The Goal is generally about emerging principles in the manufacturing industry. Here, the book discusses the efforts of a manager of a plant in increasing the productivity of his factory. One of the valuable lessons that the manager learns is that like any other firm, his organization has to have a single primary objective that determines the operations within the business. All the departments within the organization are therefore run in a manner that aims at achieving the highest goal that was initially set. Also, the manager finally understands that the efficiency of the processes in his factory are as good has the slowest process therefore new adjustments have to have this factor in mind. The manager also notes that problems with machines can be fixed compared to managerial problems such as policy.
The manager observes in the book that three variables have to be optimized to maximize profits. These are: Inventory (I), Throughput (T) and Operational Expense (OE). Throughput focuses on productivity in terms of sales, inventory is amount spent on purchases while OE is the investment of converting inventory into throughput. By optimizing these measures at the same time, system efficiency will be enhanced, which is the key to success. The manager also learns that Dependent Sequential events are interconnected. An analogy of this is given about a group of boys who are out hiking. Their speed can be improved by having the slowest lead the pack and reducing his load.
The novel goes further to describe bottlenecks as constraints where flow or capacity of a resource is usually equal to or less than demand. The manager is made to understand that processes within his factory can either be bottlenecks or non-bottlenecks. Every amount of time lost in a bottleneck directly reflects on the amount lost by the entire system but the time saved by a non-bottleneck is virtually insignificant. The Goldratt and Cox also state that in order to get the cost of bottleneck, the cost of the whole factory will be divided by the number of hours in bottleneck. Generally, production can be optimized by balancing bottleneck flow. Also, bottleneck throughput can be optimized by monitoring machines to ensure that time is not wasted on one item. Machines have to be set to produce what is currently needed.
Another concept highlighted by Goldratt and Cox is that performance of the factory can be analyzed in terms of work-in-progress inventory (WIP). This can be improved by reducing batch size which cuts costs through minimizing inventory. By reducing batch size, the cycle time involved will have been significantly reduced. The Theory of Constraint (TOC) is also discussed in by Goldratt’s book. Here, Throughput (T) is viewed as the main indicator of performance. The other two indices of performance are Inventory and Operating Expense. In such an analysis, the constraint is first established. This is the factor that limits the capacity of production. Thereafter, the constraint is fully utilized since the speed of doing this determines the general pace of the system. The next step is to make other processes boost the aforementioned constraint. The next step is elevate the constraint then the first step is revisited. After this constraint is dealt with, the next slowest constraint is focused on and the process is repeated.
Goldratt and Cox also outline the importance of Drum-Buffer-Rope as a way of implementing TOC. Here, Drum refers to bottleneck speed.Buffers refer to the allocation of resources or time slices. These buffers are used to keep the bottlenecks running in times of delay. Rope refers to a notification that gives the go ahead of introducing new materials into the system. The queues in this case are minimized or done away with altogether because constraints are scheduled one at a time. The book finally reiterates that it is important to analyze the entire system’s performance with respect to the set objective.By increasing throughput and reducing inventory, the performance is bound to improve.
Work Cited
Goldratt, Eliyahu M and Jeff Cox. The Goal. Great Barrington, MA: North River Press, 1992. Print.
