Commercial Organization of Factories.2C 1896. J. Slater Lewis

1 commercial organization of factories, 1896.

1.1 aim , purpose
1.2 duties of manager
1.3 job , works order
1.4 basis labour costing
1.5 diagram of manufacturing accounts
1.6 shop charges , general establishment charges
1.7 staff organisation diagram

commercial organization of factories, 1896.

title page, 1896.

in 1896 j. slater lewis published commercial organization of factories. hugo diemer (1904) listed work 1 of seminal works in field of work management, evolved industrial engineering. in bibliography of works management diemer summarised essence of work:

mr. lewis s comprehensive work of 540 pages deals administration, organization, , accounting. fact specific system traced through work, elaboration of minutest details, makes work 1 requires closest sort of application , study in order 1 may principles applicable. attention devoted strictly commercial office-accounting.

to mr. lewis belongs credit of making full exposition of important subject of proper distribution of establishment charges, calls them, or expense accounts designated in america. chapter xxiii of work devotes seventeen pages thorough treatment of subject, carried out more in chapter xxxiv, on works , job office, in standing order system explained.

mr. lewis makes use of chart method of circles , arrows employed garcke , fells, in illustrating connection between accounts , forms illustrated. carries chart system step further, illustrate staff organization of factory.

mckay (2011) suggested, work might first manufacturing management text. lewis provides thorough discussion , mapping of factory s decision making , information flow, details cost accounting, , describes how manufacturing orchestrated order taking shipping.

aim , purpose

in preface of work, slater lewis (1896) explained aim , purpose of volume:

notwithstanding progress of age, every manufacturer still devises own system of accounts, has own books , forms specially drafted , printed , clerks educated in methods may of little or no value them in other factories. there is, in fact, no recognised system student learn, , none schools teach : nor there examinations through managers, time cost clerks , others may receive certificates proficiency in 1 universally accepted system.

engineering, save in matter of factory accounts, endowed acknowledged formulae, rules, tables, , data of every description, acquisition of knowledge of state has deemed of national importance, , technical schools , other state-aided institutions have come stay ; whether legislature ever recognise exact relationship between successful engineering , scientific book-keeping, , afford rising generation opportunities of qualifying positions both indispensable conditions, remains seen. beyond question, however, largest , successful industrial undertakings minuteness of detail , perfection of organisation have received paramount consideration : fact should, in itself, in these days of world-wide competition, make commercial organisation of factories matter of first importance in every country manufacturing pretensions.

in opening of first introductory chapter, slater lewis further explained:

this book intended practical handbook use of manufacturers wish adopt modern methods of organisation. written throughout point of view of organiser , manager, rather of professional accountant, , author hopes feature commend have bear responsibility of conducting large engineering , manufacturing undertakings.

and furthermore:

the author satisfied difficult persuade have responsibility of conducting large industrial undertakings complete , intelligent office organisation save money, time , worry, few years ago convince them use of modern machine tools indispensable workmanship cheap production. now, however, has been established experience special machinery each manufacturing operation, consequent division of labour in works, economical method of production, may clear same principle should applied division of labour in office, reducing clerical work pure routine. expect carried out old-fashioned books , foolscap paper equivalent expecting production of high-class engine old-fashioned appliances @ same price , within same time 1 turned out aid of latest labour-saving machinery...

duties of manager

on duties of manager, particularly general management, slater lewis (1896) presented exacting , constructive view:

the duties of manager of responsible nature, , special stress should laid on importance paramount importance of being strict disciplinarian. must practical man of world, organiser, and, above all, must possess tact , judgment. should known man means says, , conveys impression 1 , means obeyed. regards technical details of business, should thoroughly practical all-round man. need not have intimate acquaintance mathematical or other minutiae of each branch of business, must have strong capacity administrative work. should have instinctive knowledge of customers require, , know smartest , cheapest way of supplying wants. should <]uite @ home in modern office routine, in accounts kept double entry, in handling of large bodies of men, , in application of modern machinery classes of engineering work. found can fill position make completeness of work chief , absorbing aim. manager should bear reputation of being firm, , @ same time absolutely impartial under charge, office boy upwards. should ready learn anyone, and, in whatever work may have in hand, should adopt latest processes , methods, , carry them out in efficient manner. if has erect new factory, should think out every detail before commences operations, , not wait developments during progress of work. if has no experience of own guide him, should promptly seek advice of have.

