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405 of 416 people found the following review helpful
5.0 out of 5 stars The Theory of Constraints (TOC) will change the way you think
Eliyahu Goldratt's "The Goal" is an entertaining novel and at the same time a thought provoking business book. The story is about a plant manager, Alex Rogo, whose plant and marriage are going downhill. He finds himself in the unenviable position of having ninety days in which to save his plant. A fortuitous meeting with an old acquaintance, Jonah, introduces him to the...
Published on February 12, 2006 by Avinash Sharma, The Yogic Manager

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15 of 18 people found the following review helpful
3.0 out of 5 stars Good for Beginners, Outdated
If you were stuck in a production environment gone horribly wrong, and you had no clue at all how to begin fixing it, this might give you some ideas to think about. But if you are that lost, why would you be managing a huge production operation to begin with. It isn't that the ideas are bad ones, but they do have limited application. Also, I would definitely say some...
Published on April 8, 2011 by Coghan


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405 of 416 people found the following review helpful
5.0 out of 5 stars The Theory of Constraints (TOC) will change the way you think, February 12, 2006
Eliyahu Goldratt's "The Goal" is an entertaining novel and at the same time a thought provoking business book. The story is about a plant manager, Alex Rogo, whose plant and marriage are going downhill. He finds himself in the unenviable position of having ninety days in which to save his plant. A fortuitous meeting with an old acquaintance, Jonah, introduces him to the Theory of Constrains (TOC). He uses this new way of thinking to ...
TOC postulates that for an organization to have an ongoing process of improvement, it needs to answer three fundamental questions:
1. What to change?
2. To what to change?
3. How to cause the change?
The goal is to make (more) money, which is done by the following:
1. Increase Throughput
2. Reduce Inventory
3. Reduce Operating Expense
Goldratt defines throughput (T) as the rate at which the system generates money through sales. He also defines inventory (I) as everything the system invests in that it intends to sell. Operating expense (OE) is defined as all the money the system spends in order to convert inventory into throughput.
The author does an excellent job explaining his concepts, especially how to work with constraints and bottlenecks (processes in a chain of processes, such that their limited capacity reduces the capacity of the whole chain). He makes the reader empathize with Alex Rogo and his family and team. Don't be surprised if you find yourself cheering for Alex to succeed.
The importance and benefits of focusing on the activities that are constraints are clearly described with several examples in "The Goal". One example from the book is the one in which Alex takes his son and a group of Boy Scouts out on a hiking expedition. Here Alex faces a constraint in the form of the slowest boy, Herbie. Alex gets to apply two of the principles Jonah talked to him about - "dependent events" (events in which the output of one event influences the input to another event) and "statistical fluctuations" (common cause variations in output quantity or quality). He realizes that in a chain of dependent processes, statistical fluctuations can occur at any step. These result in time lags between the processes that accumulate and grow in size further down the chain. This leads to the performance of the system becoming worse than the average capacity of the constraint.
It is interesting to note that TOC practitioners often refer to TOC concepts in terms of references from this book. For example, a constraint is often called a Herbie.
The Goldratt Institute (goldratt dot com) has illustrated TOC Analysis in the form of five steps used as a foundation upon which solutions are built:
1. Identify the constraint
2. Decide how to exploit the constraint
3. Subordinate and synchronize everything else to the above decisions
4. Elevate the performance of the constraint
5. If, in any of the above steps the constraint has shifted, go back to Step 1
Although this book is excellent in the context of Operations, the "Goal" to "make (more) money by..." is limited in its focus. It is concerned with the cost centers internal to a business. Business performance in today's increasingly competitive market depends on a variety of factors that exist outside the business. These include competitors, external opportunities, customers and the non-customers. Executives need to focus on these in order to see the bigger picture.
This book is necessary reading at the best MBA programs. In addition to being a review, this write-up was intended to serve as a summary of the core concepts of this book and TOC. If you are reading this as part of your coursework, please feel free to share the link with your fellow students.
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33 of 35 people found the following review helpful
5.0 out of 5 stars It' so much more than a business book on meeting the goal, December 5, 2005
I didn't know what to expect when I began reading this novel about a manufacturing plant. As provider of a professional (legal and risk management) services, I initially thought this wouldn't have much application for me. But it certainly does. First, the story itself, told as a novel, is an enjoyable read. This must be the first business book that I didn't want to put down until I had finished reading it from cover to cover!

