Sunday, August 19, 2007

The Goal: A Great Book

Have you ever read a business book that was so interesting that it made you turn pages to see what is going to happen next ? I have read a number of strategy books, books on what excellent companies do, books on what enterprising leaders do, but I have never read a business book such as this one.
The Goal takes a somewhat familiar concept of a loss making unit being told that his unit can no longer be afforded by the parent company due to its losses and will have to be shut down, with the loss of its entire work-force and him personally as well, unless, the plant can be turned around and show profits. In addition, the time and pressures involved in the job is causing incredible pressures in the marital life of the Plant Manager Alex Rogo (the book is written from his perspective), with the marriage showing strong signs of breaking down.
Now Alex knows that he has to increase profits, for which he has to show better sales and reduce inventories, but neither nor his managers are able to figure out how to. In addition, with the way that the plant is working, they are not able to execute orders on a proper ordered schedule, and when a major customers calls, they have to execute a rush order that in turn causes costs to go up. At this time, Alex remembers an old college mate of his who is a college professor in the area of operational effectiveness, but he is a very busy person and his mechanisms are also radical, going against most cost accounting. In the midst of all this, his wife goes back to her parent's house.
And then comes the change around. Based on the long-distance and 1 visit by the professor, Jonah, which causes Alex to push for the concept of using the Theory of Constraints to figure out what the changes are needed in the plant. He needs to increase throughput, reduce inventory and reduce operational expense, seemingly very logical steps, but extremely difficult to bring out.
And the real hard conceptual part starts, where Alex and his team figure out what constraints and bottlenecks actually mean, and have to try and overturn traditional accounting. They need to overcome the bottleneck, since the bottleneck decides the speed of throughput through a system. If work items are lined up at a bottleneck and are piling up, then the throughput of the system is slowed down. In addition, a good learning from the book was that a bottleneck can be a dynamic system, in the sense that any machine can be a bottleneck depending on how work items are getting piled up. This could even involved getting an older machine if it helps break up the bottleneck.
Once they are able to resolve this system, they find that the system starts to move more smoothly, order scheduling and predictability becomes more accurate and much shorter. The harder part is in convincing the management and cost accounting department about this new system, but even they are convinced by the new figures and sales starting to emerge.
At the same time, Alex Rogo is saving his marriage by starting again, giving time to his wife and starting the romance again. The book finally ends by everything getting solved, and leaves a long thought in the head about how to use this great system to help resolve things.

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