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Introduction The Goal, by Eliyahu Goldratt and Jeff is a fictional story based in a fictitious town called Bearington. The story revolves around the life of Alex Rogo, who is the plant manager of Uniware, a manufacturing unit of the UniCo Company. This book explains how the plant has undergone a serious downturn and Alex was given an ultimatum by his superior Mr. Bill Peach, the Division Vice President of the company either to turn it around or it would be shut down. In his search for options to recover the plant, Alex finds answers through his mentorhis past professor and physicist named Jonah, who helps him through a series of challenges and improvements. This leads to the question of What is the goal of any business? On the other hand, with the pressure mounting and the work-centric lifestyle he leads, his wife, Julie, walks out on him one fine day. The book is a runs in parallel with Alex trying to save both the firm and his marriage. The Goal Alex had to do something about getting the plant to a suitable profitable condition and with his job on the line, he was lucky to meet his former Professor, Jonah, at the airport. He guides Alex in analyzing and identifying what exactly is the goal of the business, which is-to make money. If the goal is to make money, then (assuming how Jonah might have said), an action that moves us toward making money is productive. And an action that takes away from making money is non-productive. (Pg. 41) Additionally, if the goal is to make money, any related action towards achieving this goal is productive while anything that is not moving towards achieving this is non-productive. They realised that the robots in the plants are not actually productive to maximize the profit and started to rely on the non-conventional approaches. They realized that cutting costs, increasing efficiency, reducing wages and other traditional factors were not in the right direction and identified three critical areas that needed to be balanced in order to increase profit. These three components are listed below and they have to be implemented simultaneously to see the results. There are three measurements which express the goal of making money perfectly well, but which also permit you to develop operational rules for running your plant. Their names are throughput, inventory and operational expense. (pg.60)

a. Throughput: It is the rate at which money is generated through sales and not production. It determines the worth of the product at the market value less the inventory and operating expenses. It is a positive factor when it increases therefore, if there is production but no sales, there is no throughput. b. Inventory: It is all the money invested by the firm for purchasing the things intended to sell. It will include work in progress, raw materials from suppliers and standing stock levels. It is required to be reduced in order to maximize profit. c. Operational expense: This is the money spend to convert the inventory into throughput and this should be minimized for a positive result. An example would be the inventory carrying cost. If the goal has to be expressed in terms of these measurements then, to be profitable, the goal is to reduce operational expense and reduce inventory while simultaneously increasing throughput. (pg 87) Alex with the help of Jonah found that there were inter-dependent processes in the plant which could cause statistical fluctuations at any point during the process, causing lags, delays and barriers piling up and ultimately leading to poor performance. Therefore, maintaining a balanced plant was not possible and this is shown by explaining the mathematical proof that rests between two events, dependent events and statistical fluctuations. (Pg. 87) Dependent events: This is an event, or a series of events, which must take place before the other can beginthe subsequent event, depends upon the ones prior to it. (Pg 88) Statistical Fluctuations For some information we cannot precisely predict and there is a variation from one moment to the next (for example, the number of chairs can be precisely measured but there is a variation in the time when the waiter will being the water) (pg.88). This concept becomes clearer to Alex when he goes for a hike with his son, Dave. One of the other kids named Herbie, was slower in catching up the team. Alex then realizes the idea that the speed of the whole line depends on the slowest kid which was a bottleneck or a constraint and to increase this speed of the movement, the slowest kid needs to be helped to move faster. He also noticed that inventory depends on the first and the last process in the chain whose length should be reduced while the operating expenses were the energy required which has to be conserved.

This same concept was then applied in the plant with his team to identify the bottlenecks and constraints and then apply accordingly to increase the throughput while reducing the inventory and operational expenses. They then concluded that because of the statistical fluctuations, the inventory moved slowly. Dependent events put a cap on above average fluctuations. So there is an accumulation of slowness. (Boy Scout Troop Example, pg 101). Jonah explains that Bottlenecks are defined as any resource whose capacity is equal to or less than the demand placed upon it (pg. 139) and that the rule we should be following is to balance the flow with demand, not the capacity (Pg. 259). During this process, they restructured the method into 5 steps called Theory of Constraints which was applied to practice. They are mentioned in the book as follows: Step 1: Identify the systems bottlenecks: Identification of the oven and NCX-10 as bottlenecks. Step 2: Decide how to exploit the bottlenecks: Limiting break time of the machines etc Step 3: Subordinate everything else to the above decision: Keeping in tune with the constraint by using red and green tags on the machines. Step 4: Elevate the systems bottlenecks: Bringing back old systems and switiching to less effective routings Step 5: If, in a previous step, a bottleneck has been broken go back to step 1. (pg. 301) These 5 steps were actually applied to their two bottlenecks that the team had identified: one of the new robots, NCX-10 and the heat treatment process (oven) and this was how they worked out to solve the issue. NCX-10: This machines processing time was lesser than the old machines and required only two operators. They ensured that the operators run this machine continuously which reduced the costs while increasing the efficiency. The operators could also take breaks in between since their only work was to set up the batches. They also decided to continue using the old machines to meet the production requirements.

