April 30, 2001
Page 1 of 3
Executive Summary for
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.
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.
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.