06/03/2013

The Goal (book review)

The Goal: A Process of Ongoing Improvement
Eliyahu M. Goldratt
The North River Press, 1984

My first (public) book review! As you'll understand, I'm a bit nervous. ;-) But let's move on. Why The Goal by Eliyahu Goldratt? A business novel of almost three decennia ago? Because I think it's an important book. First of all to myself. I received it when I started my APICS course, years ago. It motivated me to complete the course which was probably the reason for giving it us. It also introduced me to the world of manufacturing. Secondly, I believe it's an import book because Goldratt learns us to focus on throughput in stead of cost reduction, efficiency, suboptimization or whatever.

The book is about Alex Rogo, a man in trouble, both in business and in relationship. Since six months, he's manager of a poor performing production plant. Everything is late in there. One day, Alex finds his boss telling him to close the plant unless they increase the results dramaticly within three months. Alex and his team start analyzing the situation they're in.

At an airport, Alex meets and old study mate called Jonah who is now a consultant. Alex talks proudly of his work, the efficiencies of robots and the cost decreases he has gained. Jonah asks if the net results are improved and what the goal (!) of the business is. Alex has to admit that overall performance is bad. Before answering all his questions, Jonah has to catch his plane.

During a hike with boy Scouts, including his son Dave, Alex makes an important discovery. On a tight path, the boys are walking one by one. The distance between them diverges as they're walking at different speeds. Alex directs the fastest boy in front of the troop and the slowest, a thick boy with a heavy backpack called Herbie, in the rear. Now the Scouts are not longer slowing down each other. However the lenght of the group extends and the troop will not arrive any sooner. Therefore Alex puts Herbie in front and the fast boys in the rear. As the boys start complaining about Herbie's speed, Alex encourages them to help Herbie speeding up. The boys lighten Herbie's backpack by taking over items to theirs. As a result, the speed of the whole troop increases and they arrive on their camp site in time.

Back at work, Alex discovers there is 'a Herbie' in his plant too. A machine called the NCX-10 seems to be the bottleneck in their production process. They increase the ouput of this workstation by allocating operators permantly to the machine so it will produce continuously. They also add a safety buffer in front of the machine so production will not be interrupted by short of supplies. They also manage to add an old machine similar to the NCX-10. However it produces less then the newer one, it adds up production capacity of the whole plant. By taking these measures, Alex increases the throughput of the plant and the net results according to his instructions. As a reward, Alex is promoted to his boss' job. By applying the new acquired principles, he also tries to save his marriage. Will he succeed here too?

In his book, Goldratt explains his Theory of Contraints (TOC). All processes, not only those in production plants, have a bottleneck. In Alex' plant it's the NCX-10. By resolving the constraint, the throughput will increase. As a result there'll be another bottleneck as there's always one. Then the process of finding and resolving the new bottleneck starts again. Goldratt learns his readers to focus on throughput because this generates revenues. He does so in a captivating and entertaining way. This novel is easy to read.

Back in 1984 Goldratt caused a paradigm shift from cost accounting, which he calls detailed bullsh*t, to throughput accounting. He caught both admiration and aversion as he was not very subtle about his ideas and opinion about management.

By reading the book, I understood how to examine business processes. Therefore I recommend The Goal. Did you read this book? What's your opinion about it?

For those interested: I also reviewed  Critical chain. In this book Goldratt applies the TOC on project management.

Happy reading!

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