The Goal by Eli Goldratt

Notes from the book The Goal by Eli Goldratt

Check your numbers if you’d like, says Jonah. But if your inventories haven’t gone down.. and your employee expense was not reduced.. and if your company isn’t selling more products – which obviously it can’t, if you’re not shipping more of them – then you can’t tell me these robots increased your plant’s productivity.

We have to keep producing to stay efficient and maintain our cost advantage… says Alex.

Really?

Alex, if you’re like nearly everybody else in this world, you’ve accepted so many things without question that you’re not really thinking at all, says Jonah.

With does it mean to be productive?

Accomplishing goals.

And there is only one goal, no matter what the company.

You cannot understand the meaning of productivity unless you know what the goal is. Until then, you’re just playing a lot of games with numbers and words.

Throughput means through sales – not through production. If you produce something, but don’t sell it, it’s not throughput.

We are not concerned with local optimums.

So the way to express the goal is this.

Increase throughput while simultaneously reducing both inventory and operating expense.

Two types of resource. One type is what I call a bottleneck resource. The other very simply is a non-bottleneck resource.

You should not balanced capacity with demand. Balance the flow of product through the plant with demand from the market. Balance flow, not capacity.

The idea is to make the flow through the bottleneck equal to demand from the market.

We adjust capacity so the bottleneck is at the front of production.

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