Book Summary The Goal Processes and Operations

The Goal Processes and Operations Key Idea The main message of the book is that the proper way to manage any operation, whether it’s a manufacturing plant or a web design shop or a clothing store, is to: 1) Identify what needs to be changed. 2) Identify what it should be changed to. 3) Identify how to execute the change. Summary This story is based around the life of Alex Rogo, Plant Manager for Uniware, which is a division of Unico. After some very upsetting customer approaches Alex’s boss, Bill Peach, is given a challenge 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, and so on. With very few hopes, Alex foresees the inevitable until he remembers his conversation with Jonah, a physicist who Alex knew from a previous job. It is not until Alex’s job is in at risk 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 considered productive and any action not moving towards the goal is nonproductive. Alex was unsure of such a simple answer and decided to contact Jonah to continue the search for more answers. 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 output. This would include such items as depreciation of a machine, lubricating oil, scraps, etc. Jonah explains to Alex that a plant that is continuously productive is 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 demonstrate a balanced line of production. Jonah leaves him to think about the understanding of two things: what are the dependent events and statistical fluctuations in his plant. 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. Therefore, inventory moves very slowly because of statistical fluctuations. In the end, this is where Alex began his search inside the plant. After arriving back at work, he and the crew began 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 began their search for solving them. After following some 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 got promoted to Bill Peach’s position. 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 think that the author is telling the audience that there must be a balance between these two lives. It is important for both to be in harmony because eventually they will flow in and out of each environment. Lessons Learned What I enjoyed the most about this book was the layout. It consisted of telling a story about Alex in a novel form, which included dialog, plot, etc. By making the book 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. What I learned about this book is that you should not let your business and processes control you and lead you. Instead, you should be constantly criticizing and reviewing your processes and not settling for any bottlenecks or sticking points. Another major theme in the novel is that the point of a business is to make money, and more specifically, to make a profit. The way to do this is not to create as much as possible, but instead to run as efficiently as possible. That might require making drastic changes to common practices, things that on paper seem like they will hurt the bottom line. For example, in the book, they discover they’re running their manufacturing plant at 80% capacity. That means 20% of the time, they have machines and people just sitting there doing nothing. So they tell their sales manager to get them 20% more work. He says that they can only get it from a client who wants it at below cost, so they would lose money. But Alex convinces him that they only have materials as costs, as they have people doing nothing currently who are getting paid, so their time is not an additional expense. I thought this was very interesting. Application This book would be ideal for anyone 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.