1. The Goal
Book Review
By..
Sadashiv Salunkhe
XMBA 22
Date: March 2013
GE Confidential
2. Content
1. Executive Summary - The GOAL, Business Novel
2. Author
3. Characters & Story Plot
4. TOC Concept
5. Key Learning's
3. Executive Summary - The GOAL, Business Novel
The Goal is an international bestseller business novel. It was authored by Dr. Eliyahu
M. Goldratt and Mr. Jeff Cox and was first published in 1984
“The Goal” demonstrates the effectiveness of Socratic way of approaching and
resolving problems, Deductive process
gives significant insight into the day-to-day life of an operations manager and
challenges common business practices and thought processes.
It breaks the myth of true performance measurement & the real Goal of any
company, productivity and efficiency of plant operations
The book aims at explaining the validity of and logic behind Dr. Goldratt’s Theory of
Constraints
4. Characters & Story Plot
Characters:
Mr. Alex Rogo – Plant Manager UNICO
Dr. Jonah – Alex’s ex-teacher and physicist
Julie – Alex’s wife
Mr. Bill Peach - The division vice president, Alex’s Boss
Alex’s Staff – BOb (Prd mgr), Ralph (Dat procsessor), Stacey (Inventory controller)
Story Plot:
The story describes the exciting journey of one Mr. Alex Rogo is the plant manager at one
of the manufacturing units of UniCo in a town called Bearington. UniCo has been running
in losses for the last few years On the other hand, a parallel storyline depicts the marital
problems faced by Alex with his wife Julie. This highlights the difficulties faced by
managers, especially those who are obsessed with their work, in their personal lives.
The story begins at a point when Mr. Bill Peach, the division vice president, asks Alex to
make his plant profitable within three months. In case of failure, the plant was to be shut
down by the management. Alex has the option to look for another job, but he decides to
do whatever he can to save the plant. Here, he recollects a conversation he had with Dr.
Jonah, when the latter, through a few simple questions, convinced Alex that the hi-tech
robots in his plant are not contributing to the actual goal of the company. He also
encouraged Alex to figure out the true goal of his organization. Faced with grave
difficulties, Alex figures out that the true goal of the company is to make money.
5. Author
Eliyahu Moshe Goldratt (March 31, 1947 – June 11, 2011)
Dr. Goldratt was an Israeli physicist, who later became a
business management guru.
originator of the Optimized Production Technique, the Theory
of Constraints (TOC), the Thinking Processes, Drum-Buffer-
Rope, Critical Chain Project Management (CCPM) and other
TOC derived tools.
The Goal (1984) TOC process
for improving organizations A small stint with Creative Output - Optimized Production
Technology (OPT). OPT was billed as the first software to
The Race (1986) further
develops the logistical system
provide finite capacity scheduling for production
called drum-buffer-rope (DBR) environments
Critical Chain (1997) applies Avraham Y Goldratt Institute AGI (1985) - self-funded Goldratt
TOC to project management
Group continued work on TOC
Necessary But Not
Sufficient (2000) applies TOC
to Enterprise resource
planning (ERP)
6. TOC Concept & Theory
The theory of constraints is an important tool for operations managers to manage
bottlenecks and improve process flows.
theory states, “the throughput of any system is determined by one constraint (bottleneck).”
Thus to increase the throughput, one must focus on identifying and improving the
bottleneck or constraint.
7. Key Concept
TOCLearning's
It is important to know what one’s true goal, In the case of UniCo Manufacturing in this
book, the goal is to make money. Although it sounds simple and obvious, it is the reason
for the company's existence. Everything else is just a means to achieving the goal.
The three measurements which express the goal of making money are throughput,
inventory and operational expense. Throughput is the rate at which the system generates
money through sales. Inventory is all the money that the system has invested in
purchasing things it intends to sell. Operational expense is all the money the system
spends in order to turn inventory into throughput.
Productivity is the act of bringing a company closer to its goal. Productivity is meaningless
unless you know what is your goal.
A balanced plant is where the capacity of each and every resource is balanced exactly with
demand from the market. However, the closer you come to a balanced plant, the closer
you are to bankruptcy because the goal is not to improve one measurement in isolation,
but all three.
Maximum throughput of a system is determined by the constraints in the system.
