The Goal: A Process of Ongoing Improvement, Third Revised Edition
Page 9
months.
But that decided, the big question arises: what the hell can I
really do? I've already done the best I can with what I know.
More of the same is not going to do any good.
Unfortunately, I don't have a year to go back to school and
re-study a lot of theory. I don't even have the time to read the
magazines, papers, and reports piling up in my office. I don't
have the time or the budget to screw around with consultants,
making studies and all that crap. And anyway, even if I did have
the time and money, I'm not sure any of those would give me a
much better insight than what I've got now.
I have the feeling there are some things I'm not taking into
account. If I'm ever going to get us out of this hole, I can't take
anything for granted; Tm going to have to watch closely and
think carefully about what is basically going on ... take it one
step at a time.
I slowly realize that the only tools I have—limited as they
may be—are my own eyes and ears, my own hands, my own
voice, my own mind. That's about it. I am all I have. And the
thought keeps coming to me: I don't know if that's enough.
When I finally crawl into bed, Julie is a lump under the
sheets. She is exactly the way I left her twenty-one hours ago.
She's sleeping. Lying beside her on the mattress, still unable to
sleep, I stare at the dark ceiling.
That's when I decide to try to find Jonah again.
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
61
8
Two steps after rolling out of bed in the morning, I don't like
moving at all. But in the midst of a morning shower, memory of
my predicament returns. When you've only got three months to
work with, you don't have much time to waste feeling tired. I
rush past Julie—who doesn't have much to say to me—and the
kids, who already seem to sense that something is wrong, and
head for the plant.
The whole way there I'm thinking about how to get in touch
with Jonah. That's the problem. Before I can ask for his help, I've
got to find him.
The first thing I do when I get to the office is have Fran
barricade the door against the hordes massing outside for frontal
attack. Just as I reach my desk, Fran buzzes me; Bill Peach is on
the line.
"Great," I mutter.
I pick up the phone.
"Yes, Bill."
"Don't you ever walk out of one of my meetings again," rumbles Peach. "Do you understand me?"
"Yes, Bill."
"Now, because of your untimely absence yesterday, we've got
some things to go over," he says.
A few minutes later, I've pulled Lou into the office to help
me with the answers. Then Peach has dragged in Ethan Frost and
we're having a four-way conversation.
And that's the last chance I have to think about Jonah for the
rest of the day. After I'm done with Peach, half a dozen people
come into my office for a meeting that has been postponed since
last week.
The next thing I know, I look out the window and it's dark
outside. The sun has set and I'm still in the middle of my sixth
meeting of the day. After everyone has gone, I take care of some
paperwork. It's past seven when I hop in the car to go home.
While waiting in traffic for a long light to turn green, I finally
have the opportunity to remember how the day began. That's
when I get back to thinking about Jonah. Two blocks later, I
remember my old address book.
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
62
I pull over at a gas station and use the pay phone to call
Julie.
"Hello," she answers.
"Hi, it's me," I say. "Listen, I've got to go over to my mother's for something. I'm not sure how long I'll be, so why
don't you go ahead and eat without me."
"The next time you want dinner—"
"Look, don't give me any grief, Julie; this is important."
There is a second of silence before I hear the click.
It's always a little strange going back to the old neighbor-
hood, because everywhere I look is some kind of memory waiting
just out of sight in my mind's eye. I pass the corner where I had
the fight with Bruno Krebsky. I drive down the street where we
played ball summer after summer. I see the alley where I made
out for the first time with Angelina. I go past the utility pole upon
which I grazed the fender of my old man's Chevy (and subse-
quently had to work two months in the store for free to pay for
the repair). All that stuff. The closer I get to the house, the more
memories come crowding in, and the more I get this feeling that's
kind of warm and uncomfortably tense.
Julie hates to come here. When we first moved to town, we
used to come down every Sunday to see my mother and Danny
and his wife, Nicole. But there got to be too many fights about it,
so we don't make the trip much anymore.
