Jennifer Purifoy

April 30, 2001

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

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Jennifer Purifoy
April 30, 2001
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 they are only needed for setup of the next batch.
• Continue use of the older machines that the NCX-10 was supposed to
replace.
• Do not produce parts for inventory — produce only what is in demand (via an
order from a customer).
• Produce smaller batches to increase productivity for the whole process.

Heat Treatment:
• Perform quality control testing before going into the bottleneck.
• Hire outside vendors to assist in heat treat.
• Produce smaller batches to increase productivity for the whole process.
• Combine batches that require the same temperature.

With all of these changes however, one thing remains constant: an hour lost at a
bottleneck is an hour lost at the whole system. Therefore, it is extremely
important to keep the bottleneck moving at all times.

Based on these few simple steps they significantly increased production by 12%
during the first two months and 20% in the third month. Based on these
increases, Alex saves the plant and his promoted to Bill Peach’s position.

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Jennifer Purifoy
April 30, 2001
Marriage and Beyond:
Besides the ongoing theme of saving the plant, there is an underlying story about
Alex’s personal life. In the beginning Alex’s wife, Julie, and him are constantly
arguing about Alex working late in attempts of saving the plant which flows over
into not spending any time with his family. Within the first 100 pages of the book,
his wife leaves him, after being exhausted of all attempts to save their marriage.
However, during his search for reclaiming the plant he does the same with his
marriage. I believe that the author is stating to the audience that there must be a
balance between these two lives. It is important for both to be in harmony
because ultimately they will flow in and out of each environment.

Overall Review:
Overall the book was excellent and easy read. This book would be ideal for any
one interested in simplifying ways to improving any process - whether it is
manufacturing or service oriented. These back to basics principles, help break
down what has become "common practice". What I enjoyed about this book most
of all, was the layout. The layout consisted of telling a story about Alex in a novel
form, which included dialog, plot, etc. By laying it out in this way it broke the
specifics down for a layperson, Alex. After all, Alex represents the average
person - job going down the tube and marriage shortly following it. The source of
the problem the whole time was following the rules that were and are
continuously engraved into us each day.

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