The Goal

-Shreya Albal (14233073)

The “Goal” by Eliyahu Goldratt and Jeff Cox is a novel about a plant manager’s quest to find solutions to otherwise arduous problems and in that process he revamped not only his factory but every part of his life. This book illustrates the initiation of a continual improvement process in a manufacturing plant which is at rock bottom but makes it relevant to all the organizations because it is about people who are forced to think logically and coherently to figure out the relationship between cause and effect and understand mechanism that makes the entire operation function to make it better.
The management of the company has given ‘Alex Rogo’, the plant manager to turn the once successful plant which is now neither productive nor profitable to profitability to avoid it from being shut down.
The plant is facing problems such as extreme late deliveries, tons of production backlog and huge inventories. Facing the dead end Alex along with his team consisting of Stacey the logistic manager, Bob the production manager ,Lou the accountant ,Ralph the computer whiz, decide to consult Jonah, who had predicted the situation in his plant aptly even without knowing which company or product they produced. He guides Alex by compelling him and his team to arrive at unique yet potentially risky solutions to their problems.
He starts with establishing that the productivity is anything that gets the company closer to its goal and every action which does not get the company closer to its goal is unproductive. He challenges Alex to find the goal of his company. After contemplating concepts like market share, customer satisfaction, technology he finally arbitrates that money is the ultimate goal of any company. Jonah then gives him the key to defining the process with three terms which can help to categorize and to set up the relationship of everything in the factory with the goal of the company. Firstly, throughput that is the rate at which the system generates money through sales. Secondly, the inventory which is the money the system invests in purchasing things which it intends to sell. Lastly, the operational expense which is the money the system spends in order to turn the inventory into throughput. Increase in throughput, reduction in inventory and operational expenses forms the pivot of the improvement process.
Next Jonah suggests that Alex should question the capacity of the plant and balance the plant, wherein each and every resource is managed and balanced exactly with the demand from the market. Along with that he riddles Alex with relationship of dependent events and statistical fluctuations. He discovers the relationship metaphorically (“Herbies”) when he acts as a troop master for a hike for the boy scouts. He is successful in practically applying those concepts and studying their covariance to an order and getting it out of the plant on time all the while studying their covariance. Jonah then helps Alex to distinguish between the bottle necks and non-bottlenecks. Alex and his team are at wits end trying to figure out a way to increase capacity at bottlenecks to balance the plant which they know won’t be acceptable by the management. Hence they request Jonah to visit the plant.
The team realizes that it is essential to balance the flow of products and not capacity with demand, and that the design of the flow should be necessarily through the bottlenecks. According to Jonah’s suggestion they also realize that some ways to increase capacity at the bottlenecks are not to have any down time at the them, make sure they are only working on quality products so not to waste time, and relieve the workload by farming some work out to vendors or add some machines performing similar operations as the capacity of any plant is equal to the capacity of its bottlenecks making it crucial to evaluate if the bottlenecks are helping or hindering the process. The team also sets up a process to prioritize the material