The Goal

The Goal

A thorough knowledge of business processes is extremely valuable in the business world. Although the majority of this story focused on how to control the production in a manufacturing facility, I think many of the concepts of The Goal could be applied to any area of business.

Alex Rogo is a plant manager who is continually fighting to meet the output requirements of his business. There are ongoing conflicts between marketing, accounting and production in the organization.

The original problem of Alex Rogo is that he did not understand the goal of a manufacturing plant. According to Jonah, "The goal of a manufacturing organization is to make money." Alex was concerned with things like efficiencies of individual processes instead of the profitability of the entire system. He had very efficient robots working on his assembly line, but because they were not managed properly with respect to operating time and order scheduling, the plant was losing money. Inventory was piling up in front of the bottlenecks and the order of the jobs to be processed was determined by which customer complained the most.

To solve this, he first increased the capacity by re-instituting older machines and had the robots working for as much of the day as possible. He also regained control of the order jobs were processed by getting rid of the most overdue projects and working backwards until there was no standing inventory.

Another one of the main is the bottleneck. A bottleneck is simply any process within a system that cannot keep up with the other processes. Bottlenecks are commonly viewed as problems within a system but can be extremely valuable if you understand how they truly work. A bottleneck is actually fairly easy to identify. In a manufacturing environment, walk down the line until you meet a big stack of product waiting to continue along the process. In a service environment, look for stacks of files in someone's office. Bottlenecks should be put as top priority within system, that is, they should be running at 100% capacity for as long as possible. Purchasing and order shipment schedules can be based off of when a particular product is planned to pass through the bottleneck process.

In addition to bottlenecks, Jonah and Alex look into the important measurements to attain the goal. They are inventory, throughput and operational expense. Throughput is the speed at which the plant can turn inventory into sales. Inventory is the total monetary value of all things purchased by the department that is intended to be sold. Lastly, operational