The Goal

The Goal by Eliyahu Goldratt “The Goal” (of a manufacturing company) – to make money; everything else is a means to achieving the goal (i.e. produce products to make money) Reworded: The goal is to increase net profit, while simultaneously increasing both ROI and cash flow Measurements which express the Goal (pgs 60-61): Throughput – the rate at which the system generates money through sales Inventory – all the money that the system has invested in purchasing things which it intends to sell 3. Operational Expense – all the money the system spends in order to turn inventory into throughput 1. 2.

*Ideal Situation  Throughput increases simultaneously with decreasing Inventory and O.E. Two phenomena in a plant (pgs 87-88): Dependent Events – an event or a series of events must take place before another can begin…the subsequent event depends upon the ones prior to it 2. Statistical Fluctuations – when information changes from one instance to the next 1.

Two types of plant resources (pgs 138-139): Bottleneck Resource – any resource whose capacity is equal to or less than the demand placed upon it 2. Non-bottleneck Resource – any resource whose capacity is greater than the demand placed on it 1.

*BALANCE FLOW, NOT CAPACITY  make flow through a bottleneck equal (a little less than) to market demand “The capacity of the plant is equal to the capacity of its bottlenecks.” To optimize bottlenecks, you must (pgs 158-159): 1. Make sure bottleneck time is not wasted a. Sitting idle during lunch b. Working on defective parts c. Work only on the parts you need 2. Take the load off of bottlenecks and give it to non-bottlenecks a. Outsource to another company b. Other machines can do it “A plant in which everyone is working all the time is very inefficient.” (pg. 205) E. Goldratt’s The Goal Notes compiled by Gina Carlier

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Four elements of time a material spends in a plant (pgs 231-232): 1. Setup 2. Process 3. Queue (large) 4. Wait (large) Process of on-going improvement (pg 307): Step 1 – Identify the system’s constraint(s) Step 2 – Decide how to exploit the system’s constraint(s) Step 3 – Subordinate everything else to the above decision Step 4 – Elevate the system’s constraint(s) Step 5 – Warning!! 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 Example from “The Goal” Define Goal

Define Measurements

Determine Bottlenecks

Relieve stress from bottlenecks and increase productivity of bottlenecks

Increase Sales

Cut batch sizes in half

Reduce lead times

“If…Then” relationship based from science research (pgs 317-318): If the hypothesis is right, then logically another fact must exist 2. Verify whether or not the predicted effects do exist 3. Order is built on chaos 4. Socratic method 1.

A good manager needs to be able to answer 3 questions (pg 337): 1. “What to change?” 2. “What to change to?” 3. “How to cause the change?” The layers of resistance to change (pgs 349-350): Layer 1 – raising problems have one thing in common…it’s out of our hands Layer 2 – arguing that the proposed solution cannot possibly yield the desired outcome Layer 3 – arguing that the proposed solution will lead to negative effects (“yes, but…”) Layer 4 – raising obstacles that will prevent the implementation Layer 5 – raising doubts about the collaboration of others (or worse, not raising their doubts)

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Peeling, in sequence, all these layers turns resistance to change into the enthusiasm of an inventor

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The importance of not neglecting a relationship “Nothing neglected will remain as it was or is, or will fail to deteriorate. All things need attention, care and concern, and especially so in this most sensitive of all relationships of life.” E. Goldratt’s The Goal Notes compiled by Gina Carlier

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