Key points in the book include the principle of finding and then focusing on the one true goal and not getting caught up on a lot of side issues that others (even others in management) might think are the goal. This requires learning how to stop and really look at the problem. It then requires new ways to look for and try potential solutions. This includes ask penetrating questions of yourself and others who may provide key information and insights. And it requires really listening to what the affected people have to say about different aspects of achieving the goal.

An important point that is made is that every individual within the organization has part of the knowledge needed to reach the goal, and that we need to create a genuine environment where we not only encourage their participation but we also teach everyone how to ask the right questions so they can see for themselves what needs to be done to achieve the goal.

Incidentally, the partnership of communication that ultimately develops between the lead character and his employees and superiors overflows into his relationship with his spouse and naturally changes their relationship as well. There is much to be learned from this book, and I can see why it has been such a huge success for so many years.
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56 of 68 people found the following review helpful
4.0 out of 5 stars Concepts from The Goal, February 21, 2005
By 
The author of this business novel thinks he's the Messiah. The gist of the 384-page book could have been expressed in a page, and some of it is obvious. But it may be useful anyway, and it's an entertaining read.

His schtick is that one can achieve great gains by identifying the bottlenecks ('constraints') that are blocking improved performance toward your goal, and then doing anything necessary to unblock those constraints - even if this means inefficiently using other non-bottleneck resources.

He says that one should think of the cost of each resource as including its effect on the whole system. So if a machine costs $1K/month to operate, but its rate of production is preventing the business from accepting or fulfilling extra orders that would represent $10K/month in profits, then the true cost of the machine is $11K.

It follows that anything one can do to remove that bottleneck would be worthwhile, provided it adds less than the amount saved to the cost and doesn't introduce a new bottleneck. It's fine if you have to overpay for other resources or use them inefficiently as long as you accomplish this.

It then becomes a matter of analyzing and brainstorming all the ways that bottleneck can be reduced. For instance:

- Can extra capacity be added, even if it is less efficient or uses antiquated equipment or is outsourced to a vendor?

- Can you prioritize the use of the bottlenecked resource so that high-profit and time-sensitive work comes first?

- Can you divert work that doesn't need to go through the bottleneck, even if it would then go through another more cumbersome process?

- Can you prevent work from reaching the bottleneck if Quality Control will eventually reject it?

- Can you increase the rate of output of the bottleneck resource by doubling up batches?

This logic applies regardless of the nature of the bottleneck - whether it relates to a machine (production capacity), marketing effort (how much business is coming in), or any other element of one's environment.

To help identify the bottlenecks and judge tradeoffs, one should identify one's goal as a measure (in a business context this is generally profits or ROI), then identify the factors that influence that measurement and create an equation. For instance,

Profits = Sales - Cost of Inputs - Cost of Transforming Inputs

or,

Return On Investment = (Sales - Cost of Inputs - Cost of Transforming Inputs) / Money Trapped In Unfinished Goods And Inventory

Essentially, his thesis is that by focusing on these bottlenecks, and analyzing and brainstorming their solutions, one takes advantage of the 80/20 rule by prioritizing those few factors that most greatly impact one's performance.

The most rewarding part of the book are the examples in the Testimonials section at the end. The testimonials describe creative solutions to tough bottleneck situations. The book doesn't help the reader come up with this type of creative solution - it only mentions where to look for the problem. Here are the memorable examples he cites:

1. A large office supply company (similar to Staples) was losing business to companies that were charging very low prices. Investigating this marketing bottleneck, they determined that from the customers' perspective, the larger problem was the overall cost of stocking and procuring and purchasing and tracking the office supplies.

Rather than competing on price, its owner fixed the Sales bottleneck with an innovative concept, where they arranged to place fully stocked cabinets filled with office supplies throughout their client companies, just like a hotel minibar. They'd visit each week, restock any items that were used, and charge the company for the items that were removed, thereby saving the company the aggravation and cost of even having to purchase or account for office supplies. They also supplied each customer with detailed information regarding what was used, when. In exchange for this unique convenience, they charged higher prices and achieved large profit margins.

2. A printing company, constrained by the number of presses available to print jobs, made more efficient use of its presses by routing jobs to different types of presses in a way that would maximize the total output of the presses.

3. A manufacturing company's output was limited by a saw that cut pipes. They dug up an old, inefficient saw, put it to work to remove that bottleneck, and increased output and profits significantly.

