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The Goal
by Eliyahu M. Goldratt
ISBN: 0884270610

The Goal describes how a plant manager, Alex Rogo, turns around a failing production plant by changing how he and his staff think, and then by changing what he and his staff measure and value. Old metrics, such as efficiencies and price-per-part, are abandoned in favor of looking systemically at the bottlenecks (or constraints) of the production line as a whole. In their story, they realize (or remember) important points:

  • The goal of a business is to make money.
  • Money can be made (or saved) by increasing throughput, reducing inventory, or reducing operating expenses.
  • An entire production system can move only as quickly as its slowest process.
  • Increasing production of the slowest process increases production of the entire system.

The last two points focuse Alex and his staff on increasing throughput while reducing inventory and reducing operating expenses. Four steps comprise their iterative system:

  1. Identify system constraints, or "bottlenecks"
  2. Exploit the system constraint (i.e., ensure peak usage, minimize downtime)
  3. Subordinate to the system constraint (i.e., don't overproduce upstream of the bottleneck; reducing efficiency upstream reveals excess capacity; align the entire system to help the bottleneck increase throughput)
  4. Elevate the system constraint (i.e., find alternatives that increase productivity--any alternative that increases bottleneck productivity increases system capacity; consequently, such productivity increases need not necessarily be efficient, merely productive)

Once a constraint is cycled, the team begins again by looking at the next constraint. In the story, they discover that pending sales are now a bottleneck, leading them to aggressively capitalize on an opportunity they could not have achieved before implementing their new system of thinking.

 

 
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