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The Goal The Goal by Eliyahu Goldratt “The Goal” of a manufacturing

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The Goal The Goal by Eliyahu Goldratt “The Goal” of a manufacturing Powered By Docstoc
					                      The Goal by Eliyahu Goldratt
“The Goal” (of a manufacturing company) – to make money; everything else is a means to
      achieving the goal (i.e. produce products to make money)

       Reworded: The goal is to increase net profit, while simultaneously increasing both ROI
       and cash flow

Measurements which express the Goal (pgs 60-61):

   1. Throughput – the rate at which the system generates money through sales
   2. Inventory – all the money that the system has invested in purchasing things which it
      intends to sell
   3. Operational Expense – all the money the system spends in order to turn inventory into
      throughput

*Ideal Situation  Throughput increases simultaneously with decreasing Inventory and O.E.

Two phenomena in a plant (pgs 87-88):

   1. Dependent Events – an event or a series of events must take place before another can
      begin…the subsequent event depends upon the ones prior to it
   2. Statistical Fluctuations – when information changes from one instance to the next

Two types of plant resources (pgs 138-139):

   1. Bottleneck Resource – any resource whose capacity is equal to or less than the
      demand placed upon it
   2. Non-bottleneck Resource – any resource whose capacity is greater than the demand
      placed on it

*BALANCE FLOW, NOT CAPACITY  make flow through a bottleneck equal (a little less than)
to market demand

“The capacity of the plant is equal to the capacity of its bottlenecks.”

To optimize bottlenecks, you must (pgs 158-159):

   1. Make sure bottleneck time is not wasted
         a. Sitting idle during lunch
         b. Working on defective parts
         c. Work only on the parts you need
   2. Take the load off of bottlenecks and give it to non-bottlenecks
         a. Outsource to another company
         b. Other machines can do it

“A plant in which everyone is working all the time is very inefficient.” (pg. 205)

E. Goldratt’s The Goal                                                                Page 1 of 2
Notes compiled by Gina Carlier
    Four elements of time a material spends in a plant (pgs 231-232):
      1. Setup
      2. Process
      3. Queue (large)
      4. Wait (large)

    Process of on-going improvement (pg 307):

    Step 1 – Identify the system’s constraint(s)
    Step 2 – Decide how to exploit the system’s constraint(s)
    Step 3 – Subordinate everything else to the above decision
    Step 4 – Elevate the system’s constraint(s)
    Step 5 – Warning!! If in the previous steps a constraint has been broken, go back to Step 1, but
             do not allow inertia to cause a system’s constraint

    Example from “The Goal”
                                                Relieve stress from
Define        Define            Determine       bottlenecks and increase      Increase   Cut batch          Reduce
Goal          Measurements      Bottlenecks     productivity of bottlenecks   Sales      sizes in half      lead times


    “If…Then” relationship based from science research (pgs 317-318):

         1.   If the hypothesis is right, then logically another fact must exist
         2.   Verify whether or not the predicted effects do exist
         3.   Order is built on chaos
         4.   Socratic method

    A good manager needs to be able to answer 3 questions (pg 337):

         1. “What to change?”
         2. “What to change to?”
         3. “How to cause the change?”

    The layers of resistance to change (pgs 349-350):

    Layer 1 – raising problems have one thing in common…it’s out of our hands
    Layer 2 – arguing that the proposed solution cannot possibly yield the desired outcome
    Layer 3 – arguing that the proposed solution will lead to negative effects (“yes, but…”)
    Layer 4 – raising obstacles that will prevent the implementation
    Layer 5 – raising doubts about the collaboration of others (or worse, not raising their doubts)

                         **   Peeling, in sequence, all these layers turns resistance    **
                                  to change into the enthusiasm of an inventor

    The importance of not neglecting a relationship

    “Nothing neglected will remain as it was or is, or will fail to deteriorate. All things need attention,
       care and concern, and especially so in this most sensitive of all relationships of life.”
    E. Goldratt’s The Goal                                                                               Page 2 of 2
    Notes compiled by Gina Carlier

				
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