4. In the book itself, the protagonist's factory increased its Return On Investment (profit/money tied up) by shortening the time it took for a product to be manufactured (as doing that reduced the money tied up, hence increased ROI). This was accomplished by removing delays that were keeping costly unfinished products sitting around the plant. For instance, by reducing the 'batch size', a product would wait less time for its batch to be complete, allowing it to move to the next step of production sooner.
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12 of 14 people found the following review helpful
4.0 out of 5 stars Julie Rogo Knocks It Down One Star, September 17, 2008
By 
Luther Setzer (Kennedy Space Center, FL United States) - See all my reviews
Per my graduate class in quality engineering:

"Read The Goal and provide an executive summary of the book. The summary should cover the main points of the process that Mr. Rogo and his team took to turn around the plant. In addition to the summary, answer the following questions."

Part I -- Executive Summary

The problem of production has challenged human beings since they first evolved. Even hunters and gatherers had to do elementary planning to evaluate local resources and ration their prizes to assure they met the basic needs of the tribe. Moreover, gathering these basic commodities from nature -- wild game, fruits, nuts, roots, stems, berries, and so forth -- constituted only the first step of the tribal production process. A primitive division of labor within the tribe created the equivalent of an assembly line on the micro scale with hunters, gatherers, preparers, tribal elders, caretakers, medicinal specialists, etc.

Over the millennia, this division of labor continued to specialize and to multiply the range of possible productive occupations. This trend exploded with the advent of new individual freedoms after the American Revolution. The resulting Industrial Revolution greatly swelled the diversity, complexity, and specialization of knowledge needed in the rapidly modernizing society. It resulted in the modern fields of engineering and especially industrial engineering, the study of systems that keep industries humming.

Because of their long history of storytelling, humans still show a strong preference for learning through dramatic interpretation. Young people learn moral lessons like the just rewards of industry through stories such as "The Little Red Hen." Such fictional tales of virtue tend not to make their way so much to older generations. A few exceptions exist in novels such as Atlas Shrugged by Ayn Rand, a story which illustrates the role of the mind in man's life. A more recent exception comes in The Goal by Eliyahu Goldratt, a story which illustrates his "Theory of Constraints" dramatically.

Goldratt, a consultant by profession, considers himself a philosopher in his own right. His frustrations in the early 1980s in attempting to convey his new theory of production to his clients led him to write The Goal with the help of professional writer Jeff Cox. Goldratt seeks to show, in the form of a novel, how commonly held yet faulty assumptions about ideal production plant behavior, such as using all processing resources to capacity, neglect integrated thinking at a systems level and lead to net profits far short of potential. To borrow the words of Ayn Rand, Goldratt tells the reader, in effect: "Check your premises." By the end of the tale, protagonists and readers alike have profitably done just that.

Goldratt cleverly tells the story from a first person point of view of its main protagonist, Alex Rogo. The novel opens with Alex struggling to keep his manufacturing plant afloat. As the plant manager, Alex has done his best to apply his degree as an industrial engineer to solve mounting production problems at his plant. But he has had to face the hard truth that his best simply will not do. The plant has fallen into a perpetual "fire fighter" mode in which jobs get "expedited" based on whichever higher manager screams the most loudly on that particular day. Preposterously long work shifts resulting from this modus operandi have placed stresses on his marriage to his wife, Julie, as well as his relationship with their two young children.

Alex encounters Jonah, an old friend and science teacher who challenges Alex on a number of his basic assumptions with a Socratic method of inquiry. "Then, tell me, what is the goal of your manufacturing organization?" he asks Alex after a brief series of opening questions. Although seemingly innocuous, the answer to the question of "the goal" actually opens a floodgate of other questions. These in turn cascade into answers that help Alex and his team of managers to transform the plant from the biggest loser in the company to the most profitable one.

For any plant, of course, "the goal" proves actually quite simple -- to make money. But Alex takes pages and pages of thought and dialogue in the early part of the novel to answer this question, first refuting other common answers such as "to produce products as efficiently as we can" and other misleading slogans before arriving at the final answer to his own satisfaction. His ensuing exchanges with Jonah over the remainder of the novel, combined with many other plot elements, help Alex to work backwards from this goal to the intermediate tasks the plant performs to achieve it. This leads to open challenges and confrontations with management up and down the chain of command in the company as Alex and his new converts strive to drive dogma from the corporate culture and replace it with a well-reasoned production philosophy -- the "Theory of Constraints."

