noticeable if it has already occurred

p18 - Toyota production system method is the five whys:

p23 - 90 percent or more of the time spent in a process is on scaffolding steps like waiting, inspection,moving things back and forth when they don’t strictly need to be moved, and so on.

p23 - an operation that doesn’t exist is an operation that can’t fail.

p23 - Antoine de Saint-Exupéry famously quipped that “perfection is finally attained not when there is no longer anything to add, but when there is no longer anything to take away

p23 - Cutting a step out of the process is the ultimate efficiency improvement

Chapter 12

p8 - It will be much easier to control the temperature of the glass furnace to produce reliably good glass if we know exactly how temperature affects the glass quality

p9 - apprentices.

p12 - measuring instruments

p13 - As Mokyr notes, “When no one knows why things work, potential inventors do not know what will not work… The range of experimentation possibilities that needs to be searched over is far larger if the searcher knows nothing about the natural principles at work.”

p15 - According to Shewhart, there were two types of variation at work in any process: assignable cause variation and chance cause variation.555 Chance cause variation is the result of numerous tiny factors: slight fluctuations in material composition, slight differences in air temperature or pressure, the natural variation in machinery or human actions. This type of variation has no direct assignable cause;it consists of many small fluctuations in conditions that are beyond the scope of our knowledge, either because they’re fundamentally impossible to completely predict or because the effort required to try to predict them would vastly exceed the potential benefits.55

p22 - Historically, human operators acted as manual control systems,observing the state of a production process and adjusting it to bring it in line with a desired value

p23 - automatic control systems

p24 - By the early 20th century, automatic control systems were common in industrial processes, often replacing less reliable processes that depended on operator judgment

p25 - Automatic temperature control systems allowed gasoline plants to run for longer and have higher yields while reducing fuel consumption, coke formation, and required repairs

p25 - Herbert Henry Dow, the founder of Dow Chemical, considered automatic control mechanisms to be on par with the steam engine or interchangeable parts in terms of industrial importance

p26 - humans are incredibly flexible controllers, capable of responding to any possible disturbance in an infinite number of ways

p27 - producing parts just in time requires an extremely predictable and reliable process.

p28 - TPS uses the kanban production control system

p29 - With one-piece flow and kanban, there are either no buffers or very small buffers of extra inventory in the process. This means that any disruption to the process—a machine failure, a bad part—immediately shuts down the production line. But in TPS this is considered a feature rather than a bug, because the disruption reveals problems in the process that the inventory buffers were masking.

p32 - achieving strict tolerances is often expensive, relaxing them can significantly reduce production cost

p32 - it may be possible to relax the tolerances on a product without affecting its functionality.

p33 - tolerance stacking.

p35 - Because overly tight tolerances add significant manufacturing costs, production manuals and design guides often stress the importance of avoiding them

p35 - One manual notes that “it is only in exceptional cases that a mechanism cannot be modified so as to retain all functional advantages and yet allow liberal tolerances on the majority of its dimensions.”5

p36 - Variability pooling can also be used to reduce variation in process times. If many stations perform an operation in parallel, process time will be more uniform if they all share the same queue.

p37 - the more flexible a buffer—the more it can be used to damp different sources

p40 - if you never produce a part out of tolerance, you’re spending too much on machining operations

p45 - Reducing buffers can make the process fragile

Chapter 13

p24 - Every time a unit gets produced, there’s a chance of discovering a better production method, represented by drawing a random number between one and10. If the number is below the current cost, that becomes the new cost;

p24 - Over time, it becomes less and less likely that a given innovation or improvement is superior to the current method

p31 - Stable environments are what make learning from experience possible

p31 - there was a reset in the curve

p34 - lack of stability in a process can cause a phenomenon known as negative learning, wherein costs increase over time due to constantly changing production conditions.

p35 - key skills had atrophied or been lost.6

Chapter 14

p11 - These “farmer tools”—so called because they supposedly made it possible for unskilled farmers to do machining work

p12 - typical tolerance on the Model T was 1/64th of an inch

p16 - Moving the work in a continuous chain allowed it to be synchronized, which sped up the slow workers and slowed down the fast ones to an optimal pace.

Chapter 15

p1 - they tend to converge on a common form: continuous processes

p17 - fundamentally changed the nature of consumption, and that “largely because of mass production,standards of living have probably risen more in the last 100 years than in any comparable period in human history.”801

Chapter 16

p2 - In other cases, producers, governments, and other groups have successfully erected barriers to entry to the market, preventing competition and allowing sellers to maintain high prices. The high cost of medical care services in the US has many causes, ranging from the private insurance system to price opacity, but one reason is supply restrictions such as certificate-of-need laws, which require health care providers to prove there is a clear need for things like new hospitals or clinics before they are allowed to build them.804

p8 - But if there are technical limitations that prevent efficiency improvements or mean that a product will always be more expensive compared to alternatives, this jump-starting process will fail.

p8 - In an unstable environment where the product or process is constantly changing, on the other hand, producers will find it difficult, if not impossible, to accumulate improvements.

p8 - In an unstable production environment, not only will less automation be possible, but the process will also likely require more skilled, and thus more expensive, labor.

p8 - it may be possible to jump-start an industry by subsidizing production until it has fallen far enough down the learning curve

p9 - Repairing even a small amount of damage affecting a tiny fraction of the parts can cost a large fraction of the cost of a new car.This is because a new car can be produced using a high-volume,streamlined, repetitive, highly automated process that has been designed to be as efficient as possible.

p11 - Baumol’s cost disease or the Baumol effect: As labor productivity in certain economic sectors increases, wages in that sector will tend to rise.

p11 - Increased productivity in a specific sector thus drives up the costs of labor across the entire economy, and tasks where the amount of labor can’t easily be reduced will exhibit steadily rising labor costs.

p12 - industry that has repeatedly tried and failed to reduce production costs: building construction.

p12 - , since the early 20th century the costs of construction in the US have almost always risen faster than inflation.

p13 - Between 2005 and 2023, construction costs in Europe as a whole increased at a similar pace to the US

p13 - the number of labor hours it took to build one square foot of a single-family home increased from 85 hours in 1962 to 86.5 hours in 2022.825

p25 - Toyota has built thousands of prefabricated homes in Japan.837 But despite 40 years of homebuilding experience and its wealth of manufacturing expertise, Toyota has not found a way to make prefabricated construction cheap and ubiquitous.

p27 - transporting a building is proportionately much more expensive than transporting something with higher dollar density.

p34 - Bricklaying, for example,seems like it would be a perfect task for automation. It’s physically taxing and highly repetitive; even a small house will use thousands of identical bricks. But there have been more than a century’s worth of attempts to develop bricklaying machines, all of which have had limited success at best as of this writing. The machines have struggled to handle mortar, required making maps of the location of each individual brick, and had high setup and teardown costs.

Chapter 17

p2 - When we can’t repeat a process, or when there’s significant variation in the production environment or in the product itself, many paths toward increased efficiency are blocked.

p3 - inding ways to make these things cheap will require escaping the constraints of scale to get the benefits of a continuous process

p6 - map a desired product to a series of operations and how those operations should be structured.

p9 - explore a much wider design space by experimenting

p10 - it’s not clear whether the Navier–Stokes equations will in some cases “blow up”

p10 - one of the seven Millennium Prize Problems by the Clay Mathematics Institute, which has offered a $1million reward for its solution.

p11 - Case study: home construction of the future

p16 - The entire process, from starting design to being handed the keys, has taken less than 24 hours.