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The Goal by Eliyahu M. Goldratt Book Review



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The Goal by Eliyahu M. Goldratt Book Review 


Details of The Goal by Eliyahu M. Goldratt Book

  • Book Name: The Goal
  • Authors: Eliyahu M. Goldratt
  • Pages: 119
  • Genre: Business
  • Publish Date: Jan 1, 1984
  • Language: English
  • Format: PDF, ePub, Mobi
  • Price: Free

Book Review:


The Goal: A Process of Ongoing Improvement by L. Jaha M. Goldratt. "The Goal" is a business novel that L.L.L. Johar used to introduce the Theory of Constraints, a sort of meta-theory for business and life, really, that you can use to advance the output of just about any system. 

It tells a story of Alex Rogo, a plant manager who has three months to turn his plant around or else it will shut down, and his hundreds of employees will be out of work. He meets a wise business mentor who exposes him to the Theory of Constraints piece by piece throughout the novel so that the reader can see it being applied and how it helps.

The book discusses manufacturing, but the theory can be applied anywhere. You'll start seeing it everywhere after you read the book. The written audio summary can be found on the website BestBookBits.com. So without further ado, I bring the book summary of "The Goal."

You could think you're running an efficient system, but your thinking might be wrong. If you didn't increase sales throughput or decrease cost, you didn't increase productivity. 

If you don't know what the real goal is, which you could very well be wrong about, then you can't figure out what to do to reach the goal. And the goal of any business is to make money. Keeping people working and making money aren't the same thing. Just because you're paying for someone doesn't mean they should be busy all the time. It could be harmful.

The goal reframed: increase throughput while simultaneously reducing both inventory and operating expense. Not to do them in isolation, but to do them all together. If you keep everyone and everything working at full capacity, you'll naturally build up inventory by creating excess work. A plant where everyone is working all the time is very inefficient.

You can't have a balanced plant without doing excess work because of dependent events and statistical fluctuations. You naturally run into bottlenecks in the system, kind of like the fattest kid on a hike slowing everyone down. 

The whole system only moves as fast as the bottleneck. So it makes sense to focus on increasing the bottleneck's capacity and trying the rest of the system's right to the right of the bottleneck.

A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it, and a non-bottleneck is any resource whose capacity is greater than the demand placed on it. 

To optimize the system, make the flow through the bottleneck equal to demand from the market or a tiny bit less than the demand from the market. In most cases, you'll have the capacity that is hidden from you because some of your thinking is incorrect.

The first thing you should always do is to see exactly how the bottlenecks are currently operating and if you can change how they're used to increase their capacity before simply hiring or buying more tools. 

If you lose even one hour on the bottleneck, you have lost it forever. You can't get it back somewhere else in the system. Your throughput for the entire system will be longer by whatever amount the bottleneck produces in that time.

Lost time on the bottleneck is lost throughput, which means you've lost the total output of the whole system. If your whole plant owes a thousand dollars an hour, then an hour lost on the bottleneck is a thousand lost. 

Make sure its time isn't wasted by sitting idle and not getting used during some break. For it to be spending time on output that's already defective, making it work on something you don't need, you can increase the capacity of the bottleneck by only making it work on what will increase throughput today.

Taking some of the load off the bottleneck and giving it to the non-bottleneck when you make a non-bottleneck do more work than the bottleneck, you create excess inventory and thus lose money. What you have to do is to figure out how to release materials at the start of the process exactly according to the capacity of the bottleneck.

If you reduce your batch size, you increase throughput by reducing inventory held and reducing the amount of cash tied up at any one time. It also lets you move faster since the gaps will be smaller since the time to process a batch will be lowered as well. And your total lead time on any project condenses.

Three simple questions: What to change? What to change to? And how to cause the change?

Five focusing steps: Identify the system's constraint. Number two, decide how to exploit the system's constraint. Number three, subordinate everything else to the above decisions. Number four, elevate the system's constraint. And five, if even the previous steps a constraint has been broken, go back to step one. But do not allow inertia to cause a system constraint.




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