The "Theory of Constraints" itself seems obvious by the end of the novel. It simply shows, for example, that the throughput of a plant will remain constrained by the narrowest "bottleneck" in the production line, with that line including the market demand itself. Hence, attempts to use other resources up and down the line from that bottleneck to full capacity result in backlogs before the bottleneck and idleness after it. Other problems, such as excess inventory and untimely retooling, also result from the "full capacity" fallacy. Moreover, as a plant reorganizes its resources to make the plant more effective, thus increasing its overall capacity, it can experience the phenomenon of moving bottlenecks. Alex Rogo and his team of experts deal with just this occurrence as their plant improves and they later document this as a key component of their process improvement strategy. (See Part II Question 1 for the step by step strategy.)

Goldratt keeps the story interesting with side plots to illustrate his theory, such as a Boy Scout hike that stretches or shrinks depending upon the sequence and ability of the hiking troops. He also shows that "constraints" apply beyond manufacturing plants to human relations as Alex struggles to hold his family together under the "constraints" of 16 hour work shifts. By the end of the novel, Goldratt resolves the conflicts among the characters satisfactorily and shows the happy reality of practicing his "Theory of Constraints."

Readers who liked Atlas Shrugged will enjoy The Goal. While much narrower in scope, it nevertheless remains a novel that challenges many widely held assumptions. As did Ayn Rand, Eliyahu Goldratt demonstrates himself a profound thinker who dares all of us to think more profoundly.

Part II -- Questions and Answers

1. Review the step-by-step approach implementing the Theory of Constraints (TOC) approach. In your opinion, which is the hardest step and why?

Per Chapter 37:

1. IDENTIFY the system's constraint(s).
2. Decide how to EXPLOIT the system's constraint(s).
3. SUBORDINATE everything else to the above decision.
4. ELEVATE the system's constraint(s).
5. 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 constraint.

In my experience, the overcoming of inertia mentioned in Step 5 represents the greatest challenge to implementing TOC. Comfort embodies the core of inertia. With management content with how a process currently operates, overcoming that inertia can prove almost impossible.

2. The first edition of this book hit print in 1984. Are the lessons still relevant? Explain.

The lessons of this book remain as relevant today as they did in 1984. Although the industrial culture has learned much since then, the principles remain timeless and warrant consistent and unyielding repetition. Only repetition of a principle assures its continued practice.

3. What is your biggest takeaway from this book and why?

First, my personal takeaway: Julie Rogo behaves like a psychotic drama queen from hell, and her parents, lying sacks of garbage. I fantasize a novel called Alex Shrugged in which immature Julie leaves her hard-working, productive husband under cover of her conniving, coddling parents only to return to the house to find the locks changed, the house sold, and her husband, children, and assets vanished without a trace. She would have gotten her just deserts.

Now, my professional takeaway: The largest lesson I took from this book involves the importance of setting forth principles dramatically. The compelling and engaging story complete with plot, theme, character, and style help to illustrate otherwise dry principles. One can say much the same for Ayn Rand's great novel Atlas Shrugged which illustrated the role of the mind in man's life.

4. The author claims that the TOC is hard for management to accept because the result runs contrary to common practice (i.e., 100% utilization may not be good). Which of these results, or measurements, or practices is the hardest to accept for management (in your opinion)? Explain.

I agree with the author that a result such as using a resource at less than full capacity remains the hardest pill for management to swallow. Management mythology suggests the old nineteenth century whip cracking slave driver who gets maximum effort from his minions and punishes those who "slack." Reality shows that slack remains a vital and indispensable part of any good management system.

5. There is an old saying that "if you measure it, they will do it." How does this phrase relate to the TOC approach?

Every measurement implies an acceptable range of performance. When the plant measured efficiencies of individual components in the system rather than the overall performance of the system, the metrics misled management to focus on "improving" those efficiencies at the expense of overall plant performance. Once the focus changed to the right metrics, plant performance improved dramatically.

6. As the demand on the system increased, problems arose in the plant -- first diagnosed as moving bottlenecks. As the demand on any system reaches capacity, what are the keys to implementing TOC?

Per the answer to Question 1, management must follow the process of constraint identification regularly.

7. Would you have accepted the French order for $701 per part (Model 12)? Is the answer the book takes always the correct answer? Explain.

Per Chapter 38:

"We calculate the load that this large deal will place on the bottlenecks -- no problem. We check the impact on each of the seven problematic work centers -- two might reach the dangerous zone, but we can manage. Then we calculate the financial impact -- impressive. Very impressive. At last we're ready."

Yes, I would have accepted the order. Yes, the book offers the right answer under the conditions given. The Goal of the plant is to make money. This decision served that goal.

