The Goal Summary

A Review and Analysis of The Goal: Looking Deeper into the Manufacturing and Business Processes Presented

At first glance, Eliyahu Goldratt’s best-selling business novel, The Goal, may seem as merely a rudimentary look and introduction to the effectiveness of constraint modeled manufacturing processes; however, a thorough analysis of the principles presented through protagonist Alex Rogo’s ongoing plant improvement, reveal otherwise. The novel essentially guides the reader through a three step process that consists of: an identification of the root problems and failures of Al’s UniCo plant at the beginning, the principles applied and measures taken to ensure the profitability and sustainability of his plant, and the steps taken to
foster future success which will also come with reward. As a result, Goldratt demonstrates that the implementation of these principles of constraints is truly “a process of ongoing improvement”, and one that is essential to the modern manufacturing business. When the reader is first acquainted with Mr.
Alex Rogo, he is a troubled plant manager filled with anxiety about the future of his plant, and as a direct result, the future of his family and relationship with wife Julie. He has worked his way up in UniCo, and has carried much of the knowledge and preconceived notions about proper manufacturing to his current position. The state of affairs in the plant is nothing short of catastrophic, with inventory costs going through the roof (almost literally) and late orders piling up at an exponential rate. Once given a mandate from his boss Bill Peach, his world is thrown upside down. Rogo’s theories on manufacturing at this point are clearly grounded in efficiencies and measurements based on arbitrary calculations, and a stubborn reliance on robots and new technology, which ironically, foster a lower overall level of productivity. Though with all of Rogo’s theories on why and how his plant is not succeeding, he cannot seem to find the right answers to his questions in order to save the plant. All of his effort is put towards figuring out the ways in which he went wrong, rather than identifying the actual goal of his plant and UniCo as a whole. The first true realization of the plant’s error in its’ focus and goal is brought to Al’s attention when Bob, the plant controller, is forced to spend all of the factory’s energy and manpower on the shipment of one late order. Goldratt uses this as an example of an error in the
management of constraints, and therefore, it is essentially the first lesson presented in the novel with concern to the theory of constraints. The reader is shown early on that a focus on flow and inventory management are vital to the true efficiency and operation power of a plant, and that ultimately, a supply chain is only as strong as its’ weakest link. Emphasis is placed not on the long term variables to be maintained, but rather on the shifting and managing of operational flow in order to reduce lead time and increase profit. There is less emphasis placed on the reduction of cost, and more weight given to the money brought in on both lower inventory and reductions of time. Alex Rogo doesn’t truly begin to grip these ideas until both his motivation and thought process are sparked by a former physics teacher, Jonah. Jonah effectively becomes Al’s business consultant for the coming months in which Alex must turn his plant around towards profitability. He begins by forming the essential goal and allowing Rogo to really flesh it out amongst himself and his staff. The goal which Jonah presents is quite simple, to make money for the plant by careful management of the three operational rules, which “are throughput, inventory, and operational expense” (Goldratt and Cox 60). This one idea is essential to the rest of the manufacturing processes presented throughout the novel. Throughput is how the plant will make money through the sale of finished goods/resources. Inventory refers to all of the things purchased which the plant intends to sell. Operational expense is simply all of the money/resources spent in order to turn the inventory into throughput. Further into the novel, all of these factors are interrelated by two main factors, these being dependency and statistical fluctuations. The manufacturing processes described are broken down and explained in terms of “bottleneck” operations, and “non-bottleneck” operations. The concept presented is that in order for some processes to continue and products be produced, the necessary preceding products and components must be finished first. The idea expressed here is dependency. The priority is given to operations whose capacity must be full and therefore whose components will be needed at final assembly in advance of those other “non-bottleneck” operations. Material flow is another facet of this theory of constraints which comes into play with the emphasis on dependency. Statistical fluctuations will impact heavily on the points at which certain materials need to be released and which ones need to be held. In this process of manufacturing provided, it is of paramount importance that work-in-progress inventories be cut back, which could also mean an increase in idle time. Goldratt spends a great deal of time focusing on this particular issue throughout the period of the novel where Alex begins to bring his plant out of the brink of a possible shutdown. A hick up occurs where Al cannot understand why inventory costs have gone up, even with the implementation of their new system. The author uses this instance to explain that efficiency is not entirely built on the usage of employees, but rather on the activation, and most importantly, utilization of their product to achieve a finished product, and ergo, a sale. These principles established by Goldratt through his literary analyst character, Jonah, and fully realized by Alex Rogo and his staff, are cemented through the rewards reaped at the end of the novel, and more importantly, the process laid out for ongoing improvement. In some ways, Al’s success in bringing his family back together and rekindling the relationship with Julie present a good organic representation of this goal that has been laid out. Even though constraints on his marriage and family may persist, by optimizing their influence on his life and using “bottleneck” situations to foster development and growth in more of a metaphysical, than monetary sense, he can succeed in his goal. Once awarded the position of division head/manager, Alex realizes that he must apply these manufacturing principles to the entire system in order to remain successful. When sitting down with Lou, Bob, and Stacey, he begins by laying out the vision that “improvement for us is not so much to reduce costs but to increase throughput” (Goldratt and Cox 298). There is a switch of the “scale of importance” and a “very important lesson” is learned about the nature of manufacturing to increase throughput and achieve The Goal (Goldratt and Cox 298). A process is finally laid down which fundamentally focuses on “bottlenecks”/constraints. The list consists of basically identifying these constraints and adjusting to deal with them, making them priority number one, and figuring out how to use them in order to make money. As Alex begins to understand the vastness of the task in which he has adopted as division manager, he realizes that it will truly be “a process of ongoing improvement”, and one that must require at sometimes more general applications of these processes. These being, the ability to answer three simple fundamental questions: “What to change?, what to change to?, and how to cause the change?” (Goldratt and Cox 337). In conclusion, Goldratt presents some valuable and important manufacturing, business, and general life insights through his novel.
The validity and applicable nature of what he presents through his theory of constraints is key in the analysis and approach to the modern manufacturing and business model. If a plant manager were to seek out a guide for valuable manufacturing principles, there would be much to find in The Goal. One of the most important facets of Goldratt’s approach is his adherence to the ever present importance of the baseline. In other words, how much product is a company producing and what does this mean in terms of profit. Measurements and cost reduction principles can be applied all day, but if money is not being made and inventory lies dormant, a manufacturing operation will slowly
die. If one were to try and isolate some of the most vital features of the manufacturing processes described with relation to the operation of a plant now, in 2011, reduction of lead time would undoubtedly be among them. Producers and consumers operate in a business environment where the flow of information and products must be fast and quality must be top notch. Deadlines, and the swiftness with which they are reached, have become increasingly more important to consumers. This is of paramount importance when factoring in the recent competitive nature of offshore markets, and the outsourcing of labor to foreign providers. Managers must conduct business and run manufacturing operations in a world where little thought is given to extenuating circumstances. For someone running a modern manufacturing operation, the ideas and processes presented in this novel and theory of constraints are a necessity, not merely a benefit. When beginning an operation, any manager would be wise to remember the identification of constraint and non-constraint processes.

Works Cited
Goldratt, Eliyahu M., and Jeff Cox. The Goal a Process of Ongoing Improvement. 3rd ed. Great Barrington, MA: North River, 2004. Print. pp. 60, 298, 337