Characteristics Fordism (pre 1980s) Post-Fordism (post 1980s)
Production Mode Mass Production Mass Customization
Organization Structured (Pyramidal / Top down) Networked (Flexible / Bottom up)
Focus Supply (Production) Demand (Market)
Market Reach Regional / National Global
Expansion Vertical or horizontal integration Outsourcing and offshoring
Information Monthly / Weekly Daily / Real-Time
Core Resources Physical Assets Innovation / Knowledge / Network
Value Chains Discontinuous Integrated (continuous)
Inventories Months Hours
Production Cycle Time Weeks / Months Days
Product Life Cycle Years Months
Quality Affordable Best Zero-Defect
Fordist and Post-Fordist Production Structure
The setting of the assembly line in the early 20th century led to a system of production that came to be known as Fordism. It became the dominant industrialization paradigm of the developed countries of North America, Europe and Japan. With technological and regulatory changes that took place after the 1980s, Fordism was mainly replaced (or expanded) by Post-Fordism, which is more reflective of the global economy and the expanded mobility of the factors of production. Each system has the following characteristics:
  • Fordism. The core of Fordism is the concept of mass production catering the development of a mass market. Production is highly structured with a pyramidal command structure. It usually services a national market with a focus on supply (production) and the expectation that the market will absorb the output. This is linked with production cycle times that spend weeks if not months to adapt to the fluctuation of the demand, as well as information flows (e.g. sales data) that are slow and lagging. A Fordist corporation usually expands through vertical (moving upstream or downstream the supply chain) or horizontal (acquiring competitors) integration. The core resources of Fordism are physical assets such as plants and machine tools representing a large share of the total capital investments. The value (supply) chains tend to be discontinuous, implying that a large amount of parts and finished goods are held in inventory to deal with longer production cycle times (lead times) and difficulties to distribute goofs. The product life cycle of goods is designed to last years (if not decades) with limited adjustments in the characteristics of the product. Although efforts are made to insure a reasonable quality level, it is expected that defects will take place and that defective products will be returned.
  • Post-Fordism. The core of Post-Fordism is mass customization; being able to provide large quantities of goods but with the option of customizing them for specific markets and/or customer preferences. Economic globalization has permitted the exploitation of global comparative advantages in terms of labor and resources (outsourcing and offshoring), leading to networked organization forms to manage such a system. Demand is a key driver with the capability to quickly adapt production based upon its fluctuations (e.g. seasonality). A better access to information, particularly through information technologies, enables a real-time update about market conditions (demand and price). Globalization and the growing level of flexibility required in production has incited a higher level of outsourcing and offshoring. The growing influence of technology and market factors has shifted the importance of core resources towards innovation and knowledge, which have become key competitive factors. Value chains are integrated where processes such as research and development, design, manufacturing, distribution and retailing are part of a continuous chain. This is also linked with lower inventory levels and short production cycle times. Rapid technological change is also inciting much shorter product life cycles with new generations of products being regularly introduced (sometimes on bi-annually). Quality and zero-defect become prevalent with customers having little tolerance for defective products in a highly competitive environment allowing substitution to another product.