The Goal: A Process of Ongoing Improvement, Third Revised Edition

by Eliyahu M. Goldratt

  Captured by Plamen T.

  THE GOAL

  A Process of Ongoing Improvement

  THIRD REVISED EDITION

  By

  Eliyahu M. Goldratt

  and

  Jeff Cox

  With interviews by David Whitford,

  Editor at Large, Fortune Small Business

  North River Press

  Captured by Plamen T.

  Additional copies can be obtained from your local

  bookstore or the publisher:

  The North River Press

  Publishing Corporation

  P.O. Box 567

  Great Barrington, MA 01230

  (800) 486-2665 or (413) 528-0034

  www.northriverpress.com

  First Edition Copyright © 1984 Eliyahu M. Goldratt

  Revised Edition Copyright © 1986 Eliyahu M. Goldratt

  Second revised Edition © 1992 Eliyahu M. Goldratt

  Third Revised Edition © 2004 Eliyahu M. Goldratt

  All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage retrieval system, without permission in writing from the publisher

  Manufactured in the United States of America

  Library of Congress Cataloging-in-Publication Data

  Goldratt, Eliyahu M., 1948-

  The goal: a process of ongoing improvement

  I. Coxjeff, 1951-. II. Title

  PR9510.9.G64G61986 823 86-12566

  ISBN: 0-88427-178-1

  Captured by Plamen T.

  1

  INTRODUCTION

  The Goal is about science and education. I believe that these

  two words have been abused to the extent that their original

  meanings have been lost in a fog of too much respect and mys-

  tery. Science for me, and for the vast majority of respectable sci-

  entists, is not about the secrets of nature or even about truths.

  Science is simply the method we use to try and postulate a mini-

  mum set of assumptions that can explain, through a straightfor-

  ward logical derivation, the existence of many phenomena of na-

  ture.

  The Law of Conservation of Energy of physics is not truth. It

  is just an assumption that is valid in explaining a tremendous

  amount of natural phenomena. Such an assumption can never be

  proven since even an infinite number of phenomena that can be

  explained by it does not prove its universal application. On the

  other hand, it can be disproved by just a single phenomenon that

  cannot be explained by the assumption. This disproving does not

  detract from the validity of the assumption. It just highlights the

  need or even the existence of another assumption that is more

  valid. This is the case with the assumption of the conservation of

  energy which was replaced by Einstein's more global-more valid

  -postulation of the conservation of energy and mass. Einstein's

  assumption is not true to the same extent that the previous one

  was not "true".

  Somehow we have restricted the connotation of science to a

  very selective, limited assemblage of natural phenomena. We re-

  fer to science when we deal with physics, chemistry or biology.

  We should also realize that there are many more phenomena of

  nature that do not fall into these categories, for instance those

  phenomena we see in organizations, particularly those in indus-

  trial organizations. If these phenomena are not phenomena of

  nature, what are they? Do we want to place what we see in organi-

  zations to the arena of fiction rather than into reality?

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  2

  This book is an attempt to show that we can postulate a very

  small number of assumptions and utilize them to explain a very

  large spectrum of industrial phenomena. You the reader can

  judge whether or not the logic of the book's derivation from its

  assumptions to the phenomena we see daily in our plants is so

  flawless that you call it common sense. Incidentally, common

  sense is not so common and is the highest praise we give to a

  chain of logical conclusions. If you do, you basically have taken

  science from the ivory tower of academia and put it where it

  belongs, within the reach of every one of us and made it applica-

  ble to what we see around us.

  What I have attempted to show with this book is that no

  exceptional brain power is needed to construct a new science or

  to expand on an existing one. What is needed is just the courage

  to face inconsistencies and to avoid running away from them just

  because "that's the way it was always done". I dared to interweave into the book a family life struggle, which I assume is quite familiar to any manager who is to some extent obsessed with his work.

  This was not done just to make the book more popular, but to

  highlight the fact that we tend to disqualify many phenomena of

  nature as irrelevent as far as science is concerned.

  I have also attempted to show in the book the meaning of

  education. I sincerely believe that the only way we can learn is

  through our deductive process. Presenting us with final conclu-

  sions is not a way that we learn. At best it is a way that we are

  trained. That's why I tried to deliver the message contained in

  the book in the Socratic way. Jonah, in spite of his knowledge of

  the solutions, provoked Alex to derive them by supplying the

  question marks instead of the exclamation marks. I believe that

  because of this method, you the reader will deduce the answers

  well before Alex Rogo succeeds in doing so. If you find the book

  entertaining maybe you will agree with me that this is the way to

  educate, this is the way we should attempt to write our textbooks.

