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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Inventory is the money that exists within a business system in the form of equipment, assets, raw material, and so on. Anything that exists as inventory can be sold for money. However, inventory represents a financial burden, since it traps money within a system rather than leaving it available as cash on hand. A manager should keep inventory as low as possible without disrupting their throughput.

Inventory Quotes in The Goal: A Process of Ongoing Improvement

The The Goal: A Process of Ongoing Improvement quotes below are all either spoken by Inventory or refer to Inventory. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
The Importance of Goal-Setting Theme Icon
). Note: all page numbers and citation info for the quotes below refer to the The North River Press edition of The Goal: A Process of Ongoing Improvement published in 1984.
Chapter 18 Quotes

“This much is clear to me. We have to change the way we think about production capacity. We cannot measure the capacity of a resource in isolation. Its true productive capacity depends upon where it is in the plant. And trying to level capacity with demand to minimize expenses has really screwed us up. We shouldn’t be trying to do that at all.”

Related Characters: Alex Rogo (speaker), Jonah
Page Number: 138
Explanation and Analysis:
Chapter 25 Quotes

“But what are we supposed to do?” asks Bob. “If we don’t keep our people working, we’ll have idle time, and idle time will lower our efficiencies.”

So what?” asks Jonah. […] “Take a look at the monster you’ve made. It did not create itself. You have created this mountain of inventory with your own decisions. And why? Because of the wrong assumption that you must make the workers produce 100 percent of the time, or else get rid of them to ‘save’ money.”

Related Characters: Bob Donovan (speaker), Jonah (speaker)
Page Number: 210
Explanation and Analysis:
Chapter 26 Quotes

“If we don’t go ahead with a system to withhold inventory and release it according to the bottlenecks, we’ll be missing a major opportunity to improve performance and save the plant. And I’m not about to stand by and let that happen just to maintain a standard that obviously has more impact on middle management politics than it does on the bottom line. I say we go ahead with this. And if efficiencies drop, let them.”

Related Characters: Alex Rogo (speaker), Bob Donovan
Page Number: 219
Explanation and Analysis:
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Inventory Term Timeline in The Goal: A Process of Ongoing Improvement

