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Book Name : GOAL

Quick Review:
Alex, an educated and competent manager at UniCo, is excited to get
transferred back to his hometown Bearington with his family. But his
moment of bliss quickly evaporates once he realizes that his factory is
facing difficulties and might even get closed down!
Shipments are always late and their production backlog is growing, yet
somehow inventories also keep soaring. The team wonders why they can't
seem to ship on time with good quality at a reasonable cost. Alex resolves
to do whatever it takes to save the manufacturing plant
Meanwhile his wife, Julie, struggles to adjust to the monotonous life in the
small town. Alexs long hours at office put additional strain on their
relationship, as things go from bad to worse.
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.
Jonah takes on complex subjects like "productivity" and defines them in
simple terms. For example: "Every action that brings a company
closer to its goal is productive. Every action that does not bring a
company closer to its goal is not productive." But what is the goal?
Following 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. Along the way they discover the importance of constraints
and learn how to manage them to achieve growth and profitability.
Alex 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. but
rather making more and more money.
Once the plants operations stabilize, Alex finds himself spending more
time with his family. He wins back his wifes affection and his plant
suddenly becomes the most productive one in the company. Alex is
promoted to President at UniCo and entrusted with the task of
implementing Jonahs advice throughout the entire division.
Towards the end, he begins to realize that 'bottlenecks' or constraints
can change over time, and hence he must adapt his way of managing
the business. But Jonah has given him the key questions to find solutions
to these challenges as they arise the secrets to the Process of OnGoing Improvement (POOGI).
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Cast of Characters:
Alex Rogo: manufacturing plant manager (the main character) Industrial
Engineer and MBA graduate at UniCo Manufacturing Corporation.
Jonah: Alex's college professor, who offers critical advice & clues
Julie Rogo: Alex Rogo's wife
Bill Peach: division vice-president
Fran: Alex's secretary
Lou: the head accountant
Stacey: the plant inventory manager
Bob Donovan: the production manager
Ralph Nakamura: Data Processing Manager
Herbie: a boy scout who comes to metaphorically symbolize the
bottleneck in the plant
Dave: Alex's son
Sharon: Alex's daughter
My points :
1. Alex reaches office only to discover a worse-case scenario wherein a
machine has completely stalled. He pushes all the employees to work
extra hours and somehow, order #41427 finally gets shipped late that
night. But this achievement comes at the cost of declining efficiencies
and further delays for other orders.
2. Later that night, while at dinner with a colleague, he reflects upon the
mismatch between the company's MIS system reports and actual
profits
3. Alex remembers running into his old physics professor, Jonah, at the
airport. Jonah marvels Alex with his intimate knowledge of how badly
Alexs plant is doing. With no prior knowledge, he accurately predicts
problems like high inventories and missed shipping deadlines.
4. Jonah leaves Alex with a lingering question: "What is his company's
ultimate goal?" Suddenly it strikes him that the Goal of his company is
to make money! Anything that brings him closer to the Goal is
productive. Hence, all other activities are non-productive!
5. Back at the office that evening, Alex sits with the plant's controller,
Lou. Together, they discuss the details of how the plant could go about
achieving the Goal and the new targets. There is an urgent need to
increase cash flow, return on investments, and the net profits. When
Alex runs the numbers, the task seems daunting, almost impossible.
Their conversation stretches late, and Alex finds himself in trouble once
again with Julie when he calls home
6. In response to Alexs questions, Jonah reveals three operational
measurements. "Throughput is the rate at which the system
generates money through sales." "Inventory is all the money
that the system has invested in purchasing things which it
intends to sell." "Operational expense is all the money the
system spends in order to turn inventory into throughput."

