The Goal Book Report

1. Introduction:

“The Goal, A Process of Ongoing Improvement (Eliyahu Goldratt and Jeff Cox)”, tells the story of Alex Rogo, a manufacturing plant manager facing serious problems in running his firm effectively to generate revenue and make money. The accumulating problems such as delayed orders, slow moving inventories… reach their peak and he finds himself facing the thread of going out of business with all the negative consequences this fact might induce. All he’s got is the period of three months to turn things around so he saves the plant and the jobs of the employees working in it. In addition to this critical situation at work, Alex is going through a marital crisis; his wife Julie is no longer satisfied with her husband’s situation and

It is simply what the firm is trying to achieve. Once the goal is defined, the company puts action plans and orients its efforts and resources toward its accomplishment. After that, the goal must have measures that will help evaluating the process of completing it and to determine whether it’s realized or not. In this book the goal determined by Alex after being stimulated to thinking by Jonah, is making money and all the action that will lead to making money were classified as productive. The measurements defined were throughput (money generated through sales), inventory (money invested in purchasing material that will serve in production) and operational expenses (money spent to transform inventory to throughput). But these measurements should be considered simultaneously and not in isolation: the aim is to increase throughput while decreasing the two others. As we saw in Ch.2 in the course (Operations and Supply Chain Strategy), operations mission is an essential element of the operation’s strategy. It’s the first element that will drive the others. At InterContinental Hotels Group IHG (the company I work for) the goal is to be number one hotel company for employees, guests and owners. The measurements used are four grouped in a kind of steering wheel: our people, guest experience, responsible business and financial

This was due to operating the machines (especially robots) with no idle time to increase their efficiency while ignoring that inventory, in absence of sales, is sleeping capital and it’s a measurement that should be decreasing and not increasing. That why one of the steps implemented was producing what is demanded, by this way inventory levels went down. Referring back to the course (Ch.7 – Lean thinking and lean systems), this can be related to one lean manufacturing principle which is to produce only what is demanded by the client. This tenet needs replacing the push system with the pull system that is driven by the customer demand; products will be manufactured based on the market demand reducing inventories in a remarkable way. When it comes to services (especially in hotels) things are a little more complicated considering the fact that client expects to be served instantly, that’s why having inventories is a must. However, forecasting the demand helps keeping inventories at their adequate levels without having any