The Goal: A Process of Ongoing Improvement eBook ä

The Goal: A Process of Ongoing Improvement I have never been so excited to finish a book in my entire life This book is like subpar fan fic for operations enthusiasts. 2nd read through I still love this book Primarily because of its collaborative solution finding process and its vocalness against local optima Also from a didactic perspective I think this is something we as people leading teams should strive for Enabling peers to make better decisions by themselves via good process The references in The Phoenix Project pushed me towards reading this one as well I really enjoyed listening to the audible 2nd read through I still love this book Primarily because of its collaborative solution finding process and its vocalness against local optima Also from a didactic perspective I think this is something we as people leading teams should strive for Enabling peers to make better decisions by themselves via good process The references in The Phoenix Project pushed me towards reading this one as well I really enjoyed listening to the audible version of this book and I would also argue that there s a lot to take from this book, even if you ve already read The Phoenix Project In a world where so many people are talking about scaling Agile, this is one of the books that gave me a lotinsights in the underlying principles of lean The last chapters are especially great ammunition for folks that have to deal with By The Book advocates of certain methodologies Separating the application of a principle together with the assumptions from the principle itself is a great way towardsinsight and ameaningful implementation of whatever methodology in the context of your environment company.Next stop is Beyond the Goal P.S Started to listen to Beyond the Goal and realized that Jonah from the audible version sounds exactly like Goldratt himself Coincidence I think not Written in a fast paced thriller style, The Goal is the gripping novel which is transforming management thinking throughout the Western worldAlex Rogo is a harried plant manager working ever desperately to try and improve performance His factory is rapidly heading for disaster So is his marriage He has ninety days to save his plant or it will be closed by corporate HQ, with hundreds of job losses It takes a chance meeting with a colleague from student days Jonah to help him break out of conventional ways of thinking to see what needs to be doneThe story of Alex s fight to save his plant is than compulsive reading It contains a serious message for all managers in industry and explains the ideas which underline the Theory of Constraints TOC developed by Eli Goldratt This is to Systems Thinking what The Five Dysfunctions is to management A peachy piece of fiction, packed with applicable lessons in the most enjoyable format you can imagine While other systems thinking books are somewhat dry, this one is filled with life, even romance, and well grounded in reality While five stars normally for me would mean life changing, in this case I can t resist because of a rare and wonderful balance between enjoyment, levity, and insight This type of book, to me, i This is to Systems Thinking what The Five Dysfunctions is to management A peachy piece of fiction, packed with applicable lessons in the most enjoyable format you can imagine While other systems thinking books are somewhat dry, this one is filled with life, even romance, and well grounded in reality While five stars normally for me would mean life changing, in this case I can t resist because of a rare and wonderful balance between enjoyment, levity, and insight This type of book, to me, is way better than crime fiction or fantasy I wish business fiction was a genre with endless options.In The Goal, a dysfunctional manufacturing plant is transformed after the protagonist has a chance encounter with his physics professor in an airport lounge Through an unlikely rekindling of the relationship, the professor shows him simple systems thinking principles that are gradually incorporated at the plant These principles completely transform the site Through continued improvement, it turns traditional accounting and productivity practices upside down and soon outperforms all other plants in its industry.If you re bought into the whole idea of learning to think in mental models, as Dalio describes in Principles or Munger in his Almanack, you ll love this book to see how it s applied in action If not, perhaps this story will show you the usefulness of it in an entertaining, light hearted fashion The book will give you some hope that a hopeless situation can be turned around with a little ingenuity Goldratt introduces the Theory of Constraints via this entertaining novel I think this book is excellent if you are new to Operations And I think the approach of telling a story rather reading a traditional text book is a good format It demonstrates why many traditional measurements and common intuition is wrong The book revisits what the goal of a business should be and what is important to measure and control to achieve that goal Through examples in the main character s personal life and Goldratt introduces the Theory of Constraints via this entertaining novel I think this book is excellent if you are new to Operations