7. With the help of Lou the accountant, the inventory control person, and
the production manager, Alex discovers that the robots increased
operating expenses without reducing any costs like direct labor, which
was merely shifted to other parts of the plant. Since inventory stayed
the same and throughput did not increase, the productivity of the plant
declined because of adding the robots!
8. Alex and his team (Bob from production, Lou from accounting and
Stacey from inventory control) reviewed the meaning of throughput,
inventory and operating expense until everyone was satisfied. Lou,
summarizes them as follows. "Throughput is money coming in.
Inventory is the money currently inside the system. And
operational expense is the money we have to pay out to make
throughput happen."
9. But Lou explained that machines, tooling and the whole the building
are all just different forms of inventory. Stacey remarked, "So
investment is the same thing as inventory." Together they decide
that something drastic must be done with the machines. They call
Jonah in search of answers, but to speak to him Alex must visit New
York
10.Jonah eaves Alex with another riddle: consider what "dependent
events" and "statistical fluctuations" have to do with your plant? Jonah
rejects Alexs notion of a balanced plant, claiming that "the closer you
come to a balanced plant, the closer you are to bankruptcy."
11.To observe the effect more carefully, Alex devises a dice game to play
with the boys. It quickly becomes clear that any balanced plant faced
with "statistical fluctuations" and "dependent events" will see
throughput going down and inventory going up. Jonah was right - a
balanced plant is not the answer! The next day the troop begins to
hikes again. But this time, Alex decides to let the slowest kid named
Herbie lead the line. He also distributes some of the extra weight that
Herbie was carrying. As expected, the fluctuations of the line balance
out and the hikers reaches together on time, thus increasing the
throughput of the entire troop!
12.
The team is beginning to trust their boss and appears ready to act
on his command. But Alex, on the other hand, remains unsure what to
do next. Predictably, Jonah is consulted once again.
This time, the professor discloses the Theory of Constraints: "A
bottleneck is any resource whose capacity is equal to or less
than the demand placed upon it. A non-bottleneck is any
resource whose capacity is greater than the demand placed on
it." Jonah carefully explains that Alex must NOT try to balance
capacity with demand, but instead balance the flow of product
through the plant.
13.
Jonah finally visits the plant in person. 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.
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14.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. And how much does it cost
when the whole plant goes down? About $1.6 million. How many
working hours are available per month? About 585. Jonah then
reveals that when the bottlenecks are down for just an hour,
the true opportunity cost is more like $2,735. That is because
each minute of downtime at a bottleneck translates into lost
throughput for the entire plant!
15.Alex is excited to learn that their new system is actually working the
plant managed to ship twelve overdue orders! Alex is pleased, but he
definitely wants more.
16.
After studying the problems, Jonah explains that there arent any
new bottlenecks! Rather, the current practice of prioritizing
non-bottlenecks to work first on bottleneck parts inadvertently
caused the problem.
17.The focus now expands to include matching the production of
bottleneck parts to ensure timely availability of non-bottleneck child
parts. If successful, this could also reduce the accumulation of
bottleneck parts in WIP inventory at the assembly line
18.Once again, Alex is summoned for another corporate meeting. But this
time, he is expecting plenty of appreciation for the achievements of his
team.
Instead, the meeting turns into a disaster. Though Alexs plant made
progress over the last couple of months, none of the others are doing
well at all. Management is considering closing the entire division. When
Alex confronts Mr. Peach in private, he is told that if he can improve
another fifteen percent, he might be allowed to keep his plant open. It
seems pretty challenging because this would require generating
additional new demand from the market.
19.Alex makes his appearance at the plant, but this time as the division
Vice-President. He promotes his team members Lou, Bob, Stacey, and
Ralph, to higher positions within the division, carrying greater
responsibilities.
20.Now that Alexs core team has taken up their new positions, it is time
to take their model to a new level. The concepts that were being
applied for just one plant must somehow be modified to work for the
entire division. This will involve plenty of work and each team
member's intense involvement. So they decide to meet on a daily basis
to work out their strategy and tactics.
21.Gradually they formulate a five-step Process Of On-Going Improvement
(POOGI):
Step 1: Identify the systems bottlenecks
Step 2: Decide how to exploit those bottlenecks
Step 3: Subordinate every other decision to 'step two decisions'
Step 4: Elevate the systems bottlenecks
Step 5: if, in a previous step, a bottleneck has been broken, go back to
the beginning (Step 1).

These five steps follow a specific sequence. In other words, you should
exploit the constraint before elevating it, because adding capacity
requires capital investment.
22.Alex realizes that he can no longer keep running back to Jonah for help;
he must tread alone on the path shown by Jonah. As a manager, he
must master the art of how to get to the core of a complex situation
and solve it without creating new problems.
Key Take Aways from the Book GOAL
Seek Answers: Be active in your quest for knowledge. The answers are out
there, you just have to discover them. Sometimes the answers can be found in
unlikely places, such as Jonah, an old physics professor.
Improve the Overall System, Not Just the Individual Parts:Effective
coordination between Operations and Marketing/Sales is critical to achieving the
Goal, not just optimizing a single link in the value chain.
Never Give Up & Work Smarter, Not Harder