8. Are there any flaws in this philosophy? State your perceived flaws, if any, and defend your answer.

The philosophy assumes that management can identify and control all constraints. This does not always hold true, especially in an age of intrusive government regulations with origins in political ambitions. The novel could have at least mentioned this externality as a "constraint" to the effectiveness of the Theory of Constraints.
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15 of 18 people found the following review helpful
3.0 out of 5 stars Good for Beginners, Outdated, April 8, 2011
By 
Coghan "CBB" (Hurdle Mills, NC, United States) - See all my reviews
(REAL NAME)   
If you were stuck in a production environment gone horribly wrong, and you had no clue at all how to begin fixing it, this might give you some ideas to think about. But if you are that lost, why would you be managing a huge production operation to begin with. It isn't that the ideas are bad ones, but they do have limited application. Also, I would definitely say some of these theories have been improved on greatly in the 20 some years since the book was written.

The sub-story of the author's marriage gone horribly wrong is just sad. He apparently knew as little about marriage as he did about managing a production operation. The wife's confession that she just wanted to go shopping and have a nice house and nice things and nice kiddies with a doting husband... well... gag.

With that said, it must be extremely hard to write a business book that comes off like a novel (albeit a cheesy one). It wasn't as much of a snoozer as most of these mandatory reading assigments we get from management. And there is nothing inherently wrong with the info. It's just a bit simplistic. There are much better resources for teaching constraints, socratic method, and six sigma. But if you need the basics and you need them fast, this is a reasonable book to get.
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5 of 5 people found the following review helpful
5.0 out of 5 stars A must-read business classic, May 18, 2003
By 
Mark E "wreave" (Colorado Springs, CO USA) - See all my reviews
This review is from: The Goal: 2nd Edition (Audio CD)
This book is the ultimate paradox - a "business novel", a love story in fact. It is the first in Goldratt's series following Alex Rogo, and how he turns his manufacturing plant around through some relatively simple (though not necessarily easy) principles. It is through this book that Goldratt introduces the reader to his Theory of Constraints, which should rank among the top five business concepts of the 20th century (including, for example, six sigma and the assembly line).
Not in a manufacturing business? This book is set in a manufacturing plant, but the concepts apply broadly. I currently work in a service business, with no tangible products whatsoever, and the keys of this book are as useful here as anywhere.
This book is engaging and easy to read, but it's not written to the lowest common denominator. It's for people who want to improve the way their business is run, no matter what level they are - though obviously, the higher you are, the bigger impact you can have.
I read this book for the first time in college, and have reread it every two or three years since. It belongs in the company of such business and self-help classics as Seven Habits, See You at the Top, One Minute Manager, and Win Friends/Influence People. Perhaps the highest recommendation I can give this book is that I have bought it and given it as a gift, out of my own pocket, to about half a dozen different people in the company I have worked for over the last six years - all VPs, SVPs, and EVPs. I figure, if they apply the principles, it's ultimately going to make the company (and me) more successful. All of them have commented positively on the book, and some have in turn passed it along.
Whether you are just starting out in business, or have already attained a high level and want to broaden (and brighten) your horizons, this is a must-read that will positively impact your business, and your life.
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12 of 15 people found the following review helpful
4.0 out of 5 stars Quirky little book that was completely worth it...A personal review below:, May 13, 2007
TOC Overview

Defying conventional opinion which says that books on business must be boring, Eli Goldratt introduced to the world his "Theory of Constraints" in this novel published in 1984. Highly readable, the book uses layman's terms to present an unorthodox approach to improving competitive advantage. The novel is written about a manufacturing plant, but its philosophy can be applied to any company that relies on a production process. The book has been called a "Socratic" novel because Goldratt uses a sort of teacher-student discourse method to explain his theories. Today, generally referred to as the TOC (Theory of Constraints) or constraint management, Goldratt's philosophy attempts to re-focus production processes on the single-most important goal common to all free-market business: making money.

The TOC's greatest appeal is its logical simplicity. Like other operation improvement programs, Goldratt is also concerned with reducing waste and generating/sustaining competitive advantage. But Goldratt's perspective is different from other management systems because he approaches the problem with a clean slate. Leaving all traditional operations management jargon behind, Goldratt starts from scratch with both his definitions and his analysis. Nothing in The Goal requires an understanding of abstract business or economic theory. Everything has an immediate application, and Goldratt explains every concept using a real-life analogy. No doubt his background as a physicist contributes to this tendency. By his own admission, he thought of "science as nothing more than an understanding of the way the world is and why it is that way." Likewise, his exploration of an under-performing manufacturing plant in The Goal is a simple yet profound look at how a process works, and why.