The production reduced to smaller batches and only those parts ordered by the customers were produced to increase productivity.

Heat treatment area or the oven: High quality control testing was performed prior to bottlenecks and outside vendors were hired for additional heat treatments. Producing in smaller batches and combining similar batches that require the same temperature to increase efficiency and productivity. With all of these resolutions, however, Alex and his team still identified some nonbottlenecks, like in order to run the NCX-10, they needed special trainings for operators with a lead time of 6 months to operate the machine. Even the furnace was not being fully utilized due to expediting. Non-bottleneck is any resource whose capacity is greater than the demand placed on it (pg.145) In reality, bottlenecks cannot be turned into a non-bottleneck though it can be increased to meet the demands. However, the bottlenecks led to the pile up of parts in the inventory because the non-bottlenecks were made to do more work for the sake of not keeping it idle. This again led to realization of the following: Activating a resource and utilizing a resource are entirely different. An hour lost at a bottleneck is an hour lost entirely not just for the resources but the entire system. There is no use of saving an hour on non bottlenecks. The performance of any operation needs to be evaluated by its bottom-line.

When Stacey continued to maintain the production quota by continuously feeding nonbottleneck materials, inventory was piled with extra non-bottleneck units while clogging both the work-in-process inventories of the bottlenecks and non-bottleneck stations. She activated the resource and turned it on while utilization meant making use of the resources to move the system towards the goal, which is increase productivity and profit. Along with Ralph, Stacey developed the process of releasing bottleneck materials only at the rate it needed and not to

focus on the non-bottleneck idle time. This way, when the bottleneck materials reached the final assembly, the non-bottleneck materials can be produced when needed and to coincide with the assembly. As Stacey says in the book "The entire bottleneck concept is not geared to decrease operating expense, it's focused on increasing throughput." (pg 304) Jonah also indicated that the next logical step was to reduce the batch sizes so as to reduce the excess capital used in production. This was because the load balancing performed would mean meeting the demands without producing excess inventory. The advantages of reduction in batch sizes include reduction of total time spent during work-in-process, increase in throughput and faster turnaround of orders and ultimately better and faster response to the market demands. Alex and the team then developed four primary components of lead time. They are as follows: a. Setup time: This is the time the raw material waits for a resource while the latter is preparing to work on the former. b. Processing time: This is the time used by the material on being modified into a new valuable product. c. Queue time: This is the time spent in the queue while the resource is working on other materials. d. Wait time: This is the time spent by the material waiting for its assembly with other parts. While Setup time and process time are minimal in any process, the maximum time spent is on queue time and wait time. Queue time is dominant for bottleneck parts while wait time is dominant for non-bottleneck parts. However, it is the bottlenecks that have a major influence on the inventory and throughput. The calculation of economic batch quantities is based on the whole system and not only on bottlenecks. This resulted in non-optimized batch sizes for most stations affected by the bottlenecks. Now that the plant is prepared to respond better to the market demands, Alex started to focus on the sales throughput of the company. He with the divisions sales manager, Johnny Jon, tied down a fairly huge contract that combined low quantity pricing and incremental deliveries which help them achieve the 15% improvement target as promised to Peach as a

way to prove that these changes were not temporary. At the end, there was an additional 20% extra capacity that Jon and Alex started thinking about market expansion. From the entire process they went through, Alex and Lou learned that the success of any manager depended on three simple decision questions: a. Knowing what to change b. What it should change into c. How to bring about the change (pg. 337) Conclusion Alex was announced as replacement for Bill Peachs position as the division manager of UniWare. His team also moved up the ladder with him with Lou placed alongside Alex as the new division controller, Bob as the plant manager and Stacey as the production manager. Alex in the end resolved that as Jonah said, he should be able to do it without any external help and must learn the thinking process to know that he is doing his job. (pg. 337). Ironically, Alex also implemented similar process of looking at the goal of his marriage and managed to get his wife back. Overall, this book provides a basic understanding of the Theory of Constraints, though being simple common sense, seems farfetched from the conventional approach. The book also conveys that managers usually overlook the actual goal of the company which is to make money and rather concentrate on other parameters. Bottom-line is that in order to achieve the goal, identifying the constraints and implementing strategies to eliminate these constraints will help not only in professional matters but also in personal relations as well.

Reference: Goldratt, Eliyahu M. and Cox, Jeff, The Goal: A Process Of Ongoing Improvement