Wednesday, 13 May 2009

Goal. A Process of Constant Improvement. Review.

The Goal is a management cum novel styled book by Goldratt. In the book he brings forth the idea of arriving a solution to a problem by adhering to scientific method. The method shall entail a series of questions about the existing setup and then arriving at a near-best solution. In the book he very clearly shuns the idea of absolute truths and advises to practice science as process of discovering better truths rather than an absolute truth.

In the book he goes about narrating an issue faced by a Production manager at his plant and how he , with the help of others , through the process of constant improvement arrives at a better production capacity for his plant, and thus saves his plant from closure.

Towards this process of improvement the very first question which has to be identified is, "What is the Goal?" Once that is identified the next set of action shall be targeted towards identifying the factors that prohibit the realization of the Goal.
In the book, related to a manufacturing plant he identifies that the Goal of plant is to make money , and then goes about to identify the inhibitors for that . Towards explaining it he proffers new definitions for the very basic terms used in a production industry.

Throughput- Rate at which the system generates money through sales.
Inventory- Inventory is all the money that the system has invested in purchasing things which it intends to sell
Operating Expense - Operational expense is all the money the system spends in order to turn inventory into throughput.

Along with that he also explain craftily the concept of bottlenecks controlling the throughput and thus sales of an organization. He derives the inferences, by the scientific process of asking the questions and finding the right answers for them. Explaining it he derives the concept of having the slowest operation at the beginning while the most efficient and non-bottle necks at the end. This would minimize the operating cost and inventory as well.

As the solution of deciding the position of a bottleneck may not be possible in a practical scenario, he advises to improve upon the efficiency of the bottlenecks . The efficiency or the rate at which the system releases result would be decided by the efficiency of the bottleneck . Explaining this through a troop scenario, he establishes a constraint link between the bottleneck in the middle and leader in front and thereby achieving the minimum time to move the entire system together. Explaining the theory of these constraints he also elicits the inefficiency of a system generated by the extra work done on non-bottlenecks and thereby positing the maxim that an organization that works all time is non efficient and arrives at a general rule :
the level of utilization of a non-bottleneck is not determined by its own potential, but by some other constraint in the system.
In the entire book he stresses upon the fact of scientific temper of questioning and arriving at a solution. The motif being bottlenecks. In the end he formulates a general rule , but leaves it open to the reader to improve upon it.

1. IDENTIFY the system's constraint(s).
2. Decide how to EXPLOIT the system's constraint(s).
3. SUBORDINATE everything else to the above decision.
4. ELEVATE the system's constraint(s).
5. WARNING!!!! If in the previous steps a constraint has been broken, go back to step 1, but do not allow INERTIA to cause a system's constraint.

The narrative style of the book is very captive . The process of constant improvement is what the book's title says, and adheres to all through the book.

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