The Goal

In a situation like Alex Rogo's, the Plant Manager for the Bearington Division of UniCo Corporation, who has been given three months by his boss to either show a profit or face shutdown, one can be tempted to consider an easy option - quit now and look for another job while your reputation is still intact. The temptations for Alex to consider this option are many - his plant has not shown any profit for quite some time, orders are often shipped months late, the inventory position is so bad that the aisles of the plant floor are crammed with in-process parts, almost all jobs are designated as "rush" and upon all this his marriage is on the precipe because he has been spending all his time in the plant.

However, Alex decides to take the problems head on. In this quest, he is helped by his old Physics professor, Jonah. Rather than giving him ready made answers like a consultant, Jonah forces Alex to think by confronting him with pointed questions designed to help him bring out his intuitive skills. When Alex tells Jonah how he was able to increase productivity by thirty-six percent in one department alone with the use of robots, Jonah points it out to Alex how the robots could not possibly have contributed to the company's goal - and that in fact in terms of its overall goal, Alex must actually be running a very unproductive plant. Prodded on by Jonah, Alex comes to the conclusion that as a first step, he first and foremost has to ensure that his plant makes money.

With a continuous barrage of questions from his teacher, Alex and his team learn how to define measurements so that they better reflect the money making goal of a manufacturing organization. Proceeding systematically, they discover the facts which point to how the bottleneck machine in their plant, or in any plant for that matter, determines the throughput and that the capacity of the entire plant is actually equal to the capacity of the bottleneck. They then devise a system whereby the bottleneck (a machine called NCX-10, in this case ) is kept busy for the maximum amount of time possible - this they do by first ensuring that the NCX-10 is kept running even during lunch breaks and later on by ensuring an adequate buffer in front of the bottleneck so that it would not be idle for want of parts. In the meantime they also save time on another suspected bottleneck, the heat treatment, by relocating the downstream quality inspection process to before the heat treatment so that defective parts would not waste the bottleneck resource.

After about a month during which they make other changes like flagging of bottleneck parts, forming dedicated crews for heat treatment and the NCX-10, outsourcing some heat treatment jobs to outside vendors and making engineering changes to some parts, Alex and his team manage to ship a record number of customer orders. However they then perceive a new problem in which their bottlenecks have spread. Jonah steps in again at this point and shows them their erroneous policy of continuously releasing material just to keep the non-bottleneck machines busy all the time. This policy has caused an explosion of the work-in-process. To correct this situation, they work out how much of new material to release so that there is only about a few days of inventory in front of the bottlenecks even though this means that non-bottleneck machines would remain idle at times. Jonah assures them that this is perfectly acceptable and makes sense because ultimately only the bottleneck machine would define their plant throughput.

After another good showing, Alex is assured by his boss that if he can show a further fifteen percent increase in his bottom line then the threat of closure of the plant would be withdrawn. Here Alex realizes that he may now