The Goal

  This is a book about...

The main character of the book is Alex Rogo; he is a plant manager working in the manufacturing industry. In fact Alex is an industrial engineer with an MBA. Alex is in charge and manages the injection molding manufacturing part of the plant. According to the book Alex is ideal for the job but if he dose not learn how to run his plant efficiently he will not make any money. Alex faces a tough road ahead of revitalizing the plant from a money loser to a moneymaker.
Alex is faced with a difficult situation ahead. His company that he works for is losing money. For the past couple of years the company has continued losing money now it is his turn to change things around. Alex from his impressive resume was chosen for the position on the grounds that he was the right guy for the position. He was promoted to the plant manager position 6 months ago. Before he was promoted the plant was still in dire straits. Alex's superior Bill Peach came to the plan to see how the operation was running to make sure operations were running smoothly as planned. Mr. Peach visited the plant to check on an important order for a client. At the plant for some reason orders have not been on time they are usually caught up in a bottleneck somewhere. In fact many orders as of late have been so far behind that it is a major problem for the company and the lively hood of the workers.

As a possible solution strategy, Alex categorizes the orders that are behind schedule as being either now, red hot, very hot or hot. How hot is hot just kidding! This situation is prevalent at the plant. This problem has been lingering on for quite a while. Either the plant shapes up or the plant will be closed and everyone will lose his or her jobs including Alex. During Mr. Peach's visit, he explains to Alex if that the manufacturing plant is not the moneymaker it should be he would have no choice but to close the facility down. Alex has three months to get the plant running according to Bill Peach's standards or he is out of a job. Alex is faced with a real dilemma; if the company is not meeting standards set by management then the plant will be closed.

Alex has dedicated most of his energy and time to the plant and its problems. He has been working many late nights pondering the future of the company. Ale is having trouble understanding the problems at the plant. He questions why the entire industry is losing money. The book mentions something about Japan has entered the manufacturing market and have stolen some market share from the United States. How will Alex handle the situation to regain the market share that they have lost is the hot issue.

Alex in a Chicago O'Hare airport restaurant runs into his favorite former professor Jonah. Alex discusses to Jonah what he does for a living he explains the purpose of the robots and describes the whole facility. Alex explains that the robots benefit is that of technology. Jonah however feels that robots are not necessary in the manufacturing plant that he works in. Jonah throws out the question to Alex are the robots actually increasing productivity or are they just stockpile of inventory? He questioned the use of robots and automation in the manufacturing plants. Jonah also went on to ask have labor cost decreased due to the robots? Do the robots decrease expenses? What has happened to the inventory? Have the robots helped in shipping more products? Jonah continues to ask do the robots must be continuously running without taking any breaks in between? Alex replied you are correct. He explained it is necessary for the robots to run all the time. He justifies it by saying that we have to remain competitive in the industry. Alex believes strongly in favor of the robots where Jonah has a different point of view. Alex admits that he has a surplus of inventory in the plant and everything is still behind. There is still a bottleneck somewhere. Jonah points out to Alex that he needs is to rethink his position of what is his purpose at the plant. Jonah explains to Alex he needs to define the "Goal" of the manufacturing plant.

There comes a point in the book where Mr. Peach decides to call a meeting regarding the importance of improving the status of the plant as well of the division that Alex works on. His main focus is that of the financial situation. He had the entire staff get together and had a round table discussion about efficiency, cutting costs, and productivity. Mr. Peach tries to figure out the problems that linger on in the plant. He outlines the goal of the company at his lecture. He discusses at length the above issues. He continues if the plant is not being productive in 3 months than the plant will be closed down.

His family life was also taking a turn for the worst. Even though Alex was a plant manager and making a good salary his wife was getting upset with him. He was working late hours and was never home when he was needed most. Communications problems arose at home with Alex and his wife. They began to have marital problems due to the lack of communication. Alex became very complacent toward his wife and started to lack the necessary communication skills needed for a marriage. While parked at a park visualizing the plant he finally sees the light. Alex realizes what the actual goal of the plant is. With his degree I am surprised that he didn't realize sooner that the goal of the plant is to make money! I have trouble understanding that he did not know that the goal of the plant is to make money because that is with any business.

