The Goal

The beginning of the book starts off with Alex Rogo\'s plant having major problems and his boss gets on his case about it. His boss, Peach, tells him he has three months to fix these problems or they would be shut down. Rogo has to find a way to improve efficiency in his plant and he is at a loss of how to do that. He thinks that because the plant has new robots that this automatically improves efficiency, right?

Peach calls a special meeting at the headquarters for all the plant managers. Rogo does not know what the meeting is about ahead of time, but assumes it will be bad news about how the division\'s performance is horrible this first quarter. Rogo see Nathan Selwin in the parking garage; he informs Rogo that if performance isn\'t improved by the end of the year, then the whole division goes up for sale. Rogo ends up leaving the meeting early because he realizes that this meeting is pointless and not helping his plant be more productive.

A couple weeks before this meeting, Alex had run into an old friend, Jonah, in an airport lounge. He begins telling Jonah about his plant and the new robots, etc. Jonah does not seem impressed, but asks Alex some important questions such as:

„h Have they really increased productivity at your plant?

„h Was your plant able to ship even one more product per day as a result of what happened in the department where you installed the robots?

„h Did you fire anyone?

„h Did your inventories go down?

Jonah\'s point was that if inventories have not gone down, employee expense was mot reduce, the plant is not selling more products, etc. then the robots have not increased the plant\'s productivity. Jonah tells him that there is only one goal, no matter what the company. Jonah asks Alex what the goal is and Alex does not know.

After Alex leaves the meeting, he remembers this conversation with Jonah and it makes him think a lot more about the situation his plant is in.

The following enable a company to make money:

„h cost-effective purchasing

„h employing good people

„h high technology

„h producing products

„h producing quality goods

„h selling quality products

„h capturing market share

Alex finally figures out what The Goal is (I don\'t know how it took him so long!!)

to make money (which is caused by being productive). To accomplish the goal of making money, there are three things that need to be increased simultaneously:

1. Net profit

2. Return on investment (ROI)

3. Cash flow

Family issues:

I believe it is important for people to be able to have a separate family and work life. It becomes difficult during stressful times at work because then it will most likely effect the family time and life at home. It is important that workers learn to manage time enough to see their family. Stress at work causes neglection of family. This then causes more tension at home to add to the already stressed out worker - one more thing to deal with. Alex definitely needs to learn how to treat his wife and kids better. He should refrain from making commitments

(i.e. coming home from dinner or a date with his wife) if he is that stressed out at work and will not follow through with them.

There are certain measurements that can be used to know if the plant is helping the company. The following are three measurements that express the goal of making money, but permit you to develop operational rules for running a plant:

1. Throughput: the rate at which the system generates money through sales.

2. Inventory: all the money that the system has invested in purchasing things it intends to sell.

3. Operational expense: all the money the system spends in order to turn inventory into throughput.

Everything in the plant is covered by these three measurements. A company must increase throughput while simultaneously reducing both inventory and operational expenses.

All three of the definitions that Jonah gave Alex contain the word money. Alex described it as one for incoming money, money still stuck inside, and money going out. The market determines the value of the product. Also, the price has to be greater than the investment in inventory and total operational expense per unit.

Alex talks with Jonah again and decides to fly to NY to meet with Jonah. Jonah only has time to talk over breakfast with Alex. Some of the advice Jonah gives this time includes the following:

„h A plant in which everyone is working all the time is very inefficient

„h The only way to create excess inventories (they have TONS at the plant) is \"by having excess manpower\"

„h He asks Rogo how he should manage the capacity of his plant

„h Balanced plant:where the capacity of each and every resource is balanced exactly with demand from the market. No plant is actually a balanced plant: the closer you come to a balanced plant, the closer you are to bankruptcy.

Mathematical proof that shows when capacity is trimmed exactly to marketing demands, no more and no less, throughput goes down and inventory goes through the roof (makes carrying costs/operational expense go up).

There are two phenomena in every plant. The first is dependent events which is an event or series of events must take place before another can begin. The second, statistical fluctuation, is the variation from one instance to the next. These fluctuations average out over a period of time. Most of the factors critical to running the plant successfully cannot be determined precisely ahead of time.

Jonah leaves without giving Alex any more info - Jonah tells him that he has to gain understanding for himself in order to make the rules work. This last minute trip to NY causes problems once again with Julie. When Alex gets home, he tries to straighten out things with his wife.

Alex\'s son, Dave, wakes him up early Saturday morning because he is supposed to help with