FREE ESSAY ON GOAL BY ELIYAHU M. GOLDRATT

GOAL BY ELIYAHU M. GOLDRATT

The Goal by Eliyahu M. Goldratt, is the story of a man who at his crossroads, and what
direction he decides to take. The story is about a plant manager named Alex Rogo. We find
Alex six months into his first plant managers position at UniCo, in the UniWare Division.
The plant is located in Bearington Massachusetts, where Alex grew up. UniCo is definitely
a manufacturing plant, what they manufacture, I still do not know. 
The story begins when Alex's supervisor, Bill Peach, comes into the plant and nearly
turns everything upside down. After Alex puts out all of the fires that Bill had set,
they sit down in Alex's office and talk. Bill tells Alex that production has gone down in
the six months that Alex has been at the helms, and an irate customer, Bucky Burnside,
has an order that is fifty-six days overdue, and Alex must get that order shipped before
anything else. Bill also says that if the plant does not turn around in the next three
months, he will make a recommendation to close the plant. A few days later, Alex hears
more of the same at a corporate meeting and figures out why Bill was upset. After the
meeting Alex reaches for something and comes across a cigar he received from a chance
encounter from and old physicist he knew from his college days. 
While waiting for in between flights at O'Hare, Alex wandered into an airport and found
himself sitting next to the physicist named Jonah who worked on mathematical models while
he was an undergraduate engineering student. Alex and Jonah start talking, and Alex
mentions he is going to speak at a seminar. His topic is "Robotics: Solution for the 80's
to America's Productivity Crisis." Alex tells Jonah that his plant has more robots than
any other plant in the division. Jonah is not very impressed. Jonah asks how much
productivity has improved because of the use of the robots. Alex answers that there is a
36% improvement in one area. Jonah then asks if the plant is making 36% more money
because the plant is using robots? Well, of course not is the response. Just the one
department is producing 36% more.
Jonah continues the conversation and admits that he has been studying manufacturing
processes. He asks Alex what productivity is and ends up explaining true productivity is
accomplishing something in terms of your goal. Alex cannot even determine the goal of his
company at this point. Jonah tells him to think about it and leaves. Back at the meeting,
Alex hears talk about measurements of efficiencies, productivity, and cost per price,
etc. He is not even sure what productivity is, so he decides to bail out at lunch to head
back to the plant. His trip to the plant is interrupted by a pizza pie and a six pack of
beer. Alex goes to a hill overlooking the plant and spends the rest of the afternoon
contemplating what he is going to do over the next three months, and what exactly
productivity is. He spends the entire afternoon thinking about "the goal" and finally
comes up with the answer: The goal of the company is to make money, and everything else
they do is a means of achieving the goal. Once Alex figures out what the goal of the
company is, he decides to get a hold of Jonah to learn more about productivity. Alex
spends the night at his mother's house trying to contact Jonah, until he finally does at
2 a.m., with Jonah in London. Jonah explains to Alex that an action towards the goal is
productive, and an action away from the goal is unproductive. He also gives Alex three
new measurements: Throughput, the rate at which the system generates money through sales.
Inventory, all the money that the system invested in purchasing things which it intends
to sell. And finally, Operational Expense, all the money that the system spends in order
to turn input into throughput. To make money, Alex must increase throughput while
simultaneously reducing the inventory and operating expense. 
Alex goes back to the plant and realizes he needs a lot more of Jonah's advice. Jonah
agrees to meet Alex in New York over breakfast for an hour. They start to discuss the
idea of a balanced plant. Traditional manufacturing goals are always to run a balanced
plant, where the capacity of each and every resource is balanced exactly with the demand
from the market. But, Jonah points out, the closer you come to the perfectly balanced
plant, the closer you are to bankruptcy. 