job , works order

one special feature of lewis s book clearer specification of term job , distinguishing job , works order. church (1908) explained, distinction made slater lewis:

the works order may, , does, consist of considerable number of distinct jobs. practically job may defined amount of time spent particular workman on particular piece or similar set of pieces. thus, works order lathe include such jobs planning bed, cutting leading screw, milling slide rest, etc. if works order 6 lathes of similar pattern, jobs extended – as, instance, planning 6 beds, cutting 6 leading screws, etc. in case of work done otherwise on customer s stock orders, job items such new screw no. 45 lathe, altering position of band saw no. 67, etc. evident jobs charged material , not...

basis labour costing

in chapter xi on estimating slater lewis (1896) presents notable basis labour costing.

each manufacturing operation, or each set of operations, should, when estimate being prepared, dissected , entered on foolscap paper, or in rough estimate book. each operation should have reference number, should appear upon drawing , in book in estimate being prepared. when information has been extracted , checked, nothing may overlooked, prices should added each item. these prices should arrived @ manager, estimate clerk , foreman conjointly. each 1 should write down privately price or rate each operation, after should compared , definite figure arrived at : safe method being of adopting mean of 3 rates.

diagram of manufacturing accounts

scheme how incorporate labour costs factory accounts garcke , fells (1887/89).



diagram of manufacturing accounts, j.s. lewis 1896.



systems of controlling accounts, church 1910.



special order system (fragments). nicholson. 1913.



relation of stores records commercial records, moxey 1913/19.

slater lewis paid special attention establishment charges, or overhead element, of manufacturing costs, , advocated integrating of costs financial accounts. garcke , fells (1887/89) had made first step here proposing system incorporate material costs , labour costs double-entry bookkeeping system. slater lewis focussed on next step, , developed method practically use ledger accounts distributing overhead work in process. in years come, become standard in engineering factories. in chapter xxiii on establishment charges slater lewis explained principles in paragraph on allocation of establishment expenditure. opens:

for mere purposes of commercial book-keeping, matters, indeed, little in way general , shop establishment charges dealt with, long paid out of profits made on work, say, matters little whether appear in books chargeable general revenue, or allocated several items of work in progress in shops. apart mere book-keeping, , meet requirements of management estimating, controlling efficiency of production , comparing, period period, relative economy , efficiency of shop administration, absolutely necessary keep accounts of prime cost (meaning thereby actual expenditure in labour , material directly incurred in production of manufactured goods) entirely separate establishment charges (shop , general), naked truth cost of operations have taken place in shops shall plainly appear on face of accounts. comparison of costs of machines produced @ intervals of years rendered possible.

in diagram of manufacturing accounts, slater lewis explained how scheme of production , cost control unfolded in logical flow. diagram based on scheme, pictured how incorporate labour costs factory accounts, presented garcke , fells in 1887/89 (see above). urwick & brech (1946) more explained:

as scheme of production , cost control unfolded in logical flow, following sequence customer s enquiry take transformed order, job ticket, material requisition, , on, reaches general accountancy phase , opens processes of book-keeping.

to deal these in simplest manner, slater lewis added illustrative appendix of thirty pages, containing transactions set out in specimen sheet form. , perhaps in connection significance of scheme revealed. whole system interlocking unity. closely related various procedures , documents able portray them in single flow chart, undoubtedly first of kind in british industry. 2 remarkable diagrams presented show feature , make continuous study easier. supplied folded sheets slipped cover of book. how precisely , illustrate teaching, lewis indicates himself note in heavy type offering on application unfolded copies of diagrams framing , display.

as diemer (1904) explained in diagram of manufacturing accounts, slater lewis made use of chart method of circles , arrows employed garcke , fells, in illustrating connection between accounts , forms illustrated.

a decennium earlier garcke , fells had developed system of factory accounting, , pictured elements in 4 complementary flow diagrams (only first of 4 diagrams pictured here). in slater lewis diagram of manufacturing accounts these 4 diagrams integrated picture system of manufacturing accounts 1 whole. decennium later alexander hamilton church (1908/10) further develop system introducing concept of production factors, , picturing principles of organization production factors (see image) around organisation. using concept of production factors church able simplify system of manufacturing accounts systems of controlling accounts (see image).

