The Goal

The Goal is a management-oriented novel by Dr. Eliyahu M. Goldratt. The plot of the book is Alex Rogo who is a troubled Manager of the Bearington Division of UniCo Corporation with the plant consistently performing badly for a considerable period of time. The parts ordered are not able to meet the deadlines of delivery & delays have run into periods of more than fifty days. At the same time huge piles of inventory lie on the factory floor and finished items too are occupying the storage sheds.

Starting point is “Setting The Goal” i.e. making money. If the goal is to make money, then, an action that moves us toward making money is productive. And an action that takes us away from making money is non-productive. The problem is How to measure that organization is moving towards the “The Goal”. What would be the minimum number of measurements you would need in order to know if we are making money?”. The Goal is to make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow, and that’s the equivalent of saying the goal is to make money.”

The measurements which express the goal of making money perfectly well, and which also permit you to develop operational rules for running your plant are:

·         Throughput: It is the rate at which the system generates money through sales

·         Inventory: It is all the money that the system has invested in purchasing things, which it intends to sell.

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

The Goal is to increase throughput while simultaneously reducing both inventory and operating expense.

Organization must be viewed as a chain. Since the strength of a chain is determined by the weakest link, then the first step to improve an organization must be to identify the weakest link i.e. the bottlenecks. When we deal with throughput, links (departments) & linkages (interaction between departments) of the chain are important. If one link breaks, the chain is broken. The strength of the chain drops to zero. If we strengthen a link that is not the weakest link, it does not improve the strength of chain. Most of the local improvements do not contribute to global improvements

This book is about education. The process of deductive learning is emphasized in the book. Text book style presentation of final conclusion does not prepare us for battles in real life. It is the thinking process which we have to learn. The character of Jonah is particularly impressive. He is a physicist, never worked in industry but can predict the events in most logical manner. This is what education should do. It should empower individuals to stand on his own feet in any situation.