At home, Alex's wife, Julie, complains again that Al is never home. Al explains again,
that it is because of the plant. After arguing about why he needs to work as much as he
does the two reach a compromise. Alex tells Julie that he will bring his paperwork home,
and take care of the fires at the office while he is there, in order to spend more time
with Julie and the kids. The next morning, Alex is woken by his son who reminds him that
he promised to help lead the scout hike overnight. Alex leaves without waking Julie, and
finds himself to be the only parent "helping" on the hike. Throughout the course of the
hike, Alex realizes that an overweight boy, Herbie, slows down the middle and the end of
the line. Alex does not understand why the line separates so greatly if all the boys are
walking at two miles per hour. Eventually it dawns on him that Herbie is the statistical
fluctuation and the rest of the line of kids are dependent events. When Alex returns home
the next day from the hike, Julie has left. Alex realizes that he needs to work on his
marriage as much, if not more than his work, because both are in trouble. In my
estimation this is the turning point of the story, this is where Alex reevaluates the way
he has been looking at things for the past few months, years, maybe his entire life.
Julie moves in with her parents, and Alex's mother moves into the house to look after the
kids until the end of the school year. Alex calls Jonah to explain what he has learned
from the hike, and how it relates to the factory. Jonah explains that Alex has two kinds
of resources; bottlenecks, and non-bottlenecks. A bottleneck resource is one in which
capacity is equal to or less than the demand placed on it. A non-bottleneck is where
capacity is greater than demand placed on it. Alex must determine which processes are
bottlenecks. Alex and his staff search the plant to find bottlenecks. At first, they go
through statistical data, then physically walk the plant to see workstations with
work-in-progress piled up. The processes that have a lot of work backed up in front of
them are bottlenecks. Jonah tells Alex that he should start balancing the flow of
production with the flow of demand. The bottleneck's flow , which determines the rest of
the flow down the line, should then be balance with the markets demand.
Alex and his staff determine that the plant's bottlenecks are heat-treat and the NCX-10.
Jonah explains that they must increase the capacity through the bottlenecks in order to
increase throughput and improve cash flow. At this point Jonah introduces some new ways
for Alex and his staff to look at machine hours and costing. The NCX-10 is a machine that
must be running as many hours a month as humanly possible, Jonah explains. However, it is
often idle during break times and this costs the plant thousands of dollars in expenses
every month and they do not even know it. Over a period of a few weeks, with many trial
and errors, Alex and his staff finally turn out the first month of profit along with
lowering inventory, and improving cash flow. Alex starts to think about his marriage more
at this point. School is out and the kids are living with Julie and her parents. Alex
talks with Julie again and they even go on a few dates together. He sees her now more
than when he was living with her. Alex begins to include Julie in his process of growth,
by explaining to her the changes that are going on in the plant, and finds that she is
very interested.
The next step for Alex is too cut his batch sizes to cut his inventories down and improve
overall efficiency of the plant. With shortened lead time, the whole production process
is able to respond to market demand faster. Alex starts promising sales that orders that
used to take five months, now will only take four weeks due to the shorter lead times.
The three months is up, and Bill Peach still is not completely sure about whether or not
this current success is not just a flash in the pan. Bill tells Alex that if he does not
see a 15% improvement the plant will close. Business is great and with the help of Alex's
accountant Lou, the plant show an increase of 17%, however according to traditional
accounting methods the increase is only 12.8%. On the day of the performance review, Bill
Peach does not show up. Hilton Smythe, the productivity manager, and a rival of Alex's
takes notes and makes his recommendation for the plant to be closed because of the
awkward style of productivity. Alex immediately hunts down Bill Peach to see what he has
to say about this. Bill calms Alex down by congratulating him on his new position as
division manager. Evidently Bill wanted to see who would be able to see beyond
conventional methods, in order to compete in the new marketplace. 
Alex is successful at home just as much at work. Julie decides to move back in after
rekindling their relationship. In her time away Julie read about Socrates and found out
that Jonah had been using the Socratic method all along. She shows Alex that giving the
answer is not always the key, but helping one ask the questions is the true answer.
Bibliography
The Goal
A Process of Ongoing Improvement
by Eliyahu M. Goldratt and Jeff Cox