The TOC is based on three fundamental principles, and Eli's theory suggests that all companies which keep these premises in mind will make money:

1. The only reason that companies do anything is to make money.

2. Anything that a company does to speed up the processes that generate money is appropriate.

3. Each business operation is one big process with many sub-processes.

The constraint theory is nested with these principles in that all sub-processes of the operation are defined by how much each one limits total production. The most limiting factors are identified hierarchically as constraints. If non-constraint aspects of the process (whether that be a machine or a worker) need to sit idle sometimes in order to match pace with the constraints, that's okay. In fact, it's a necessity or else excess inventory and higher work-in-progress (WIP) levels will result.

Oftentimes, where operations, accounting, and marketing interface within a company presents a conflict of interest, and Goldratt's book contains several examples of this. Performance measurements such as machine productivity stats, for example, are sometimes meaningless indicators because they don't contribute or even correlate to the company's goal. Alex, the plant supervisor, begins to realize this fact when he tries to impress his mentor, Jonah, by telling him how his plant now uses robots at one of the process stations and productivity in that area improved by 36%. Jonah astutely responds by asking if any of the workers were laid off, or if the plant was selling any more products. Alex admits that neither of these had occurred, yet. Jonah then predicted, correctly, that Alex's plant had an excess inventory problem. Adding robots to a non-constraint area didn't increase overall production, it only increased WIP and total production time.

As Goldratt illustrates through Alex's trials and triumphs at the plant, the most fundamental principle of TOC is that all processes must be subordinate to the ultimate goal of making money. The performance measurements of that goal are:

1. Net Profit - an absolute measurement in dollars

2. Return on Investment (ROI) - a relative measure based on investment

3. Cash Flow - a survival measurement

Notice the absence of metrics such as station productivity or worker utilization. Goldratt helps managers mired in traditional thought re-vamp their definitions of performance indicators and the way managers look at making money. Goldratt makes use of three common terms, the correct understanding of which are key to comprehending any business process: throughput, inventory, and operating expenses.

Throughput is the rate at which the system generates money through sales (not the rate of production!). Throughput equals sales revenue minus direct materials cost - it measures the speed at which the company makes money. Inventory is all the money that the system has invested in purchasing things which it intends to sell, or the money currently inside the system. It is the raw materials value tied up in work in progress and unsold finished goods. Large amounts of inventory are undesirable because it means that the company has spent money for product that hasn't generated revenue yet. Put simply, inventory is money. Operational expense is all the money the system spends in order to turn inventory into throughput. This is the money the company must pay out to make throughput happen. All costs of operations other than direct materials costs are operational expenses. The objective is not to reduce operational expense by itself, or improve one measurement in isolation. To achieve the goal, a company must "increase throughput while simultaneously reducing both inventory and operating expense."

Contrary to previous thought on the subject, all production stations achieving max productivity, or all workers working all the time, is a sign that the business as a whole system may be running inefficiently. The sum is greater than its parts. Full utilization of any non-constraint will produce more work in progress than the constraint can handle. This is where TOC differentiates itself from other operations management systems such as TQM and Lean which focus on eliminating waste in every possible corner of the business, speeding up every process increasing "efficiencies". What the TOC does, by contrast, is attempt to increase total system efficiency.

With this in mind, Goldratt details the "how" behind this theory using Five Focusing Steps. These steps should be followed in order by any business considering using the TOC in a way similar to how Alex did in the book. These steps accomplish incremental improvement to the overall operation.

1. Identify the system's constraint(s), and prioritize them according to importance. In this step, the "Herbies" of the plant are identified, so named after an analogy Goldratt uses in the book to explain how the whole operation is only as fast as it's slowest sub-process. The slowest boyscout, Herbie, causes a backlog of hikers on a narrow trail while the faster boys in front of him get further and further ahead. Herbie is a bottleneck.

2. Exploit the system's most critical constraint. In this step, the company looks for ways to get maximum output from the constraint, usually by proper scheduling and control so that the constraint station only works on good inputs. Waste of time and effort occurred in the book when the constraint spent valuable time working on production items that were scrapped by QC later down the line.

3. Subordinate everything else to that constraint. In this step, the whole operations is slowed down to the pace of the constraint. All operation improvement opportunities that would increase productivity of a non-constraint should not be invested in (like the expensive robots which only served to increase WIP inventory).

