Summary of The Goal
Alex Rogo is manager for one of UniCo's production plants. Recently Alex's plant, as well as the others in his division, have been having major problems shipping orders on time. The company has considered closing the plant and has given Alex only three months to make a significant improvement or the plant will be closed and he as well as all of his employees will be without a job. At this point everything seems to be crashing down around him while at a meeting, discussing the future of the division, he recalls a chance encounter with an old acquaintance, a physicist named Jonah. During their discussion Alex discovers that Jonah is currently involved in the science of manufacturing organizations. Intrigued Alex describes the problems he has encountered at his plant, hoping that Jonah may be able to help. Jonah goes on to question Alex as to what the goal of the company is.
The process begins. The first order of business was to determine what the goal of the company was. Different ideas get tossed around such as: cost effective purchasing, high technology, producing quality products, etc. Quickly Alex and his team realize that these are not the goals but only a means of achieving the goal. After careful consideration the team comes up with this as the goal:
To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.
Satisfied with their goal the team must move on to the next step after more help from Jonah. The team must now find a way to increase the throughput while simultaneously decreasing inventory and operational expense. Alex realizes that the huge stockpiles of inventory have built up because they have been running every machine at it's highest possible level. When in actuality the only way to keep inventory low and throughput high is to move materials at a rate no faster than rate at which the bottlenecks can operate. The bottlenecks are the areas (machines) in the plant that are constantly holding back the production of the finished product. The philosophy behind this will become clear in a moment.
Philosophy of Ongoing Improvement
Beneath all of the buzzwords, graphs and charts common sense still reigns supreme. Sometimes it just takes a different point of view to get us to take a step back and look at how wrong we are doing things. Go, Go , Go has always been the motto in the business realm. Reaching the goal should be every organization's objective. It is unfortunate that so many are confused by meeting efficiency standards and never truly grasp the goal, which is to make money. to learn more