The next day at work back at the plant, Alex holds a meeting and discusses with all of his coworkers what needs to be done. At length he talks to the plant controller about his findings. The book discusses that the plant can make money be increasing net profit while increasing net cash flow. After discussing with the controller, Alex again calls on Jonah to discuss the state of the plant and arranges a breakfast with him. Jonah also discusses in detail the goal. Jonah discusses operational expenses, inventory, and throughput, which may lead to the goal. Jonah makes a key point here that the manufacturing as a whole unit must be looked at. Efficiency is what Jonah goes into or is trying to explain to Alex. Jonah went on to say that only the tasks directly associated to the throughput of production need to operate efficiently. Alex used robots and Jonah kept constantly questioning why robots? It was not until Alex closely examined the situation that he discovered that management was operating less efficiently. The extra costs were an actual waste. Through closer investigation Alex found out that only the operations required to produce the finished products are key to get the ultimate efficient rate needed.

Jonah asks Alex if anything at the plant what has changed? Alex again says that the robots are still running all the time because they cost the most money. He says they are the most expensive piece of equipment in the plant. Alex believes in the robots and says that he will only get right productivity when the machines are running at full capacity. Jonah again believes on the contrary that you do not need everyone working all the time to get great results. Jonah says that a plant in which everyone is working all the time may actually be a negative (the well known more-for-less paradox).

Jonah explains to Alex that the only logical way to have an over abundance of inventory is having too many people on. He believes excess inventory is caused by excess manpower. He also went on to discuss another concept of a plant that it needs to be balanced. That the plant is working all together as a unit to meet the demand of the market. Without a balanced plant operations can not run smoothly. An unbalanced plant leads to layoffs, which in return decreases operational expenses. Alex was faced with this dilemma on how to save the plant. He was also forgetting about his family life and watching that go to pot. What was he to do?

The next morning Alex has the opportunity to take his son on a hiking trip with other boys and he has an another revelation regarding work. During the hike there is one particular child that is the slowest in the bunch that can not keep up with the rest of the other's. The slowest child was the bottleneck in this situation. Alex finally decides to stop the children and put the slowest child first as the leader to resolve the issue. The slowest became the leader and the group could go only as fast as the leader. Later in the same day Alex played another game to understand the bottleneck issue. This gave Alex some more understanding of the statistical fluctuation process and the effects it has on operations in the plant.

After the hike is all over Alex is faced with the fact that work has taken over his life. His wife has decided to leave him due to that fact lately he ha been treating her like a stranger and not of a wife. Unfortunately Alex has lost sight to what is actually important in his life.

Eventually Alex figured out how, for example statistical fluctuations occur and effect operations at the plant. Jonah lets Alex understand bottlenecks and explains that they should be below market demand. After speaking with Jonah, Alex talks with his co-workers and realizes that the bottleneck at the plant is mainly a specific machine as well as the heat boxes. Due to the machine and the boxes the plant unfortunately could not keep up with the demand. Finally after looking into the problem it was corrected and they were able to meet the demand.

Alex finally persuades Jonah to come down to the plant to take a look at the problem. Jonah explains to the staff that the actual cost of maintaining high inventory and the rejection of quality control (QC) has decreased the operating time of the bottleneck. Due to that Alex changed procedures to put QC directly in front of the bottlenecks. Jonah also explained that the capacity of the plant is equal to the capacity of the bottlenecks.
Throughout the book the goal is to make money for the plant by reducing the bottlenecks. Bottlenecks existed even after putting QC in front of them. The bottlenecks that were prevalent were training new people using three machines and the new rules at the plant. Jonah also explained that in the plant when you make a non-bottleneck do more work than the bottleneck you are not increasing productivity. Instead you are increasing inventory and by virtue of creating excess inventory you are going against the actual goal. Inventory is defined as any material that is not immediately sold. Inventory goods are any raw material needed to complete the finished product. In general space becomes a major issue in the manufacturing industry world. Companies are limited to floor space and any left over goods creates a cash flow problem. Unsold finished products are a liability.

The effective prescription for Alex's problems is: Identify and explore the system's constraints, also learn to cope and adapt to new conditions. The story is all about making decisions, thinking, and modeling. In the book The Goal that is exactly what Jonah had to do using common sense ideas.

  I especially liked...

I found the book to be very informative and easy reading which anyone could read in one sitting if they put their mind to it. In today's manufacturing society production management I believe is one of the most crucial ideals to stay competitive in the market place. In our competitive manufacturing industry if a plant does not satisfy customer's wants and needs their sales and profits will suffer and unfortunately like in this book, management may end up pulling the plug if sales continue to decrease. The book covers the following topics in great detail: Communication; Inventory; Bottlenecks; Efficiency; and Capacity Planning.

  I recommend this book because...

This book opens the eyes of anyone interested in management to the fundamentals of running a business. It is wrapped inside a very interesting (and yes, even thrilling!) "real-life" story which is written so well that this book could be a best-seller just because of it.

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