The Goal Summary

Book report on The Goal: A process of ongoing improvement

Anil Kumar Jallepalli

University of Illinois at Springfield Summary of the principles taught in the book
The Goal is a novel by Dr.Eli Goldratt about a plant manager, Alex Rogo. The book is about how Alex turns the plant around into profits in a span of 3 months with the help of his guru Jonah, who was his professor in college. The book starts with Alex (Al) reaching office to know his Division Manager Bill Peach is at the plant to expedite an order, which is past its due date. This isn’t new with the plant and they have almost all their orders late. Bill, after checking on the order and asking Al to make sure the order is shipped on same day. He also informs Al that he

Moreover they piled up the inventory in the plant. The reason this is happening is because of the two machines (heat-treat and NCX 10) that are bottlenecks. Bottlenecks are those which define the throughput of the process. It is the one with least capacity and the process capacity is same as its capacity or throughput. So, we have to increase the capacity of the bottleneck to increase the throughput or capacity of the whole process. The three ways to increase capacity of bottleneck are to avoid downtime at the bottleneck, make sure only quality products go pass bottleneck and outsource or process the excess items at bottleneck at external vendor which can happen

Next challenge was to increase profit percentage by 15 % and Al could not think of more, since all the backlog inventory is no more available to make profits. Only profits he could make from there on is with new orders. Al requests Jhonny Jons to get more orders with marketing and promises to deliver them in four weeks and ends up with six weeks as Jons did not want any risk. With the new changes they could make sure of shipments delivered in time, but the current demand or orders cannot help in making the 15% more profit. Then they get the idea from Johan to cut down the batch size to half or even more. This will help in reducing the inventory, the plant will take the inputs in batches instead of bulk and also run with reduced batch size meaning the work-in-process items or inventory are also reduced. Bottlenecks determine both inventory and throughput. Inventory depends on wait and queue time that is again affected by bottlenecks. But with multiple reduced batch size, the machine set up will be multiple times which seems to increase operational cost as per traditional accounting. But it does not do so, as the labor resources are neither working for additional hours nor any additional labor is