The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt

The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt

The heart of this story is based around the life of Alex Rogo, Plant Manager for

Uniware a division of Unico. After a very upset customer approaches Alex’s boss,

Bill Peach, he is given an ultimatum to turn the plant around in three months. Due to the limited amount of time available, there are not many outside tools available such as consultants, surveys, etc. With very few hopes, Alex foresees the inevitable until he remembers his conversation with Jonah, a physicist Alex knew from a previous job.

The Goal:

It is not until Alex’s job is in jeopardy that he decides to devour into his conversation with Jonah. During the conversation, Jonah asks him several questions to analyze his company’s situation. The conversation leads ultimately to the question, "What is the goal of any business?" After rethinking his conversation, Alex realizes that the goal of any business is to make money.

Furthermore, if the goal is to make money any action toward this goal is consider productive and any action not moving towards the goal is nonproductive. Alex unsure of such a simple answer decides to contact Jonah to continue the search for more answers.

Measurements:

Once Alex contacts Jonah they define the following measurements to define the success of any plant’s production:

1. Throughout = rate that the system is used to generate money through sales. This measurement would consist of what a product would be worth when sold at market value after deducting operational expense and inventory.

2. Inventory = all the money invested in purchasing items that will be sold.

This could include the remains of their machines after being used toward the investment.

3. Operational expense = all the money used to turn inventory into throughput. This would include such items as depreciation of a machine, lubricating oil, scraps, etc.

Balancing a Production Line:

Jonah explains to Alex that a plant that is continuously productive in considered inefficient. He further explains that continuous production will result in high absenteeism, poor quality and employee turnover. Based on this, he would need to reduce operational expense and inventory to improve throughput to

demonstrate a balanced line of production. Jonah leaves him to ponder the understanding of two things: what are the dependent events and statistical fluctuations in his plant.

Bottlenecks

During a hiking trip with Alex’s son, he produces a game for a few of the kids to demonstrate an ideal balance line of production. He does this by setting up dependents and uses a die to measure the statistical fluctuations. At the end of the game, he concluded that the bottleneck’s speed of production is what