SUMMARY OF

THE GOAL -Dr Eliyahu M Goldratt

BY NAMITA CHAUDHRAY PGDM (FINANCE) 2010-12 2010127

The goal is a book on the experiences of a plant manager, Alex Rogo for Uni Co . Alex has been worried about the poor performing plant and was struggling hard to make the plant operate as the management had decided to shut the plant down if the productivity of the plant doesn t increase. Adverse impact of this was evident on his personal life as well. Once, as he was thinking hard about the ways to enhance the operations of the plant, he met his college physics professor, Jonah who actually made him think about the real goal behind operating a business. It was then he realized that he had not been paying attention to the most basic question which is yet to be answered-what is the goal? Finally after getting into so much thinking, he realized that the goal of any business is to earn money through increased throughput with reduced inventory and operating expenses. Then he started devising ways to increase the productivity of the plant. He learnt about the theory of constraints and the impact of a bottleneck on the overall production process when he was on a camping trip with his son. He observed that the scout troop is having a lesser speed due to a single boy who was not able to walk so fast. That boy acted as a bottleneck to the system. After juggling with the figures, Alex was sure that it is the bottleneck in the system which causes the increased cost to the organization. The robots installed to increase the productivity were also not fulfilling its objective and rather resulted in increased inventory. He realized that he is incapable of increasing the capacity of the bottleneck machine. However, he can surely enhance the flow of the system so that the required demand can be met by offloading excess work load to the other machines in the plant and employing additional bottleneck capacity which will reduce the workload for the bottleneck and the throughput time can be reduced. He also put a quality control before the bottleneck so that the products which do not meet the quality standards may not be worked upon further by the bottleneck. Tagging system was introduced in which red tags were used to prioritize the backlogged inventories and green tags were used for others. This further helped in decreasing the inventory and the overall cost. These measures impacted the efficiency of the plant greatly. The plant had started to make profits because of the change in scale. It was then Alex got promoted and became the division head. He was also successful in saving the plant from shutting up. Problems like workload to non bottleneck machines did occur, but Alex was able to deal with it quickly. In the end a five step process of solving the problems, which might occur while implementing theory of constraints, was discussed.