4. Elevate the system's constraints. Elevating the constraint means to find methods of increasing the capacity of the constraint, such as:

a. Performing regular maintenance on the constraint to prevent breakdowns.

b. Running the constraint for extra shifts.

c. Automating the constraint.

5. Repeat steps 1-4, focusing on a different constraint. However, Goldratt says to be wary of allowing inertia to become the bottleneck itself. Constantly look for the next system constraint, break it, and repeat.

(Goldratt, 1984)

SWOT (Strengths, Weaknesses, Opportunities, Threats)

Strengths

The most prominent strengths of Goldratt's philosophy, already discussed briefly, are that it's philosophy is simple and its approach to understanding the whole production system is intuitive, logical, and yet profound. However, the theory has been the topic of many optimistic reviews (even after twenty years) because it provides very immediate and positive results to companies. By nature, focusing on the weakest and most critical link in any production chain will generate the greatest amount of improvement in a short amount of time (Spector, 2006).

Weaknesses

One of the weaknesses, or difficulties, inherent to the Theory of Constraints is that multiple bottlenecks can occur within a plant, and sometimes bottlenecks manifest themselves at different workstations at different times, particularly in a balanced plant. Achieving an unbalanced plant is what many manufacturers should, but do not do. Balancing capacity across a sequence of processes; attempting to match capacity with market demand at each work station, is usually detrimental to the system as a whole. Goldratt uses the "match bowl" game to illustrate how floating bottlenecks can occur in a balanced plant. A series of bowls is set on a table (each one representing a station). Matches represent product inventory and one die is used to simulate statistical fluctuations (variation) in performance at each workstation. The bowls are a series of dependent events and each operation has the same capacity (six products per day, or six matches). Each player has a workstation (bowl), and rolls the die to determine how many matches he can take from the previous player's bowl (representing one day's production). On the next turn, each player rolls the die, and again he can only pick up as many matches as are in the previous player's bowl even if he rolled a higher number. The demonstration shows that in a series of dependent events, where each operation has the same amount of capacity (a "balanced" plant), the variation will cause the bottleneck to move from operation to operation (bowl to bowl). Goldratt knew this and combated it by suggesting a version of continuous improvement (see Step Five of the Focusing Steps). It's important to realize that balancing each workstation in isolation against max production will cause excess WIP inventory and bottlenecks. Another weakness/difficulty in implementing TOC is that it is often met with significant emotional resistance, especially by institutionalized business minds. It is difficult to introduce anything knew, especially a philosophy that seems counter-intuitive and unorthodox at the outset. In the book, Alex encounters this defense mechanism amongst his peers and superiors. Goldratt recommends using the Socratic method (the way Jonah does) to elicit the answers from people's own minds, rather than preaching the new methodology. All parts of an organization need to decide together on how best to proceed - if accounting, for example, is kept in the dark, they're likely to be even more hostile towards the new performance metrics.

Opportunities

The opportunities that TOC presents are exciting, especially when applied to old management accounting techniques. There are many accounting "truths" that Goldratt deconstructs quite effectively in his book (Hendricks, 2005). Traditionally, all sub-process improvements were seen as a good thing, but according to Goldratt, "improvement" expenses are wasted if they are spent on non-constraints. Also, another favorite accounting metric, station productivity, can actually lead the plant to make adjustment that detract from the total operating efficiency of the system (or plant).

Threats

The Theory of Constraints, when implemented, is often faced with both internal and external threats. Without everyone "on board," so to speak, it's all to easy to succumb to traditional thought and conventional practices. However, using some uncommon sense and logic in overcoming some of the more prevalent misconceptions is necessary in order to produce results, and ultimately, achieve the goal of making money. It's important to remember that the "TOC is not a panacea for everything. It's not going to solve cultural problems within an organization."

Associated Concepts

Goldratt introduced a new set of jargon to the world of operations management, not afraid to use some rather odd-sounding phrases (e.g., "Jonah," "Evaporating Cloud," or "Reality Tree"). Unfortunately in the early years of development, the Israeli physicist and his unorthodox (but successful) publication of the first business novel ever combined to create an aura of quirkiness amongst the managers who followed his philosophy. In an attempt to "de-cultize" the TOC, it is more commonly referred to as "constraint management." In recent years, constraint management has become a highly applicable business philosophy that can be applied to almost any profit or non-profit organization, and has even been successfully merged into Lean and SixSigma to amplify results.

