The Goal by Eliyahu M. Goldratt

The Goal

The Goal, by Eliyahu M. Goldratt, is basically a “How to…” book cleverly put together to tell a story about a struggling plant run by Alex Rogo and his staff, that will be closed down in three months if the plant doesn’t start making money. The story begins with Alex coming to work and to his dismay finding his boss’, Bill Peach, parked in his spot. Then he comes into his office and finds Bill Peach at his desk. Finally Peach give it to Alex straight, “You’ve got three months to turn this plant around”, and this is where the adventure for Alex and his staff begins. Goldratt could have easily cut this book down to a page of simple steps on how to get your plant rolling, but he has tried it before giving, seminars, holding meeting, but to with little success. No one wants to see the definition of a theory on a piece of paper or a list of steps on how to do something, people want to see this plan put to work, and if it will work when put into action, and that is what Goldratt did. Alex not only got his plant back on it’s feet in three months, but he turned his plant into a money making machine, where it was the most profitable plant in the whole division of UniWare. He did this with the help of an old physics professor, Jonah, who helped him through his problems not by solving the problems himself, but by forcing Alex and his staff to think and figure out what are the problems and how to correct them. It all started out with a simple question from Jonah which essentially is the basic premise of the book, “what is the goal of your manufacturing organization?”

After realizing the “goal” of the company is to make money, it was time to start making money. To make the money they had to fix the problems. To fix the problems they had to find the problems. The process for making the parts obviously had a bottleneck somewhere, and in this case it had a few bottlenecks. In order to move forward they had to locate the bottlenecks. A bottleneck is the slowest link in your network, which causes work to get jammed up. The first step in improving network performance is identifying the bottlenecks. That is exactly what the staff did. Goldratt shows us how just by correcting one bottleneck, vast improvements can be seen. Every part had to be inspected after it went through a heat treatment. Instead of heat treating the product and then inspecting it, they decided to inspect it before heat treating so defective products aren’t sent through the system when they will be rejected in the end anyway. This saved a lot of time in the whole process.

Goldratt shows us that when you use time on a bottleneck you lose time on the whole process time because the whole plan works on dependent

events. When combining dependent

events with statistical fluctuations the outcome is usually not favorable. Forecasting will never be 100% precise, but you must get it as close as you possibly can. Even if you are, for instance, 90% correct there’s a lot of money to be lost because of the dependent

events within the plant. You will end up making 10% more or less than what you had to make. Of course the extra can go in as inventory, but you’ve lost a great deal of time making that extra 10%. Without making that extra 10% your process could not be completed. Similarly if you made 10% less than you were suppose to then you would have to start a whole new process to make that 10% but you have more processes that are waiting to start but that 10% still needs to be made for the last short order. Therefore it is very important to “balance the flow of the product through the plant with demand from the market.” Alex and his staff are able to pinpoint some of the problems, as far as locating the bottlenecks, and trying to account for the dependent events and statistical fluctuations, but it is the constraints that have made Goldratt successful and Alex miserable.

Goldratt introduces to us the theory of constraints. “Most readers of The Goal…called it common sense.” That is exactly what it is, but its hard to say that it is the rules, policies, and laws that are making the company unsuccessful, because it is these rules, policies and laws that were suppose to increase sales, productivity, efficiencies and in effect bring in money. UniCo is just an example of how bad a situation can get if the theory of constraints is not implemented. It was the division itself that created all these constraints on Alex’s plant. Efficiency was very important to the company, the bosses wanted to see efficiencies go up all the time because if efficiencies were low they would assume that there wasn’t any money being made and that there is idle time. Workers did not need to be working all the time, and machines did not need to work at 100% efficiency