The Goal Essay

The second time Alex spoke to Jonah was after finding his contact information in his old address book. During this conversation, Alex realizes that accustomed profitability measures cannot be applied to the plant he is managing and he must follow measures that better relate to his individual plant. Jonah teaches Alex three

to tell me the latest about the drug deals. Alex says “There is a big deal going down in the next

In Chapter 1 of Eliyahu Goldratt’s book The Goal, we are introduced to Alex Rogo a mere plant manager, whom going into work that early morning is already faced with issues. While the reading continues we are introduced to a group of frustrated characters including, Dempsey, Ray, Martinez, and an hourly worker Tony. Bill Peach the vice president of this plant has decided to come in early causing a ruckus in the plant. Peach is frustrated because customer order 41427 is late and decided to take matters into his own hands, by threatening Tony's job in which he has no power of doing so. Rogo now has to face the problem and handle it himself. As the chapter continues we see many different types of writing in the workplace mentioned and how it is utilized. Chapter 1 of The Goal shows us how purchase orders, grievance forms, and efficiencies are relevant in the workplace.

The problems begin when one upset customer approaches Alex’s boss, Bill Peach about a very late order. Actually Alex’s plant has not been profitable for some time and because of that Bill gives an ultimatum to Alex to turn the plant around in 3 months or else the plant will be closed unless there are visible improvements. Due to the limited amount of time given, Alex

It isn’t until he takes a trip down to the factory floor that he realizes that it’s difficult to measure the actual activities on the production floor by those same standards. There has to be a way to measure production so that one can know if the activities are moving you toward the “goal” or away from it. It’s at this point that Alex Rogo knows that he needs to find his friend Jonah again. He needs to ask him some more questions. How did Jonah know that the factory was in trouble? After some research, Alex was able to glean a phone number in London that would put him in touch with Jonah. His conversation with Jonah provided three very precise expressions of the “goal”, parameters that weren’t loaded up with things like added value because that would only complicate things. Jonah defined very precisely three parameters that would help Alex to develop operational rules for running the plant. They were; 1. Throughput is the rate at which the system generates money through sales. 2. Inventory is all the money that the system has invested in purchasing things which it intends to sell. 3. Operational expense is all the money the system spends tin order to turn inventory into throughput.

After discussion with Jonah, he ought to think that what exactly he is trying to achieve in his plant. Alex then goes though lot of brainstorming and comes to conclusion that his plant’s goal is to make money. As long as his plant keeps making money for the company, management would not shut it down. Another challenge was how to achieve this “Goal” within the resources and capacity currently available in the plant. At this point when plant is loosing money management would not allow to add more machines or capacity to the plant for the sake of productivity. Alex gets in touch with Jonah and start to learn from him about how to approach this issue. Jonah gives hints to the Alex and he implements those suggestions and he starts to see the results. There are three main components to achieve the goal: 1. Throughput 2. Operational expenses 3. Inventory. Alex figures out that throughput should increase at the same time operational expenses and inventory should decrease in the system in order to make money. When he starts to apply this concept he learns about the new concept called bottlenecks. Bottlenecks are the processes in the system which consumes the most amount of time and have more load than available capacity. So when he adds capacity to the bottlenecks, non-bottlenecks had waiting inventory to be processed. The main challenge here is to achieve the balance between those two processes. He learns

Eliyahu M. Goldratt’s book The Goal tells the story of Alex Rogo (a plant manager) and the transformation that both he and his plant go through as he attempts to reorganize and restructure his facility in order to bring it back to a profitable state and to save it from closure. Throughout the story we see a relationship form between Alex and Jonah (an old professor) as Alex (and his team) receives advice on his operational problems through a series of questions posed by Jonah. These questions eventually lead to noteworthy improvement to the plant’s operations (the most profitable plant in the company) and a promotion to Division President for Alex.

He told Jonah that the plant he is working with installed some robots that have increased productivity by 36%. Jonah replied with “so your company is making 36% more money from your plant, just by installing some robots?” Alex said no and Jonah asked again “was your plant able to ship even one more product per day as a result of what happened in the departments where the robots were installed?” Alex answered again with a no while Jonah asked again if the plant has fire anybody and if the inventories go down but Alex’s answers are no. Jonah again asked “with such high efficiencies you must be running your robots constantly? Alex said yes and Jonah continued with predictions that the plant’s inventory is very high and Alex’s plant can not deliver products on time. Jonah added that Alex thinks he is running an efficient plant but he is not.

While eating dinner Alex has an epiphany about the goal. He realizes the first lesson, “The Goal of any organization is to make money.” All activities that lead to the accomplishment of The Goal are valuable, and all others are non-essential. Armed with this new information, Alex sets out to develop a plan. He returns to the plant and discusses the goal with Lou, the plant financial controller. Lou agrees with Alex’s theory on what the goal is. Together they try to figure out measurements to mark how well the goal is being achieved. Lou suggests that one way to measure is to look at is net profit, or loss, cash flow and ROI. Alex knows that the floor managers have heard of Lou’s terms, but they would not make sense to them. In order for the measurements to be effective, they must have a universal definition. Alex does not know how he can translate

The Goal gives significant insights of business operations within business practices. Products demanded being expected to sell at reasonable prices, being quality efficient, and delivered on time affected the major operations issue distinguished at UniCo. Visualizing the scenario, $20 million worth of unsold products have been lying around the warehouse, yet that was not the main concern and orders at UniCo have been 2 months behind there scheduled delivery date. This called for a corporate meeting at head quarters, but on the way Alex runs into his old Professor and friend Dr. Jonah, whom he opens to discuss

Alex took a decision to stay in his position for the next three months and started looking for Jonah. Alex got Jonah’s phone number from his friend who knows about Jonah. Alex talked with Jonah eventually. The conversation with Jonah helped Alex to define the main goal of the company, Making Money, and put some measurements to evaluate his progress toward the goal. The three measurements are: throughput, inventory and operational expenses. Also, Jonah has an opinion about the robots in the plant. He thought that robots do not increase

“Viable Vision: Transforming Total Sales into Net Profits is a book for anyone responsible for increasing the profitability of their business. Gerry Kendall combines the theory with real life examples of its power to transform complex problems into clear, common sense executables that will increase the profitability of your business. If you think the complexities restrict the future success of your business, then you’re about to be enlightened.” —Patrick J. Bennett, Executive Vice President Covad Communications “As senior managers we seek but seldom find the silver bullets that will lead to exponential growth for our companies. In Viable Vision, the author wonderfully presents proven tools with actual business cases that

Every business in the world has to look for different strategies that will help it to improve and raise more profits. This has become in the ultimate goal in any organisation and it only becomes a reality if the best technique and methods are used. For this, there are some analyses that at the same time need to be

To be able to understand the goal of your company you have to be able to understand the overall goal in relation to the measurements, meaning that the rate at which the system generates sales increases while at the same time decreasing the money that the company has used to purchase things and also decreasing the amount of money that is spent moving “inventory” into the throughput. The interesting part of these measurements is that they all have to do with the goal of the company, meaning that they all involve money, which is the overall goal of the company, to make money.

[Outline your planned sales targets. What quantity of your products/services do you plan to sell in a planned timeframe? Are they monthly or yearly targets?]