The Goal by Eliyahu Goldratt
Episode 1 (Chapter 1 to 4)
Let us start with our first episode of ‘The Goal’ written by Eliyahu M. Goldratt and Jeff Cox in 1984. I have the 30th-anniversary edition, which is the fourth edition printed in 2014.
The novel sets off with a ‘situation’. Alex is a plant manager for the Bearington plant, which is losing money at the money. The division director Bill Peach comes to the plant to make sure an important order that is delayed, is shipped that day. The author excels by explaining how Bill establishes the urgency of the matter by threatening to take over Alex’s territory by parking in his car park and taking over Alex’s seat in the cabin during the visit to the plant. He also threatens Alex with a risk of closing the plant if there is no improvement in the performance. Three months for Alex to react.
Alex’s personal life is also not great. His wife Julie is missing him so much as she is feeling lonely in the Bearington town.
The notes explain all about the Bearington plant’s current situation, what happens with the late order (order 41427), Bill Peach and the division performance data, Alex and Julie, and Alex’s meeting with Jonah.
This episode covers the first four chapters. Out of the four chapter’s fourth one has the details about Jonah’s meeting and the interesting conversation between Alex and Jonah. Don’t miss it.
I am re-iterating the notes here to enable searchability.
Bearington Plant:
- Losing money at the moment.
- The current priority is hot, very hot, red hot, ‘Do it now’.
- Efficiencies are down.
- No economies of scale.
- High operational cost.
- If the plant closes, 600 people will join the other 600 whom they have already laid off.
- It is a plant with good technology, best n/c machines, and even robots enabled.
- Good people are employed.
- There are enough materials.
- There is a market for their products.
- Cost reduction is done and there is nothing more to trim.
- Stacks and stacks of inventory.
- A huge backlog of undelivered orders.
Order Number 41427:
- One of those ‘Do it now’ orders that came to Bill Peach’s attention.
- Order belongs to Bucky Burnside, who is the president of UniCo’s biggest customer.
- 7 weeks delay.
- Bill Peach comes to the Bearington plant to make sure this order is shipped the same day.
- Bill Peach says this order is a symptom of the existing problems at the Bearington plant.
- This order cannot be shipped as one of the parts was missing.
- The machine that makes that part was down and got up and running after service around 4.30 pm on that day.
- Everybody worked overtime and the order got shipped on the same day at around 11.00 pm.
- The cost of this order is a loss of good machinist, overtime payment, and the repair cost of the broken machine.
Bill Peach, Division Director:
- Alex Rogo was appointed as a plant manager by Bill Peach.
- Bill Peach was a different person two years ago. Confident, not afraid to delegate responsibility, and open to ideas
- Now, he is different. He doesn’t care how employees felt. He is concerned about cutting the cost.
- Alex used to be his staff. They used to get along very well.
- He got a message from UniCo’s CEO that their performance needs to be improved before the end of that year (in 9 months). Otherwise, the whole division goes on sale.
Division’s performance data (against the previous year):
- The first-quarter sales were down by 22%
- Total raw material costs increased.
- Direct labor ratios of hours applied to hours paid had three-week high.
- The number of hours applied to the production vs standard is off by over 12%.
Alex and Julie:
- Alex is 38 years old, Engineer, MBA, works at UniCo’s Bearington plant as Plant Manager for the past six months.
- His father was a grocer, who died. His elder brother takes care of the shop.
- He is married to Julie and has two kids.
- Julie doesn’t like Bearington. She feels lonely all the time as there is no one to talk, except for Alex.
- Alex is busy with work. No family time.
- Julie doesn’t get along with Alex’s mother, who lives nearby.
Alex’s meeting with Jonah:
- Two weeks before then, Alex met Jonah, the Physicist he knew as a student, at the airport.
- Jonah is a busy Scientist now.
- Alex explains that he is going for a Robotics conference and claims that his plant has improved its productivity by 36% in one area.
- Jonah checks whether
Alex’s company is making 36% more money than before. Alex says no. - Jonah correctly predicts that Alex’s inventories are high and the backlog is huge.
- Jonah explains that
Productivity is the act of bringing a company closer to its goal.
- Jonah asks Alex a critical question
What is the goal of this manufacturing organization?
- Before Alex could confirm the answer, Jonah leaves by saying ‘Think about it’
to be continued…