And I think the approach of telling a story rather reading a traditional text book is a good format It demonstrates why many traditional measurements and common intuition is wrong The book revisits what the goal of a business should be and what is important to measure and control to achieve that goal Through examples in the main character s personal life and work life, Goldratt explains the weaknesses of traditional cost accounting systems and what s important to track In short, to optimize money earned, increase throughput, decrease operating expense and decrease inventory And an important corollary is that any change requires impact to all 3 throughput, operating expense and inventory It is a fallacy that a change can impact only one of these metrics.A good follow on book to this novel is Synchronous Manufacturing Principles for World Class Excellence by Umble and Srikanth NOTESProductivity to accomplish something in terms of a goal The future of our business depends upon our ability to increase productivity PeachWhat is the Goal Original thoughtsIncrease producitivityProduce productsPowerMarket share SalesCost effective purchasingSupplying jobsQualityQuality EfficiencyTechnology R DCommunicationsCustomer satisfactionMake MoneyThree measurements essential to knowing whether company is making moneyNet ProfitROICash flowMake money by increasing net profit, NOTESProductivity to accomplish something in terms of a goal The future of our business depends upon our ability to increase productivity PeachWhat is the Goal Original thoughtsIncrease producitivityProduce productsPowerMarket share SalesCost effective purchasingSupplying jobsQualityQuality EfficiencyTechnology RDCommunicationsCustomer satisfactionMake MoneyThree measurements essential to knowing whether company is making moneyNet ProfitROICash flowMake money by increasing net profit, while simultaneously increasing ROI, and simultaneously increasing cash flowBut he realizes that at the plant level these measurements don t mean much Only at the top level.More than one way to express the Goal at the plant levelThroughput the rate at which the system generates money through sales not production if you produce something, but don t sell it, it s not throughput Inventory All the money that the system has invested in purchasing things which it intends to sellOperational expense all the money the system spends in order to rurn inventory into throuputQuestions to ask when adding a robotDid we sell anyproducts as a result Did we reduce number of people on payroll Did inventory levels go down Goal Increase throughput while simultaneously reducing both inventory and operating expense Money Throughput is the money coming inInventory is the money currently inside the systemOperational expense is the money we have to pay out to make throughput happenIn manufacturing An event, or a series of events, must take place before another can begin the subsequent event depends upon the ones prior to it The important thing occurs when dependent events are in combination with another phenomenon called statistical fluctuationsBoy Scout hikeThe leader of the troop controls the pace of the line If a gap forms and the line is lengthened all you can do is shorten it up to the distance of the person ahead of you dependent events Dependency limits the opportunities for higher fluctuations Whoever is moving the slowest in the troop is the one who will govern throughputTwo types of resourcesBottleneck resource Any resource whose capacity is equal to or less than the demand placed upon itNon bottleneck resource Any resource whose capacity is greater than the demand placed on itBottlenecksDo not balance capacity with demand, balance the flow of product through the plant with the demand from the market.To increase the capacity of the plant is to increase the capacity of only the bottlenecksTwo principal themes on which you need to concentrateMake sure the bottlenecks time is not wasted Visual management in smooth work on manufacturing floorUsing the bottlenecks to predict when the next order will be shippedThere cannot be any idle time for bottleneck processes Dedicate people full time to those processes To shorten lead time, spend the idle time while a machine is working, to set up for the next batchTheory of ConstraintsThe level of utilization of a non bottleneck is not determined by its own potential, but by some other constraint in the systemActivating a resource and utilizing a resource are not synonymousCutting the batch size in half result in half wipThe time a material spends in each stage from entry to being shipped outSetup the time the part spends waiting for a resource, while the resource is preparing itself to work on the partProcess time the amount of time the part spends being modified into a new,valuable formQueue time the time the part spends in line for a resource while the resource is busy working on something else ahead of itWait time the time the part waits, not for a resource, but for another part so they can be assembled togetherCommon practice can mask common senseCapacity Constraint Resources CCR Management TechniquesProcess of on going improvementStep 1 ID the system s bottlenecks After all it wasn t too difficult to identify the oven and the NCX10 as the bottlenecks of the plant Step 2 Decide