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

The beginning of the book starts off with Alex Rogo's plant having major problems and his boss gets on his case about it. His boss, Peach, tells him he has three months to fix these problems or they would be shut down. Rogo has to find a way to improve efficiency in his plant and he is at a loss of how to do that. He thinks that because the plant has new robots that this automatically improves efficiency, right? Peach calls a special meeting at the headquarters for all the plant managers. Rogo does not know what the meeting is about ahead of time, but assumes it will be bad news about how the division's performance is horrible this first quarter. Rogo see Nathan Selwin in the parking garage; he informs Rogo that if performance isn't improved by the end of the year, then the whole division goes up for sale. Rogo ends up leaving the meeting early because he realizes that this meeting is pointless and not helping his plant be more productive. A couple weeks before this meeting, Alex had run into an old friend, Jonah, in an airport lounge. He begins telling Jonah about his plant and the new robots, etc. Jonah does not seem impressed, but asks Alex some important questions such as: „h Have they really increased productivity at your plant? „h Was your plant able to ship even one more product per day as a result of what happened in the department where you installed the robots? „h Did you fire anyone? „h Did your inventories go down? Jonah's point was that if inventories have not gone down, employee expense was mot reduce, the plant is not selling more products, etc. then the robots have not increased the plant's productivity. Jonah tells him that there is only one goal, no matter what the company. Jonah asks Alex what the goal is and Alex does not know. After Alex leaves the meeting, he remembers this conversation with Jonah and it makes him think a lot more about the situation his plant is in. The following enable a company to make money: „h cost-effective purchasing „h employing good people „h high technology „h producing products „h producing quality goods „h selling quality products „h capturing market share Alex finally figures out what The Goal is (I don't know how it took him so long!!) to make money (which is caused by being productive). To accomplish the goal of making money, there are three things that need to be increased simultaneou... ...nning while people are on break; the employees should go on break when it is running. „h The union is causing problems (the reason why it is not possible at the time). „h The machine is available for 585 hours a month, but the demand is greater than that - it will not be resourceful if you loose any of those hours. „h Throughput for entire plant is lower if that time is lost. „h Bottleneck #2 is the heat-treat „h The engineering department is unwilling to change; currently, the plant does not outsource to other vendors „h The plant thinks that it would increase the cost-per-part. For example: Each product shipped is about $1,000. 1,000 units * $1,000 = $1 million if parts get shipped as finished products. They need to use external heat-treat (outsource). Also, quality inspection is currently done prior to final assembly. Defective items are lost time on bottleneck because it went through the machine and now is worthless. They need to do QC before bottleneck - that way, they will not loose time on bottlenecks on any defective parts - won't loose throughput. Also, they need to make sure the process controls on bottleneck parts are very good. The Goal By Eliyahu M. Goldratt