The timeline below shows where the term Inventory appears in The Goal: A Process of Ongoing Improvement. The colored dots and icons indicate which themes are associated with that appearance.
Chapter 4
Ineffective vs. Effective Business Metrics Theme Icon
Efficiency vs. Optimization Theme Icon
...greater net profit. However, Jonah asks if his number of employees or amount of excess inventory has decreased, and Alex admits it hasn’t. Jonah suggests, then, that the plant is not... (full context)
Chapter 8
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
...congratulates Alex for finding the answer. He offers three new measurements to operate by: throughput, inventory, and operational expense. “Throughput” describes the money generated explicitly through sales. “Inventory” describes the money... (full context)
Chapter 9
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Efficiency vs. Optimization Theme Icon
...money. Alex decides the plant needs to increase its throughput while keeping operational expense and inventory as low as possible. He wonders if the robots further that goal, since they didn’t... (full context)
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Efficiency vs. Optimization Theme Icon
Alex decides they need to talk to Stacey Potazenik, their inventory control manager. When Alex asks her if the robots increased the inventory of unfinished products,... (full context)
The Importance of Goal-Setting Theme Icon
Efficiency vs. Optimization Theme Icon
...about the robots. Bob insists the robots are doing a good job but admits that inventory keeps increasing because the plant struggles to predict what parts it will need, so they... (full context)
Chapter 10
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
...The four of them continue to debate how various functions and costs fit into throughput, inventory, and operating expense. (full context)
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
The Cost of Corporate Success Theme Icon
...within three months or the whole plant closes. They all agree that they should lower inventory because it wastes money, but they worry about giving the robots less to do, since... (full context)
Chapter 11
Efficiency vs. Optimization Theme Icon
...all the time is very inefficient.” The fact that Alex’s plant has so much excess inventory proves this. Jonah states that like most managers, Alex focuses too much on trying to... (full context)
Chapter 13
Working with Constraints Theme Icon
...in the front of the line, and Alex, in the back, represents the plant’s increasing inventory. Alex’s slowed walking speed represents the plant’s decreasing throughput. Soon enough, Ron stops the whole... (full context)
Chapter 15
The Importance of Goal-Setting Theme Icon
Working with Constraints Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
...and the whole troop moves along at a good pace, all staying together. Alex thinks, “Inventory is down. Throughput is up.” They reach their destination and Alex calculates that after reorganizing,... (full context)
Chapter 18
Working with Constraints Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
...they could cross-correlate the two lists. Alex estimates that whatever machines have the most unfinished inventory in front of them might provide clues as well. (full context)
Chapter 24
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
The Cost of Corporate Success Theme Icon
...They celebrate their last month of progress, since their throughput has improved and their work-in-process inventory has decreased. Bill Peach calls Alex, and Alex braces himself for criticism. However, Peach congratulates... (full context)
Working with Constraints Theme Icon
Efficiency vs. Optimization Theme Icon
The Cost of Corporate Success Theme Icon
...has increased, they are running into shortages of non-bottleneck parts. And since they’ve decreased their inventory of spare and unused parts, the new shortages are causing delays. Alex sighs and tells... (full context)
Chapter 25
Working with Constraints Theme Icon
Efficiency vs. Optimization Theme Icon
...plant inevitably runs into excesses of some parts and shortages of others. This creates excess inventory and thus reduces the plant’s throughput. (full context)
The Importance of Goal-Setting Theme Icon
Working with Constraints Theme Icon
Efficiency vs. Optimization Theme Icon
Although Bob argues for keeping their efficiencies high, Alex thinks about their warehouses of excess inventory and realizes Jonah is right. Letting some non-bottleneck machines or workers stand idle is less... (full context)
Chapter 27
The Importance of Goal-Setting Theme Icon
Efficiency vs. Optimization Theme Icon
...success, and Peach seems only mildly impressed. Alex gives his own report of their efforts: inventory is down, throughput is up now that they can ship products much faster, and even... (full context)
Chapter 28
The Importance of Goal-Setting Theme Icon
...to cut their batch sizes in half. Stacey realizes that that would cut their in-process inventory in half, though it would require twice as many machine setups and a lot of... (full context)
The Importance of Goal-Setting Theme Icon
Working with Constraints Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
Efficiency vs. Optimization Theme Icon
...in half as well. This means that cutting the batch size in half also cuts inventory roughly in half, and the increased speed means that their plant can deliver products faster... (full context)
Chapter 29
Working with Constraints Theme Icon
Efficiency vs. Optimization Theme Icon
The Cost of Corporate Success Theme Icon
...make everything move quicker, providing all workers and machines with more consistent work to do. Inventory is lower than ever. But there is also bad news, and Alex climbs out of... (full context)
Chapter 33
Ineffective vs. Effective Business Metrics Theme Icon
...However, Lou has discovered another serious flaw in UniCo’s traditional accounting system. Currently, although excess inventory is a liability, their methods count inventory as positive assets. Thus, when the plant reduced... (full context)
Chapter 36
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
...successful. Rather than thinking of expenses as the most important function, they prioritized throughput, then inventory, and considered operating expense as the least important measurement. Alex considers Lou’s observation critically important... (full context)
Chapter 37
The Importance of Goal-Setting Theme Icon
Efficiency vs. Optimization Theme Icon
...to be assembled and stocked on shelves. She estimates they have roughly six weeks’ more inventory than they require. She adds a warning to Step 5 of their process: “do not... (full context)
Chapter 40
The Importance of Goal-Setting Theme Icon
Ineffective vs. Effective Business Metrics Theme Icon
The Cost of Corporate Success Theme Icon
...been making products but never selling them yet still counting them as income rather than inventory. No one is considering their actual throughput, and people are reticent to accept new metrics,... (full context)