The Goal Eli Goldratt Summary

Topics: Bottleneck, Expense, Operating expense Pages: 6 (2696 words) Published: June 21, 2010
The Goal: A Process of on – going Improvement (Summary)
Alex Rogo is the plant manager of Unico’s Bearington plant. Clearly he has problems in his plant as is evident in the surprise visit he got from the vice – president of his division, Bill Peach. Peach came to expedite an order (No. 41427), which he wanted to be shipped that day. Alex is given three months to turn around his unprofitable plant or else face a shut – down. The order is shipped at the end of the day, although there was a breakdown of a machine and the plant operated beneath efficiency. All workers were pulled from other jobs just to work on a single order. Some even had to carry machine parts by hand to the point of assembly. Alex is concerned that his plant does not run as well as he thinks it should be based on the level of technology in the plant. Bill Peach summons all plant managers in his division for a meeting at the head office to discuss the reports of from their plants. Alex learns from peach’s staff how bad things are in the division. It dawns on him how serious the situation is i.e. if things do not change, Alex and all staff of the division could be out of jobs at the end of three months. That is all he can think of during the meeting. While at the meeting, Alex has a flashback. Two weeks ago he runs into his old college professor, Jonah. When Jonah hears about the way the plan is trying to achieve efficiency and the addition of robots to the production line, he predicts that inventory was actually building up and it was caused by the addition of new technology working at a faster rate than all the other units at the plant. He also was on point in telling Alex that they were not meeting up on their order processing times. He also tells Alex to think about what the organization’s goal is, that anything that brings the plant closer to achieving the goal is productive while anything that keeps it from the goal is not. Alex leaves the meeting during break giving an excuse about an emergency at his plant. However, he doesn’t go straight to his plant, instead he buys some beer and snacks and drives to a deserted road to ponder on what he heard from Jonah two weeks earlier. He needs to discover what the goal of his organization is, which he does after a while. He realizes that the goal of his organization, like every other organization is to make money. Alex gets back to the office late in the afternoon; he looks for the plant accountant, Lou. They sit together and discuss terms associated with making money or achieving the goal. They talk about increasing net profit while simultaneously increasing return on investment and also improving cash flow. Alex needed to apply these terms associated with profitability in his plant’s operations. Alex resolves to make the best of the three months grace he has been given to do his best and turn around his plant even though it is not certain that he will succeed. He decides to track Jonah down and ask for help. When Alex is finally able to talk to Jonah, Alex is given three terms – throughput, inventory and operational expense - to consider as measurements for achieving the organization’s goals. Throughput defined by Jonah as the rate at which the system generates money through sales. Inventory was defined all the money that the system has invested in purchasing things it intends to sell. Operational expense is all the money the system spends to turn inventory to throughput. Alex misses a call from Mr. Granby’s Office (the CEO), Alex calls back to discover that Mr. Granby wants to come to the plant to have his picture taken with the robots. Alex had earlier discovered that the robots were contributing to the inefficiencies at the plant. From what Alex gathered from the inventory manager (Stacey), the production manager (Bob) and the accountant; the robots kept working whether there was a need for the parts they were producing or not. Using Jonah’s measurements, Alex found that the robots increased inventory,...
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