Summary of The Goal- A novel by Eliyahu M. Goldratt

The goal is based on process of ongoing improvement at a production plant, which

covers engineering and production processes, marketing, sales, and interaction with

corporate heads. Unico, which has many divisions located in various towns across

the USA has one at Bearington, managed by Alex Rogo, is not doing too well. Delay

of orders to customers is a common practice and the order of production and

despatch is decided by amount of delay in the orders in the pipeline. The Japanese

firms in the meanwhile are eating into the orders that Unico use to get by being more

efficient. Alex’s plant has not been profitable for some time, and the division

president informs Alex that the Bearington plant will be closed within 3 months

unless there are visible improvements. Alex decides that he will not give up on the

plant because it is in his hometown and he has an increased sense of responsibility

for the plant’s future.

Alex gets in touch with a past professor, named Jonah, who guides Alex toward a

series of steps and continual process of drastic and continual improvement. They

explore and challenge the conventional methods in place despite the barriers from

corporate head quarters and Alex’s sceptical boss. He learns to bridge the gap in

tackling productivity by analyzing bottlenecks or constraints in the overall system,

and not just individual areas within it that had otherwise always been the points of

measure. He soon discovers what seems like common sense is not so common after

all, and that putting into practice the non-conventional shifts can make a major

impact on what he has learned the goal to be- to make money.

Alex and his team recognize the bottlenecks, the areas where capacity doesn’t equal

demand. Some ways to increase capacity at the bottlenecks are not to have any

down time within the bottlenecks, make sure they are only working on quality

products so not to waste time, and relieve the workload by farming some work out to

vendors.

At the heart of Jonah’s business model are three definitions:

1. Throughput: The rate at which the system generates money through sales

2. Inventory: All the money that system has invested in purchasing things which

it intends to sell

3. Operational expense: All the money the system spends in order to turn

inventory into throughput.

Using these definitions, Alex always has a basis to determine if his decisions are

helping the plant move towards the goal. The goal of the plant is to make money,

which is characterized by increasing throughput and decreasing inventory and

operational expense.

He further implements changes at his plant based on the guidance of his new

mentor, Jonah. He learns that in the plant there is a chain of dependent processes

and with those, statistical fluctuations that can occur at any step and cause lags

down the chain. This slows productions and ultimately makes the performance of the

system much worse than the constraint on its own, since other barriers and delays

keep piling up. Alex begins to restructure the thinking of his people and changes the

process to maximize the use of the bottlenecks in his plant, while looking specifically

at the 3 items listed above. This process is known as the Theory of Constraints. This

theory comes into practice in the following 5 steps:

1. Identify the constraint

2. Exploit the constraint (or bottleneck) by keeping it running and maximize its

output as much as possible

3. Subordinate- Get everything to run at a pace that keeps up to the bottleneck,

to avoid inventory jams.

4. Elevate- Increase the throughput of the constraints no matter the costs since

they limit the entire system throughput.

5. Repeat with new constraints. As constraints are improved, new constraints

will emerge, repeat with these next

The story progresses through Alex’s struggles at home and in the plant. Just as in

everyday life, there are several victories followed by setbacks. However, through

hard work and with the use of a skilled team and Jonah’s help, Alex is able to make

the plant the most productive one within the UniWare division. Alex is promoted to

lead the UniWare division as president and is entrusted with implementing Jonah’s

business model throughout the entire division. Alex’s marital life also improves

because he and his spouse resolve their conflicts.