The Goal: A Process of Ongoing Improvement

The Goal: A Process of Ongoing Improvement

by

Eliyahu M. Goldratt and Jeff Cox

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The Goal: A Process of Ongoing Improvement: Chapter 19 Summary & Analysis

Summary
Analysis
Alex eats dinner with his mother, Dave, and Sharon. Noticing that Alex is distressed, his mother encourages him to share his problems with the family. Alex tells her that some of the problems at the plant feel unsolvable. Dave is shocked to hear that what they learned on the hike didn’t easily apply to the plant. Alex’s mother tells him that he should talk to Jonah again, and Alex says that he is about to go pick up Jonah from the airport.
Although Alex’s life still revolves around his work, sharing his work problems with his mother and children at least allows them to understand what occupies so much of his mind. As such, this represents a small step forward in Alex maintaining a healthier relationship with his family.
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After Alex told Jonah of his new confusion about the bottlenecks over the phone, Jonah offered to come see the plant for himself. Alex picks him up from the airport and drives him to the plant, explaining their new problems on the way. When Jonah arrives at the plant, Bob, Stacey, Ralph, and Lou meet him. Bob states that they still need a way to increase their throughput without raising their operational expense. They need more capacity. Jonah assures them that if they can raise the capacity of the bottlenecks, they’ll raise the capacity of the entire plant. When the group of them goes to see the first bottleneck, the NCX-10, they see that it is not running, since the union workers who operate it are on their break.
Although the bottlenecks have limited maximum capacity, the fact that Alex and his staff find the NCX-10 idle indicates that it has capacity which is currently not being used. If the speed and capacity of the bottlenecks sets the capacity for the entire plant, any wasted bottleneck capacity necessarily means that the plant is producing and profiting less than it could. The NCX-10 sits idle because workers are on a legally-required break, suggesting that some loss of capacity occurs for legitimate reasons.
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Jonah advises that the workers should take their lunch break while the NCX-10 is in the middle of a batch, still running on its own. He states that while any non-bottleneck machine may have some idle time, bottleneck machines need to be running at full capacity all the time, since that determines how fast everything else in the system move. He asks if there are other machines that perform the same function as the NCX-10, and Ralph tells him there used to be, but they were less efficient, so the plant sold them. Looking at the second bottleneck, the heat-treating machine, they see that there is a large stack of parts—about 1,000 pieces—waiting their turn to be treated.
Jonah’s assertion that the bottleneck machines should always be running suggests that bottlenecks are the only place where individual efficiency truly matters, since it effects the productivity, and thus the throughput, of the entire system. Ralph’s admission that the sold the less-efficient counterparts to the NCX-10 suggests that in the plant’s obsession with individual efficiencies, it actually reduced its bottlenecks’ capacity and thus reduced its own throughput, demonstrating the folly of prioritizing efficiency.
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Jonah asks if they could outsource some of the heat-treating work to vendors in town, and Stacey says that they could, though it would cost some money. Sensing that they do not understand, Jonah calculates that if each of those parts in the stack delays shipping a product, and if each of those products sell for $1,000, then the total value of that delay is $1 million. This realization shocks Alex. Jonah asks to see where they do quality inspection for bottleneck parts. He sees that they do quality inspection only after products go through the heat-treating machine, meaning that they are sending some defective units through the bottleneck. To save time and money, Jonah recommends they only heat-treat after they do quality control, so that no valuable space in the bottleneck will be occupied by faulty parts.
Jonah asserts that any delay on a bottleneck not only costs the operating cost of the machine, but also the lost value of any products not created due to that delay, since the bottleneck holds up the entire system. Jonah’s suggestion about outsourcing heat-treating and moving quality control suggests that even when a bottleneck’s capacity cannot be increased on its own, there may be other ways for a manager to increase its efficiency, such as ensuring that only pieces that are absolutely necessary pass through the bottlenecks.
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Jonah explains that although Alex and his staff would normally calculate the operating expense of each bottleneck machine based on its power and labor requirements, coming out to $20 to $30 an hour, their basic assumptions are wrong. Because the bottlenecks dictate the pace of the entire plant, they should calculate their operating expense as the total monthly cost of the plant ($1.6 million) divided by the maximum number of hours the bottlenecks can run (585 hours). With this system of measurement, each hour of delay on the bottlenecks costs $2,735, since overall production is delayed—not just the bottlenecks alone. This makes it critical not to lose any operating time on the bottlenecks at all.
Jonah’s recalculated operating costs for the bottleneck machines demonstrates that the Theory of Constraints requires one to rethink the metrics they use to measure productivity, as well as their logistical process. Thus, the Theory of Constraints that Goldratt proposes through his novel is an entirely new way to approach measuring and operating complex systems which breaks traditional ideas about how such systems operate and reveals the true cost of poor business practices.
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The next morning, Alex eats breakfast with his mother and the kids. They tell him that Julie called again last night and still wouldn’t say where she was, but they heard violin music in the background, which Julie’s dad likes to listen to. Alex decides that he’ll call Julie’s parents later.
Alex’s efforts to locate Julie demonstrate that, despite his over-commitment to his work, he does want to save their marriage. That is, his problem is not that he does not care about Julie, but rather that he does not know how to manage her needs alongside his career.
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