The Goal - Summary

The book tells us the story of a plant manager, Alex Rogo, who is trying to save his plant, at least show some improvements within 90 days to keep it open. Alex’s primary problem is that his plant can not consistently get a quality product out of the plant on time at the cost that can beat the competition. His plant is losing money and if he cannot make it profitable, the management eventually will decide to close the plant. In his fight to save his plant, a physician, Jonah, helps him in achieving his objectives.

Alex, with the help of Jonah, finds that the goal of a manufacturing organization and all organizations in general is to make money. Jonah explains the measurements which express the goal of making money in a different way. These measurements are:

• Throughput

• Inventory, and

• Operational expense

Throughput is defined as the rate at which the system generates money through sales. Inventory is all the money that the system has invested in purchasing things which intends to sell, and operational expense is all the money the system spends in order to turn inventory into throughput. Then it turns out that the goal of an organization is to increase throughput while simultaneously reducing both inventory and operating expense.

To help Alex in achieving his goals and solving problems in his plant in terms of the measurements which express the goal of making money, Jonah introduces him the theory of constraints. Theory of constraints approach includes the following steps to improve the performance of a system:

• Identify the system’s constraint(s)

• Decide how to exploit the system’s constraint(s)

• Subordinate everything else to exploit the constraint(s)

• Elevate the system’s constraint(s)

• If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system’s constraint.

Theory of constraints approach requires answering three basic questions. These questions are:

• What to change?

• What to change to?

• How to cause the change?

Alex uses the concept of “theory of constraints” to find the constraints or the bottlenecks in his plant. Jonah defines a bottleneck as any resource whose capacity is equal to or less then the demand placed upon it. And a non-bottleneck is any resource whose capacity is greater than the demand placed on it.

When Alex first meets Jonah at O’Hare Airport they start to talk about the robots Alex has been using in his plant. Jonah asks Alex if the robots in his plant had increased the productivity. Alex believes that the robots has increased productivity in one area about thirty-six percent. Then Jonah asks him if his plant was able to ship more products per day as a result of what happened in the department where they installed the robots. And then, he asks if he had fired anybody, and if their inventories had gone down. Alex’s answers to all these questions were no! And the discussion goes on. The important point Jonah mentioned here was that the robots were working in non-bottleneck processes. Adding robots to non-bottleneck processes to a system in which bottleneck processes are present does not help increase overall productivity. Instead it increases inventories. What Alex has to do is to locate the bottlenecks in the system and try to remove them, thereby controlling the flow of materials in the system, which will eventually decrease inventories, and work-in-process levels, decrease operational expenses, and increase the throughput of the whole plant.

In a system which includes dependent events, a bottleneck with a limited capacity reduces the capacity of the whole system. Alex and his team find two bottlenecks in the plant. One is the NCX-10 machine and the other is the heat-treat. Jonah advices Alex concentrate on the bottlenecks (constraints) to achieve his goals. There are two things that should be done. They have to make sure that the bottlenecks’ time is not wasted, and make the bottlenecks work only on what will contribute to throughput today. They realize also that by running non-bottlenecks for efficiency, they have built inventories excess of demand which means releasing materials faster than the bottlenecks can process it.

In the book, the concept of “constraint” is clearly explained by an example. Alex takes a group of boy scouts on an overnight hike. The slowest boy in the group, Herbie, exemplifies all the characteristics of a constraint. Because he is very slow, it becomes