Potential Areas of Application

The most successful applications of constraint management have occurred in highly competitive industries such as the low-cost airline business and the hardware technology production business. One example of this success is Seagate Technology LLC, a hard disk drive producer with 42,000 employees worldwide. The company experienced unprecedented results after adopting both Six Sigma and later, constraints management. After introducing SixSigma in 1998 and experiencing positive but plateaued results, Seagate's projects lacked the prioritization and the constraint focus that the TOC could, and did, provide. After superimposing the principles of constraint management on top of it's already-established system of SixSigma, the company increased production completion by 80%, and the number of projects completed in three months or less (half the time of the company's previous average of 6 months), was increased by 70% in just 90 days. Constraint management looks at the system as a whole, identifies limiting factors, and works to ensure a harmonious "team" operation of all workstations within the production line. Also called "synchronous manufacturing," (in contrast to the dated notion of a "balanced" plant), Goldratt's approach revolutionized the way operations managers and accountants work in unison to achieve the Goal.
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4 of 4 people found the following review helpful
5.0 out of 5 stars Excellent Hilarious Novel for Learning Management, October 2, 2007
"The Goal" is a hilarious novel but with a serious business message particularly with respect to production/operations management. The author expertly wove an intricate story about a plant manager (Alex Rogo) whose factory and marriage are failing into a compelling and convincing explanation about how to deal with constraints and bottlenecks effectively, not only in business but also in everyday life. This is a good captivating read particularly for those who find reading business and management books to be dry and having a soporific effect.

Alex Rogo's life is made very difficult by bottlenecks, constraints, excess inventories and pressure from management that demands efficiency in the factory operations. However, through mastering the theory of constraints (TOC), the appreciation of a business as a system, the effective use of industrial engineering techniques as well as common sense, Alex and his team overcome the problems.

This is an enlightening book that is easy to read and understand for people particularly those who a new to managing an organization. You will learn about the goal of an organization, waste (and how to avoid it), cost structures, team utilization, supply chain bottlenecks, identify improvements, work prioritization and enhance efficiencies.

You will get the most from this book if you also read the Toyota Production System which can fix many of the problems highlighted in this book. Among the highlights of the Toyota Production System are the Just-in-Time inventory system, production leveling, multi-skilling, the pull method of production planning which provides a more comprehensive approach to manufacturing operations. Another useful investment is to get a copy of the classic book "The Fifth Discipline" by Peter Senge (if you have not yet read it). Senge proposes the "systems thinking" method to help companies to become "learning organizations" that integrates all personnel levels and functions (such as production, human resources, finance etc) to increase the ability of the organisation to be more productive and effective.

In summary, this is an outstanding book packed with insightful wisdom that I recommend to employees at all levels in an organization as well as students studying business.
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5 of 5 people found the following review helpful
4.0 out of 5 stars Kindle errors, December 8, 2010
I have found various errors in the kindle edition of this book. Surely one should not compromise on quality editing when producing ebooks. It is quite irritating to come across so many errors.
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5 of 6 people found the following review helpful
5.0 out of 5 stars Theory of Constraints explained and its wide applications revealed, June 2, 2007
The Goal is a fascinating book about the Theory of Constraints which was introduced to the world by Eliyahu Goldratt. I must admit the title didn't appeal much to me, but bought it anyway because it was recommended highly. After reading it, I realized that the title was perfect since it plays well into the questioning that needs to take place in order to identify the constraint or bottleneck in an organization. The book is written as a novel, which makes the book a lot easier to read and also a lot more entertaining
Alex Rogo is a plant manager and at the beginning of the novel is greeted at his plant by the VP who informs him that his production numbers need to improve or they will be shutting down the plant. Of course, during all this mess Rogo is also going through a rocky marriage and throughout the book the reader is taken through the struggle of both issues.
Alex seeks advice from an old Physicist from Israel named Jonah. Jonah takes Alex through the Socratic method of analysis which is the way Alex then communicates with his management team to solve the issues causing the low throughput in the factory. The conversations that take place between Jonah, Alex and the entire management team are extremely interesting and informative. I wonder how often this level of discussion actually takes place, but it sure makes for interesting reading.
A lot of the applications of the theory of constraints, although they take place in the factory, could be easily implemented in all industries.
Mr. Goldratt has written a business book that will remain relevant for many years to come. I highly recommend this incredible business book. Anyone who does business consulting and does not read and use the information on this book is doing his/her clients a great disservice.
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The Goal: A Process of Ongoing Improvement
The Goal: A Process of Ongoing Improvement by Eliyahu M. Goldratt (Paperback - June 1, 2012)
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