  Our textbooks should not present us with a series of end results

  but rather a plot that enables the reader to go through the deduc-

  tion process himself. If I succeed by this book to change some-

  what your perception of science and education, this is my true

  reward.

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  3

  INTRODUCTION TO

  THE FIRST EDITION

  "The Goal" is about New global principles of manufacturing.

  It's about people trying to understand what makes their world

  tick so that they can make it better. As they think logically and

  consistently about their problems they are able to determine

  "cause and effect" relationships between their actions and the

  results. In the process they deduce some basic principles which

  they use to save their plant and make it successful.

  I view science as nothing more than an understanding of the

  way the world is and why it is that way. At any given time our

&
nbsp; scientific knowledge is simply the current state of the art of our

  understanding. I do not believe in absolute truths. I fear such

  beliefs because they block the search for better understanding.

  Whenever we think we have final answers progress, science, and

  better understanding ceases. Understanding of our world is not

  something to be pursued for its own sake, however. Knowledge

  should be pursued, I believe, to make our world better—to make

  life more fulfilling.

  There are several reasons I chose a novel to explain my un-

  derstanding of manufacturing—how it works (reality) and why it

  works that way. First, I want to make these principles more un-

  derstandable and show how they can bring order to the chaos

  that so often exists in our plants. Second, I wanted to illustrate

  the power of this understanding and the benefits it can bring.

  The results achieved are not fantasy; they have been, and are

  being, achieved in real plants. The western world does not have

  to become a second or third rate manufacturing power. If we just

  understand and apply the correct principles, we can compete

  with anyone. I also hope that readers would see the validity and

  value of these principles in other organizations such as banks,

  hospitals, insurance companies and our families. Maybe the same

  potential for growth and improvement exists in all organizations.

  Finally, and most importantly, I wanted to show that we can

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  4

  all be outstanding scientists. The secret of being a good scientist, I

  believe, lies not in our brain power. We have enough. We simply

  need to look at reality and think logically and precisely about

  what we see. The key ingredient is to have the courage to face

  inconsistencies between what we see and deduce and the way

  things are done. This challenging of basic assumptions is essential

  to breakthroughs. Almost everyone who has worked in a plant is

  at least uneasy about the use of cost accounting efficiencies to

  control our actions. Yet few have challenged this sacred cow di-

  rectly. Progress in understanding requires that we challenge basic

  assumptions about how the world is and why it is that way. If we

  can better understand our world and the principles that govern

  it, I suspect all our lives will be better.

  Good luck in your search for these principles and for your own

  understanding of "The Goal."

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  5

  ABOUT THE AUTHOR

  Dr. Eli Goldratt's book, The Goal has been a best seller since

  1984 and is recognized as one of the best-selling management

  books of all time. Recently, the Japanese edition of The Goal

  sold over 500,000 copies in less than one year after being re-

  leased.

  Eli Goldratt is the author of many other books including the

  business novels, It's Not Luck (the sequel to The Goal), Critical Chain, and Necessary but Not Sufficient. His books have been Iranslated into 27 languages and sales have exceeded 6 million

  copies worldwide. His latest book is, Necessary but Not Sufficient,

  which focuses on the low rate of return obtained by companies

  on their huge investments in IT and enterprise resource plan-

  ning (ERP) systems.

  Eli Goldratt is the founder of TOC for education; a non-profit

  organization dedicated to bringing TOC thinking and tools to

  teachers and their students (www.tocforeducation.com). Dr.

  Goldratt currently spends his time promoting TOC for Edu-

  cation and The Goldratt Group while he continues to write,

  lecture and consult.

  For more information on Eli Goldratt and his current projects

  visit his web site at: www.eligoldratt.com.

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  6

  THE GOAL

  THIRD REVISED EDITION

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  7

  1

  I come through the gate this morning at 7:30 and I can see it

  from across the lot: the crimson Mercedes. It's parked beside the

  plant, next to the offices. And it's in my space. Who else would do that except Bill Peach? Never mind that the whole lot is practically empty at that hour. Never mind that there are spaces

  marked "Visitor." No, Bill's got to park in the space with my title on it. Bill likes to make subtle statements. So, okay, he's the division vice-president, and I'm just a mere plant manager. I guess

  he can park his damn Mercedes wherever he wants.