how to exploit the bottlenecks That was fun Realizing that those machines should not take a lunch break, etc Step 3 Subordinate everything else to the above decision Making sure that everything marches to the tune of the constraints The red and green tags Step 4 Elevate the system s bottlenecks Bringing back the old Zmegma, swithcing back to old, less effective routings Step 5 If, in a previous step, a bottleneck has been broken go back to step 1 CCRIDENTIFY the system s constraint s Decide how to EXPLOIT the system s constraint s SUBORDINATE everything else to the above decisionELEVATE the system s constraint s 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 constraintRoot Cause What to Change What to Change to How to Cause the Change 4.5interested in application to project development vs repeatable manufacturing.I like the approach of discovering the principles behind theory of constraints and how to optimize throughput through a repeatable manufacturing process Seems quite practical and valuable in just that application.Trying to figure how this can apply beyond just manufacturing The latter portion of the book view spoiler after Alex is promoted to division head and can t optimize a single plant, but needs 4.5interested in application to project development vs repeatable manufacturing.I like the approach of discovering the principles behind theory of constraints and how to optimize throughput through a repeatable manufacturing process Seems quite practical and valuable in just that application.Trying to figure how this can apply beyond just manufacturing The latter portion of the book view spoiler after Alex is promoted to division head and can t optimize a single plant, but needs to figure out how to optimize as a manager hide spoiler starts to address how to apply Theory of Constraints beyond the operations of a plant togeneralized management I kind of got lost there.Also interested in how Goldratt thought his theory could apply to relationships It seems as though Alex may have inadvertently used some of what he learned from Eliyahu er, sorry, Jonah with his wife This one gets super reviews but I m at best lukewarm about it It s an early example of the teach business principles through a novel genre In this case, the bumbling plant manager gets whacked over the head by his Israeli physicist friend until he figures out that flow through his plant isimportant that keeping everyone busy You d think that the piles of inventory choking things off would have been a clue There are things to learn here, but they could be taught in half the size, with This one gets super reviews but I m at best lukewarm about it It s an early example of the teach business principles through a novel genre In this case, the bumbling plant manager gets whacked over the head by his Israeli physicist friend until he figures out that flow through his plant isimportant that keeping everyone busy You d think that the piles of inventory choking things off would have been a clue There are things to learn here, but they could be taught in half the size, without the bad romantic subplot or the amazingly bad portrayal of Boy Scouts Great explanation of the theory of constraints and operations management It s a business classic first published in 1984 but still relevant as it gets at the fundamentals I almost removed a star for trying to create a fictional story to tell the book in that was badly told edited Did we really need the side story about the protagonists marital issues One of the biggest takeaways from this book is that it s incredibly important to set the right goals to manage a complex operation This soun Great explanation of the theory of constraints and operations management It s a business classic first published in 1984 but still relevant as it gets at the fundamentals I almost removed a star for trying to create a fictional story to tell the book in that was badly told edited Did we really need the side story about the protagonists marital issues One of the biggest takeaways from this book is that it s incredibly important to set the right goals to manage a complex operation This sounds obvious and intuitive, however it s actually much harder than most people think, and easy to get wrong It gets down to the question of is everyone working on the right things The things that will lead to the business making the most money It s too easy to find a things that are easily measurable and saying this thing is correlated with our success, so let s focus on it It sounds like cost accounting fit into that bucket What you re saying is that making an employee work and profiting from that work are two different things So how do you set the right goals Focus on making money So this is the goal To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow One of the drivers of making money in any business that creates a product is throughput, or how fast a product can be made The others are costs operating expenses, and inventory One of the key concepts of the book is that focusing on throughput rather than costs will yield much better results The entire bottleneck concept is not geared to decrease operating expense, it s focused on increasing throughput The bottleneck theory, or the theory of constraints, was very useful to think about My company produces software