The Goal by Eliyahu Goldratt - Book Report/Review Example

the goal is to make money. I feel the way we follow to make money shouldn't be violating the business ethics. In my opinion, the money generated by business is essential for firm's survival, growth, social responsibility. As mentioned in the novel, the plant manager character in the novel Alex Rogo, and his division was facing financial crisis. His supervisor Bill Peach had warned him to shut-down the plant if they don't show improvement of the plant in three months time. Alex took this as a challenge to prove himself and his plant to prove in three months.

Surprisingly, Alex remembers his physics professor Jonah, who finally helped Alex with practical suggestions in a Socratic way. The measurements of expressing the goal of making money are namely: throughput, inventory and operational expense. The rate at which the system generates money through sales is throughput. This is the money coming in the system. The money invested in purchasing things is called inventory (Goldratt 66). Inventory is the money currently inside the system. The money spent to turn inventory into throughput is called operational expense (Goldratt 67).

All these definitions are related to money, the goal of any business firm. If we increase throughput, and reduce both inventory as well as operating expense, this leads to profit. So the goal can be understood in terms of relation of these terms. The order of preference among these measurements is throughput comes first, then comes inventory, later comes operating expenses (Goldratt 283).Alex and his team followed following steps to improve the plant:1. Identification of the system's bottlenecks/ system's constraints 2.

Exploitation of the bottlenecks/system's constraints to perform and subordinate everything else to the above decision3. Elevate the system's bottlenecks/system's constraint If, in a previous step, a bottleneck has been broken go back to step 1 (Goldratt 307).1. Identification of the system's bottlenecks/ system's constraints "A bottleneck is any resource whose capacity is equal to or less than the demand placed upon it. And a non-bottleneck is any resource whose capacity is greater than the demand placed on it" (Goldratt 145).

Alex and his team identified the bottlenecks by commonsense approach. They analyzed the system identified by the huge pile of work-in-process sitting in front of them. They identified the robotic machine NCX10 and the oven, the heat-treating furnace as the bottlenecks of the plant. 2. Exploitation of the bottlenecks/system's constraints to perform and subordinate everything else to the above decisionThey realized it is not good to waste time for the bottlenecks. Bottlenecks were made to contribute to the throughput by making them work during lunch hours i.e. eliminating idle time, eliminating defective parts before it reaches the bottlenecks using quality check, making the bottlenecks work on only the relevant parts which directly contribute to the throughput, prioritization with red and green tags, if got two batches of the same color, then work on the materials with the lowest number, halving the batch size.3. Elevate the system's bottlenecks/system's constraint(s)This was done by bringing back the substitute machine for the robot to accelerate the process and also less "effective" routing (Goldratt 307).

The Theory of ConstraintsThe Theory of Con