nicholson & rohrbach (1913) in cost accounting differentiated 1 method 4 different:

in same year nicholson & rohrbach published work, in 1913/19, edward p. moxey published influential textbook on accountancy, in pictured relation of stores records commercial records (see image).

in 1960 accounting principles braden , allyn described , pictured cost-flow principle:

as direct material passes storeroom factory conversion finished products , storeroom storage until sold, costs being gathered in totals , per unit each stage of productive process. each movement in factory operation accounted @ time occurs. cost-flow principle. assisting in carrying out of principle perpetual inventory method of accounting inventories. in operation of method of handling inventory, record made of issue of direct , indirect materials storeroom, record of receipt when purchased. continuous accounting flow of materials @ time of occurrence essential accounting costs.

in accompanying diagram illustrates flow of 3 sources of cost through factory (work in process), storeroom (finished goods), , hands of customers (cost of sales), appear in these general ledger control accounts. further explained of product through plant , corresponding flow of costs through accounts follows 1 of 2 different systems. 1 system called job order system; other system process cost system.

shop charges , general establishment charges

a key element in proper distribution of establishment charges distinction made between shop charges , general establishment charges or works cost , inclusive cost. church (1908) further explained details:

... necessity , justice of distinction between shop charges , general charges (works cost , inclusive cost) hardly needs insistence. has been ably , exhaustively argued in work of mr. slater lewis, referred to, argument may briefly recapitulated here.

nothing naturally more distinct operations of making , selling. require different instincts , separate talents. undertaking may efficiently organized , managed on 1 of these sides, , yet unsuccessful, because gained in 1 set of efforts lost in another. more useful, therefore, make natural division of work reflected similar division in system of accounting? easiest , simplest of modifications shau meet, because obvious , fundamental...

church (1908) concluded that:

mr. slater lewis s theory on point clear , distinct, , should studied every manufacturer cares accuracy , clearness in place of confusion , mixed results in accounts. not system of accounts lumps both classes of charge , averages them round entirely worthless. far being improvement on simple system of prime cost, probable may easily, inducing false security, positively dangerous , worse no system @ all.

more contemporarily, chatfield (2014) summarised innovation follows:

[the] preferred treatment of overhead costs bring them contact prime costs @ end of accounting period. lewis proposed, accounts containing overhead items closed profit , loss ordinary expenses. @ same time, work in process , finished goods debited respective shares of overhead cost, , suspense account in general ledger credited. @ start of next period reversing entry made, debiting suspense , crediting profit , loss. suspense again debited , finished goods , work in process credited, bringing inventory accounts prime cost basis , leaving total overhead cost balance in suspense.

staff organisation diagram

diemer (1908) credited slater lewis introducing chart system illustrate staff organisation of factory. work expressed surprisingly modern in attitude towards organisation structure. slater lewis (1896) stated:

the question of staff precedence 1 deserves more attention receives, , fertile source of jealousy , heart-burning amongst employees. in no circumstances should members of staff placed in positions antagonistic 1 another, or given dual , overlapping control of 1 or more departments. imprudent allowing 2 commanders dispute mastery on same ship, or having no degree of rank amongst officers, or dividing line between duties of steward , of carpenter. imperative every member of staff should have defined position, , given understand in unmistakable terms whom has orders, otherwise continual bickering , consequent dis-organisation inevitably occur. should intimated every official, particularly in minor positions of responsibility, must exercise self-control , not ride roughshod on may happen subordinates.

in last chapter of work salter lewis presented short paragraph diagram of staff organisation, read:

staff organisation diagram, j.s. lewis 1896.

some officials being disposed, not infrequently, regard equal, if not superior men masters, essential well-being of industrial concerns have definite organisation under responsibility may not fixed, relative positions or rank of officials defined. purpose necessary have recourse diagram such specimen (see image)...

the diagram should drawn in bold lines , clear letters on sheet of drawing paper not less double elephant size. should framed , placed in conspicuous position in general offices...

the diagram can of course varied suit particular organisations, though, stands, possible in accordance general practice prevailing in country...

urwick & brech (1946) noted knowledge, first example of modern organisation chart in british business literature. concluded fact in treatise intimately concerned every aspect of management, organisation structure touched on incidentally regards method indicates how little need definition of formalised relations in industrial enterprise had been appreciated end of nineteenth century.