The Goal

The Goal is a book that focuses on management by Dr. Eliyahu M. Goldratt, a business consultant whose Theory of Constraints has become a model for systems management. He uses the Socratic inductive reasoning approach to present ideas in the form of a fascinating novel about people dealing with the problems that managers face at home and at work every day.

In the story, Alex Rogo, a manager in a manufacturing plant who has only three months to turn operations at his plant from unprofitable and unreliable to successful. His marriage was going downhill due to his busy work, too. The first point of common sense it comes to is the goal of any business that would be making money by increasing net profit, increasing ROI and simultaneously increasing cash flow. The book points out the role of bottlenecks (constraints) in a manufacturing process, and how to identify them not only allows for removing them, but also yields a useful tool for measuring and controlling the flow of materials. It should focus on three steps: A. What to change, B. What it has to change to, and C. How to change it.

Theory of Constraints (TOC) is a management philosophy that helps organizations continually to achieve their goals. Although any manageable system is limited to achieve more of its goal by a very small number of constraints, there is always at least one constraint there. The premise of Theory of Constraints is that organizations can be measured and controlled by variations on three measures:

a. Throughput: the rate a system generates money through sales. This is your money coming into the system.

b. Inventory(investment): all the money that the system has invested in purchasing things that it intends to sell. This is money stuck in the system.

c. Operational Expense: All the money the system spends in order to turn inventory into throughput. This is the money going out of the system.

Alex and his team identify the bottlenecks in the process and immediately begin to implement...