  I put my Mazda next to it (in the space marked "Controller").

  A glance at the license as I walk around it assures me it has to be

  Bill's car because the plate says "NUMBER 1." And, as we all

  know, that's absolutely correct in terms of who Bill always looks

  out for. He wants his shot at CEO. But so do I. Too bad that I

  may never get the chance now.

  Anyway, I'm walking up to the office doors. Already the

  adrenalin is pumping. I'm wondering what the hell Bill is doing

  here. I've lost any hope of getting any work done this morning. I

  usually go in early to catch up on all the stuff I'm too busy to do

  during the day, because I can really get a lot done before the

  phone rings and the meetings start, before the fires break out.

  But not today.

  "Mr. Rogo!" I hear someone calling.

  I stop as four people come bursting out of a door on the side

  of the plant. I see Dempsey, the shift supervisor; Martinez, the

  union steward; some hourly guy; and a machining center fore-

  man named Ray. And they're all talking at the same time. Demp-

  sey is telling me we've got a problem. Martinez is shouting about

  how there is going to be a walkout. The hourly guy is saying

  something about harassment. Ray is yelling that we can't finish

  some damn thing because we don't have all the parts. Suddenly

  I'm in the middle of all this. I'm looking at them; they're looking

  at me. And I haven't even had a cup of coffee yet.

  When I finally get everyone calmed down enough to ask

  what's going on, I learn that Mr. Peach arrived about an hour

  before, walked into my plant, and demanded to be shown the

  status of Customer Order Number 41427.

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  8

  Well, as fate would have it, nobody happened to know about

  Customer Order 41427. So Peach had everybody stepping and

  fetching to chase down the story on it. And it turns out to be a

  fairly big order. Also a late one. So what else is new? Everything

  in this plant is late. Based on observation, I'd say this plant has

  four ranks of priority for orders: Hot . . . Very Hot . . . Red

  Hot . . . and Do It NOW! We just can't keep ahead of anything.

  As soon as he discovers 41427 is nowhere close to being

  shipped, Peach starts playing expeditor. He's storming ar
ound,

  yelling orders at Dempsey. Finally it's determined almost all the

  parts needed are ready and waiting—stacks of them. But they

  can't be assembled. One part of some sub-assembly is missing; it

  still has to be run through some other operation yet. If the guys

  don't have the part, they can't assemble, and if they can't assem-

  ble, naturally, they can't ship.

  They find out the pieces for the missing subassembly are

  sitting over by one of the n/c machines, where they're waiting

  their turn to be run. But when they go to that department, they

  find the machinists are not setting up to run the part in question, but instead some other do-it-now job which somebody imposed

  upon them for some other product.

  Peach doesn't give a damn about the other do-it-now job. All

  he cares about is getting 41427 out the door. So he tells Dempsey

  to direct his foreman, Ray, to instruct his master machinist to

  forget about the other super-hot gizmo and get ready to run the

  missing part for 41427. Whereupon the master machinist looks

  from Ray to Dempsey to Peach, throws down his wrench, and

  tells them they're all crazy. It just took him and his helper an

  hour and a half to set up for the other part that everyone needed so desperately. Now they want to forget about it and set up for

  something else instead? The hell with it! So Peach, always the

  diplomat, walks past my supervisor and my foreman, and tells the

  master machinist that if he doesn't do what he's told, he's fired.

  More words are exchanged. The machinist threatens to walk off

  the job. The union steward shows up. Everybody is mad. Nobody

  is working. And now I've got four upset people greeting me

  bright and early in front of an idle plant.

  "So where is Bill Peach now?" I ask.

  "He's in your office," says Dempsey.

  "Okay, would you go tell him I'll be in to talk to him in a

  minute," I ask.

  E.M. Goldratt

  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  9

  Dempsey gratefully hurries toward the office doors. I turn to

  Martinez and the hourly guy, who I discover is the machinist. I

  tell them that as far as I'm concerned there aren't going to be any

  firings or suspensions—that the whole thing is just a misunder-

  standing. Martinez isn't entirely satisfied with that at first, and the