Goal Book summary

Updated: Nov 14, 2020

Goal book is written by Eliyahu Goldratt in 1984. This book is based on Toc i.e Theory of Constraints.

The main characters are:

  • Alex the plant manager

  • Jonah the professor of Alex who guides him

  • Bill peach the vice president

  • Julie the wife of Alex

There are other side characters like Lou, Stacey, Bob Donovan, Ralph Nakamura and Herbie. This book is for all businesses who are involved in the manufacturing of products. The book is very interesting to be read as it is written in story format and somewhat also connected to Alex's personal life. Alex was in big trouble as plant manager at the unit and as a husband in his love life. The story says you how Alex came out of all stuff despite complexities involved.

What is the Theory of Constraints?

The Theory of Constraints is a methodology for identifying the most important limiting factor (i.e. constraint) that stands in the way of achieving a goal and then systematically improving that constraint until it is no longer the limiting factor. In simple words, to achieve the goal of organisation by use of the least number of constraints and avoid wastage. In manufacturing, the constraint is often referred to as a bottleneck. Dr Eliyahu Goldratt has introduced this concept via a book called Goal.

Alex, a plant manager faces a lot of issues as his order number #414127 was overdue for 7 weeks. Due to this Mr. Peach gave him 3 months to improve the productivity or else the plant was going to be shut down, as it was facing huge losses. Losses occurred as the cost of production was high than actual sales.

What should be the goal of a manufacturing company? This question was asked by Jonah to Alex during the first meet. Alex at last found one answer and that was money. But what leads to earning of money? Money is earned when a company attains cost efficiencies by producing good quality products with the help of good technology and increase market share by selling it. There are three units of measurement to find out whether the company earns money. They are net profit which comes under absolute measurement and ROI and cash flow in relative measurement. There were two terms mentioned in the 6th chapter. Productive and Non-productive

Productive things are those things which help the company take itself closer to the goal and Non-productive things are those which take the company away from goal. So Alex has to identify non-productive processes and eliminate is so as to reduce the cost of production

As chapters process, we also come to know about Alex love life and so many complexes. He makes promises to his wife Julie for dinner but in the end he can't make up time for it. So at-last his wife leaves him not divorce as she can't live in a town with Alex's mother. Also, she used to feel loneliness without Alex.

Here Alex with his team trying to find out ways to save his plant and tries to take appointment of Jonah. Day and night he and his team sit and plan out action plans. Some of them left also the job as it seems to be impossible to save the plant by increasing output. Machine NCX-10 also started to perform unwell and made to the whole production to stand still. In the middle of the story, Alex made some foolish decisions too, like bringing many robots to increase output like replacing manpower with robots, but that didn't really help him increase the output and all money was wasted. Alex had a boss called Bill Peach and through his attitude in the whole book seems to be very bad towards Alex. He used to put pressure on Alex and this 3 months due date was given by him only.

As you read the story you will come to know more about it in detail. There are a few more concepts explained in form of story which come under the Theory of Constraints. (to know more on this please see my new post after this)

  1. Throughput

  2. Inventory

  3. Operating expenses

  4. Bottleneck

The plant even got new orders from Europe. Jonah asked Alex to reduce the batch size so that target can be reached fast. So he delivered 1000 order in 4 weeks having delivered 250 orders each week to another client. This client was impressed by the efficiency and plan of delivery, So he increased the order to 10000 from 1000. All MIS reports where misstated. Lou his accountant with his technical knowledge corrected it and then showed actual cash flow, net profit and ROI.

Soon, Alex and his plant showed improvement and management decided that Alex will be promoted and his plant will continue to work. As responsibility increased he again faced difficulties for some time to work with new people but his team formulated five steps of Process of On-Going Improvement. (Read the book to know steps)

Also, in his personal life, Julie came back as Alex could make up time for her for dinner.

Conclusion

One can attain bottleneck if one utilises its resources effectively with least wastage. Money is the ultimate goal and to achieve it one need to increase sale and reduce cost of production. -Bhavya Gada