and not physical products, but each feature we develop definitely has steps it has to go through creating the concept, research, spec, design, implementation backend and client , testing, QA, measure results, analyze them, iterate, etc Focusing on where the bottlenecks are with that process can help us move faster And every startup needs to be moving fast and not just at building we need to be doing build, measure, learn as fast as we can.A consequence of the bottleneck theory that is useful to keep in mind is that in any system only the bottlenecks should be 100% utilized Every manager will have a natural tendency to want to utilize all their resources to 100% because that just seems wasteful if you don t People should be working full time right But a system can only run at the speed of the slowest bottleneck, so non bottlenecks will by definition have spare cycles, and it s important to keep them open for the important work and not fill it up with unimportant stuff that will bog them down when you actually need them on the important stuff I ve seen this happen many times in software An engineer finishes a project, and the big important project coming from the design team isn t done yet, so he picks up something small in the meantime The next day that big important project is ready to go, but the engineer only needs oneday to finish this thing he started And then that day becomes two and then three because we didn t count QA And then we ve lost 3 days on our most important project for another project that doesn t matter at all Add that up across a large number of developers, and you ve lost a lot of time.The theory of constraints is not limited to manufacturing, as the author shows In the end, he is advocating it as a method or process of learning STEP 1 Identify the system s bottlenecks.STEP 2 Decide how to exploit the bottlenecks STEP 3 Subordinate everything else to the above decision STEP 4 Elevate the system s bottlenecks STEP 5 If, in a previous step, a bottleneck has been broken go back to step 1 The best process improvement novel I ve seen, this classic work explains the all important Theory of Constraints through real life examples and a surprisingly good story Most books of this nature are exceptionally unrealistic, but this one manages to keep the reader engaged, which is key for an instructional text like this.The book s lessons have some practicality in normal, everyday life, but its greatest utility is for those involved in process improvement in industries such as manufacturing, The best process improvement novel I ve seen, this classic work explains the all important Theory of Constraints through real life examples and a surprisingly good story Most books of this nature are exceptionally unrealistic, but this one manages to keep the reader engaged, which is key for an instructional text like this.The book s lessons have some practicality in normal, everyday life, but its greatest utility is for those involved in process improvement in industries such as manufacturing, distribution, services, and retail All industrial and systems engineers need to read this book, as do all managers of processes


About the Author: Eliyahu M. Goldratt

Eliyahu M Goldratt was an educator, author, physicist, philosopher and business leader, but first and foremost, he was a thinker who provoked others to think Often characterized as unconventional, stimulating, and a slayer of sacred cows, he urged his audience to examine and reassess their business practices with a fresh, new vision.Dr Goldratt is best known as the father of the Theory of Constraints TOC , a process of ongoing improvement that identifies and leverages a system s constraints in order to achieve the system s goals He introduced TOC s underlying concepts in his business novel, The Goal A Process of Ongoing Improvement, which has been recognized as one of the best selling business books of all time First published in 1984, The Goal has been updated three times and soldthan 7 million copies worldwide It has been translated into 35 languages.Heralded as a guru to industry by Fortune magazine and a genius by Business Week, Dr Goldratt continued to advance the TOC body of knowledge throughout his life, building on the Five Focusing Steps the process of ongoing improvement, known as POOGI with TOC derived tools such as Drum Bu er Rope, Critical Chain Project Management CCPM and the Thinking Processes He authored ten other TOC related books, including four business novels It s Not Luck the sequel to The Goal , Critical Chain, Necessary but Not Sufficient and Isn t It Obvious His last book, The Choice, was co authored by his daughter Efrat Ashlang Goldratt.Born in Israel on March 31, 1947, Dr Goldratt earned a Bachelor of Science degree from Tel Aviv University and a Master of Science and Doctor of Philosophy from Bar Ilan University He is the founder of TOC for Education, a nonprofit organization dedicated to bringing TOC Thinking and TOC tools to teachers and their students, and Goldratt Consulting In addition to his pioneering work in business management and education, Dr Goldratt holds patents in a number of areas ranging from medical devices to drip irrigation to temperature sensors He died on June 11, 2011, at the age of 64.


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