The Goal: A Process of ongoing Improvement

Jennifer Purifoy

April 30, 2001

Page 1 of 3

Executive Summary for

The Goal: A Process of Ongoing Improvement

by Eliyahu M. Goldratt

The heart of this story is based around the life of Alex Rogo, Plant Manager for

Uniware a division of Unico. After a very upset customer approaches Alex's boss,

Bill Peach, he is given an ultimatum to turn the plant around in three months. Due

to the limited amount of time available, there are not many outside tools available

such as consultants, surveys, etc. With very few hopes, Alex foresees the

inevitable until he remembers his conversation with Jonah, a physicist Alex knew

from a previous job.

The Goal:

It is not until Alex's job is in jeopardy that he decides to devour into his

conversation with Jonah. During the conversation, Jonah asks him several

questions to analyze his company's situation. The conversation leads ultimately

to the question, "What is the goal of any business?" After rethinking his

conversation, Alex realizes that the goal of any business is to make money.

Furthermore, if the goal is to make money any action toward this goal is consider

productive and any action not moving towards the goal is nonproductive. Alex

unsure of such a simple answer decides to contact Jonah to continue the search

for more answers.

Measurements:

Once Alex contacts Jonah they define the following measurements to define the

success of any plant's production:

1. Throughout = rate that the system is used to generate money through

sales.

This measurement would consist of what a product would be worth when

sold at market value after deducting operational expense and inventory.

2. Inventory = all the money invested in purchasing items that will be sold.

This could include the remains of their machines after being used toward

the investment.

3. Operational expense = all the money used to turn inventory into

throughput.

This would include such items as depreciation of a machine, lubricating

oil, scraps, etc.

Balancing a Production Line:

Jonah explains to Alex that a plant that is continuously productive in considered

inefficient. He further explains that continuous production will result in high

absenteeism, poor quality and employee turnover. Based on this, he would need

to reduce operational expense and inventory to improve throughput to

Jennifer Purifoy

April 30, 2001

Page 2 of 3

demonstrate a balanced line of production. Jonah leaves him to ponder the

understanding of two things: what are the dependent events and statistical

fluctuations in his plant.

Bottlenecks

During a hiking trip with Alex's son, he produces a game for a few of the kids to

demonstrate an ideal balance line of production. He does this by setting up

dependents and uses a die to measure the statistical fluctuations. At the end of

the game, he concluded that the bottleneck's speed of production is what

determines the speed of the other dependents. Hence, inventory moves very

slow because of statistical fluctuations. This would eventually result in huge

bottlenecks over time. In the end, this is where Alex begins his search inside the

plant.

Upon arriving back at work, him and the crew begin their search for the

bottlenecks. They identify one of the robots, NCX-10, and the heat treatment

area as the source of the bottlenecks. Once identified, they begin their search for

solving them. These are the steps they proceeded with to solve the bottleneck

issue:

NCX-10:

* Have two employees dedicated to the setup of the robot -- this will help

ensure that the machine will be continuously running.

* Additionally, these employees take their breaks while the machine is working

since