Theme of the book: As the name of the book mentions “Goal: ongoing improvement” but it just does not explain the goal and ongoing process to improve the system but also talks about the theory of constraints. Constraints which we face in real life situation. The main character in the book is Alex Rogo who is the manager of manufacturing plant. His plant is one of the few plants which company operates. Alex’s plant was not making enough money to sustain on its own. Orders were getting delayed often and the throughput was reduced which was eventually taking plant towards the financial losses. Management was very upset with the performance of the plant. They would have to shut it down if plant kept loosing money in future. There was a pressure …show more content…
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
The Dare by Roger Hoffman is a short story that conveys feelings and emotions of a seventh grade boy who had undertaken an extremely risky adventure. The essay is written by the author in his adulthood, but, nevertheless, he still manages to create this essay as if he is still in his childhood. Hoffman uses stylistic devices like metaphor, imagery, simile, and personification to create meaning in the short story, The Dare.
Alex comes up with the consensus that the “Goal” of his business and many others is to increase net profit while simultaneously increasing return on investment and their cash flow at the plant. This basically means to make money. These three measurements can be achieved by looking closer into his second set of measurements. Alex specifically must find a way to increase throughput while at the same time decreasing it inventory and operational expenses. All three of these measurements must be cautiously monitored since they all rely on each other to be obtained in balance. Factors that cause throughput, inventory, and operational expenses to become unbalanced are excess manpower and balance capacity of the demand of resources in the market.
Throughout the entirety of the book, The Goal: A Process of Ongoing Improvement, author Eliyahu M. Goldratt focuses on demonstrating the importance of the Theory of Constraints and what corporations should do in order to increase profits. A major term used throughout the novel is “throughput,” which according to the text, is “the rate at which the system generates money through sales” (Goldratt 60). Once a bottleneck machine in a production process is identified, there are multiple ways to increase throughput without expanding the physical capacity of the machine.
I must also identify how I can “abolish local efficiencies” for a bottlenecked resource and which vital changes would introduce significant capacity enhancements at the bottlenecks. Book suggests using “simple actions such as ensuring that a capacity-constrained work center will not stay idle during lunch-break or shift changes, and offloading work to less efficient work centers that have ample excess capacity (p. 359).” I can build upon this suggestion and introduce off-shore IT team working “ten-hour shift schedule” to offset the costs and still providing around the clock 24*7 crucial IT support for the global digital supply chain. Also, this continuous production improvement process requires on-going attention and remediation strategy implementation and attentive manager to evaluate if remediation strategy has worked and/or if it requires any changes. Because systems’ bottleneck can “move,” if we increased the capacity at existing bottleneck, then other “bottlenecks” can be found at different place in the same department or in other departments, creating entirely “new” bottleneck. The main goal of management should be to utilize ongoing improvement policy to stay on track with the company’s long-term money-making
4) Continuous improvement is based on the philosophy that any aspect of an operation can be improved.
Say we have identified the bottleneck machine of a production process. List at least four things suggested in the book that will result in a greater throughput without actually expanding the physical capacity of the machine.
Jonah tells them that they have hidden capacity because some of their thinking is incorrect. Some ways to increase capacity at the bottlenecks are not to have any down time within the bottlenecks, make sure they are only working on quality products so not to waste time, and relieve the workload by farming some work out to vendors. Jonah wants to know how much it cost when the bottlenecks (X and heat treat) machines are down. Lou says $32 per hour for the X machine and $21 per hour for heat treat. How much when the whole
Alex then had discussion with Jonah regarding managing capacity. According to Jonah, a managed plant is one where the capacity of each and every resource is balanced exactly with demand from the market." He explains that a plant where everyone is working all the time is not efficient.
The first major event is when Jonah and Alex met up in the airport and came to the realization of what Alex is doing is not the way he should go about running his business operations. Alex’s goal was all about making money. It was not about productivity. When Alex was explaining what his goals were, his answers were all related to the numbers. Increasing net profit, having a high return on his investments and getting positive cash flows to help sustain the plant. Although those are imperative to have and learn from a financial perspective, Alex did not understand that and from his position, an operations management perspective, it should be about productivity. From those statistics, in production means, they will improve in the plant through increasing the throughput, and decreasing the inventory and operational expenses. Jonah states, “There are three of them. Their names are throughput, inventory and operational expense.(Goldratt, pg.60)”. Jonah defines throughput as the rate at which the system generates money through sales”. Then he
“The Goal” by Goldratt is a book about the Theory of Constraints, TOC. It is about the behavior of manufacturing facilities. It deals with bottlenecks that are the manufacturing constraints and the variability that creates them. The book states that a manufacturing organization cannot run at 100% and that you cannot balance the assembly line. It seems that your efforts for efficiency must be focused on the worst bottleneck. The loss caused by a bottleneck is a loss for the entire system. Focusing on improving the throughput of the bottleneck increases the flow for the entire manufacturing line. If there is a bottleneck, then all other areas are capable of excess capacity. Don’t try to improve non-bottlenecks, as
When reading “The Goal” by Eliyahu Goldratt, the first thing that came to mind was the exposure of many issues that are currently happening in companies, especially in the manufacturing industry. For the last ten years that I have worked in the manufacturing world, I have been exposed to a range of positions (from manufacturing clerk to production control planner, and most recently customer service representative) which allowed me to witness a great deal of these types of conflicts happening in real life. In many occasions, I was directly involved, due to the nature of my job position in finding solutions and handling emergencies that would help my company meet product deadlines, as many of us said, making the impossible, possible.
When I initially received my copy of The Goal: A process of ongoing improvement by Eliyahu Goldratt and Jeff Cox, I assumed it would be your standard business book with dry statistics and nothing that would actually constitute as a story. I was pleasantly surprised that it was actually a well-developed story that kept me entertained and coincided with many point that were just being taught in our Supply Chain Management class (as I had finished the book relatively soon). The Goal covered both business stand points as well as work-life balance or in this case, the initial lack thereof. I felt that The Goal brought up productivity, efficiency, overproduction, as well as excess material issues. This book is a good example of some of the seven deadly wastes mentioned in earlier SCM classes, as well as how it affected their business and how it is possible to counteract each one.
The next steps would be to exploit and subordinate. Once we actually identify the constraint we have to turn the focus to how to get more production within our current capacity limitations. We have to be extremely careful when doing this
Continuous increase in production and productivity is another basic principle of scientific management. The aim of both workers and management should be to maximize output. This is in the interest of all. Increased output means lower cost of production and more profits. For workers, increased output means can provide better wages and other benefits.
3. Managers and employees of the firm should continually be aware of progress being made toward achieving the firm’s objectives. As critical success factors change, organizational members should be involved in determining appropriate corrective actions.