Essay title: The Goal
The Goal by Eliyahu M. Goldratt, is the story of a man who at his crossroads, and what direction he decides to take. The story is about a plant manager named Alex Rogo. We find Alex six months into his first plant managers position at UniCo, in the UniWare Division. The plant is located in Bearington Massachusetts, where Alex grew up.
UniCo is definitely a manufacturing plant, what they manufacture, I still do not know. The story begins when Alex’s supervisor, Bill Peach, comes into the plant and nearly turns everything upside down. After Alex puts out all of the fires that Bill had set, they sit down in Alex’s office and talk. Bill tells Alex that production has gone down in the six months that Alex has been at the helms, and an irate customer, Bucky Burnside, has an order that is fifty-six days overdue, and Alex must get that order shipped before anything else. Bill also says that if the plant does not turn around in the next three months, he will make a recommendation to close the plant.
A few days later, Alex hears more of the same at a corporate meeting and figures out why Bill was upset. After the meeting Alex reaches for something and comes across a cigar he received from a chance encounter from and old physicist he knew from his college days. While waiting for in between flights at O’Hare, Alex wandered into an airport and found himself sitting next to the physicist named Jonah who worked on mathematical models while he was an undergraduate engineering student.
Alex and Jonah start talking, and Alex mentions he is going to speak at a seminar. His topic is “Robotics: Solution for the 80’s to America’s Productivity Crisis.” Alex tells Jonah that his plant has more robots than any other plant in the division. Jonah is not very impressed. Jonah asks how much productivity has improved because of the use of the robots. Alex answers that there is a 36% improvement in one area. Jonah then asks if the plant is making 36% more money because the plant is using robots? Well, of course not is the response.
Just the one department is producing 36% more. Jonah continues the conversation and admits that he has been studying manufacturing processes. He asks Alex what productivity is and ends up explaining true productivity is accomplishing something in terms of your goal. Alex cannot even determine the goal of his company at this point.
Jonah tells him to think about it and leaves. Back at the meeting, Alex hears talk about measurements of efficiencies, productivity, and cost per price, etc. He is not even sure what productivity is, so he decides to bail out at lunch to head back to the plant. His trip to the plant is interrupted by a pizza pie and a six pack of beer. Alex goes to a hill overlooking the plant and spends the rest of the afternoon contemplating what he is going to do over the next three months, and what exactly productivity is. He spends the entire afternoon thinking about “the goal” and finally comes up with the answer: The goal of the company is to make money, and everything else they do is a means of achieving the goal. Once Alex figures out what the goal of the company is, he decides to get a hold of Jonah to learn more about productivity.
Alex spends the night at his mother’s house trying to contact Jonah, until he finally does at 2 a.m., with Jonah in London. Jonah explains to Alex that an action towards the goal is productive, and an action away from the goal is unproductive. He also gives Alex three new measurements: Throughput, the rate at which the system generates money through sales. Inventory, all the money that the system invested in purchasing things which it intends to sell. And finally, Operational Expense, all the money that the system spends in order to turn input into throughput.
To make money, Alex must increase throughput while simultaneously reducing the inventory and operating expense. Alex goes back to the plant and realizes he needs a lot more of Jonah’s advice. Jonah agrees to meet Alex in New York over breakfast for an hour. They start to discuss the idea of a balanced plant.
Traditional manufacturing goals are always to run a balanced plant, where the capacity of each and every resource is balanced exactly with the demand from the market. But, Jonah points out, the closer you come to the perfectly balanced plant, the closer you are to bankruptcy. At home, Alex’s wife, Julie, complains again that Al is never home. Al explains again, that it is because of the plant.
After arguing about why he needs to work as much as he does the two reach a compromise. Alex tells Julie that he will bring his paperwork home, and take care of the fires at the office while he is there, in order to spend more time with Julie and the kids. The next morning, Alex is woken by his son who reminds him that he promised to help lead the scout hike overnight. Alex leaves without waking Julie, and finds himself.