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- THE GOAL ELIYAHU GOLDRATT SUMMARY CHAPTER 2 HOW TO
- THE GOAL ELIYAHU GOLDRATT SUMMARY CHAPTER 2 SERIES
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The main character is Alex Rogo, who manages a production plant owned by UniCo Manufacturing, where everything is always behind schedule and things are looking dire. Click here to read more about The Five Focusing Steps.Like other books by Goldratt and by Cox, The Goal is written as a piece of fiction. Also note that the bottleneck may be internal or external, such as customer demand. In other words, you should exploit the constraint before elevating it, because adding capacity requires capital investment. These five steps follow a specific sequence. If in the previous steps a constraint has been broken, go back to step 1, but do not allow inertia to cause a system's constraint.Subordinate everything else to exploit the constraint(s).
THE GOAL ELIYAHU GOLDRATT SUMMARY CHAPTER 2 HOW TO
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The answers to his questions form five focusing steps to improve the performance of any system (sometimes known as the Process of On-Going Improvement or POOGI): Jonah outlines the secrets to managing constraints (Theory of Constraints) by asking questions. A lost production hour on this bottleneck tends to be very costly. This slowest machine is called the Bottleneck or Constraint.
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The slowest operation always determines the maximum speed at which products can be produced and therefore also the rate at which throughput can be realized. Between these three operational measurements, increasing Throughput impacts profitability far more than reducing Inventory or Operating Expense. That is because each minute of downtime at a bottleneck translates into lost throughput for the entire plant! Chapter 20 (The Goal)Īrmed with these definitions, Alex has a sound basis to analyse whether his decisions are helping the plant move towards the Goal (to make money, as characterized by increasing throughput and/or decreasing inventory and operational expense). Jonah then reveals that when the bottlenecks are down for just an hour, the true opportunity cost is more like $2,735. How many working hours are available per month? About 585. And how much does it cost when the whole plant goes down? About $1.6 million. How much does it costs when the bottlenecks (NCX-10 and heat treatment) machines go down? Lou quotes $32 per hour for the former and $21 per hour for the latter. Jonah muses that more machines to do the bottleneck operations might help, but weren’t they forgetting about making the existing machine run more effectively? What must he do to increase the capacity of the plant? Ideally he would like to purchase an additional machine, but they have neither the time nor the budget for that. He explains to Alex that every plant should have bottlenecks (!), and that a system can only increase production by increasing capacity at the bottleneck operations.īut Alex is confused. Jonah finally visits the plant in person. Alex is promoted to President at UniCo and entrusted with the task of implementing Jonah’s advice throughout the entire division. He wins back his wife’s affection and his plant suddenly becomes the most productive one in the company. Once the plant’s operations stabilize, Alex finds himself spending more time with his family. Along the way they discover the importance of constraints and learn how to manage them to achieve growth and profitability.Īlex eventually realizes that the goal is not cost-effective purchasing, employing the right team members, the latest technology, producing quality products, capturing market share, customer satisfaction, etc. Every action that does not bring a company closer to its goal is not productive." But what is the goal?įollowing Jonah's clues, Alex mobilizes his team at the plant to find ways to improve the flow of production and somehow ship the huge backlog of orders on time. For example: " Every action that brings a company closer to its goal is productive. Jonah takes on complex subjects like "productivity" and defines them in simple terms.
THE GOAL ELIYAHU GOLDRATT SUMMARY CHAPTER 2 SERIES
Given three months to turn the plant around, Alex chances to bump into his old Physics professor, Jonah, who challenges his thinking and gives a series of clues about how to save the division.