I park the Mazda by the curb in front of the steps to my
mother's house. It's a narrow, brick row house, about the same as
any other on the street. Down at the corner is my old man's store,
the one my brother owns today. The lights are off down there;
Danny closes at six. Getting out of my car, I feel conspicuous in
my suit and tie.
My mother opens the door.
"Oh my god," she says. She clutches her hands over her
heart. "Who's dead?"
"Nobody died, Mom," I say.
"It's Julie, isn't it," she says. "Did she leave you?"
"Not yet," I say.
"Oh," she says. "Well, let me see ... it isn't Mothers'
Day . . ."
"Mom, I'm just here to look for something."
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
63
"Look for something? Look for what?" she asks, turning to
let me in. "Come in, come in. You're letting all the cold inside.
Boy, you gave me a scare. Here you are in town and you never
come to see me anymore. What's the matter? You too important
now for your old mother?"
"No, of course not, Mom. I've been very busy at the plant," I
say.
"Busy, busy," she says leading the way to the kitchen. "You hungry?"
"No, listen, I don't want to put you to any trouble," I say.
She says, "Oh, it's no trouble. I got some ziti I can heat up.
You want a salad too?"
"No, listen, a cup of coffee will be fine. I just need to find my
old address book," I tell her. "It's the one I had when I was in college. Do you know where it might be?"
We step into the kitchen.
"Your old address book . . ." she muses as she pours a cup
of coffee from the percolator. "How about some cake? Danny
brought some day-old over last night from the store."
"No thanks, Mom. I'm fine," I say. "It's probably in with all my old notebooks and stuff from school."
She hands me the cup of coffee. "Notebooks . . ."
"Yeah, you
know where they might be?"
Her eyes blink. She's thinking.
"Well . . . no. But I put all that stuff up in the attic," she
says.
"Okay, I'll go look there," I say.
Coffee in hand, I head for the stairs leading to the second
floor and up into the attic.
"Or it might all be in the basement," she says.
Three hours later—after dusting through the drawings I
made in the first grade, my model airplanes, an assortment of
musical instruments my brother once attempted to play in his
quest to become a rock star, my yearbooks, four steamer trunks
filled with receipts from my fatber's business, old love letters, old
snapshots, old newspapers, old you-name-it—the address book is
still at large. We give up on the attic. My mother prevails upon
me to have some ziti. Then we try the basement.
"Oh, look!" says my mother.
"Did you find it?" I ask.
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
64
"No, but here's a picture of your Uncle Paul before he was
arrested for embezzlement. Did I ever tell you that story?"
After another hour, we've gone through everything, and I've
had a refresher course in all there is to know about Uncle Paul.
Where the hell could it be?
"Well, I don't know," says my mother. "Unless it could be in your old room."
We go upstairs to the room I used to share with Danny. Over
in the corner is the old desk where I used to study when I was a
kid. I open the top drawer. And, of course, there it is.
"Mom, I need to use your phone."
My mother's phone is located on the landing of the stairs
between the floors of the house. It's the same phone that was
installed in 1936 after my father began to make enough money
from the store to afford one. I sit down on the steps, a pad of
paper on my lap, briefcase at my feet. I pick up the receiver,
which is heavy enough to bludgeon a burglar into submission. I
dial the number, the first of many.
It's one o'clock by now. But I'm calling Israel, which happens
to be on the other side of the world from us. And vice versa.
Which roughly means their days are our nights, our nights are
their mornings, and consequently, one in the morning is not such
a bad time to call.
Before long, I've reached a friend I made at the university,
someone who knows what's become of Jonah. He finds me an-
other number to call. By two o'clock, I've got the tablet of paper
on my lap covered with numbers I've scribbled down, and I'm
talking to some people who work with Jonah. I convince one of
them to give me the number where I can reach him. By three
o'clock, I've found him. He's in London. After several transfers
here and there across some office of some company, I'm told that
he will call me when he gets in. I don't really believe that, but I
doze by the phone. And forty-five minutes later, it rings.
"Alex?"
It's his voice.
"Yes, Jonah," I say.
"I got a message you had called."
"Right," I say. "You remember our meeting in O'Hare."
"Yes, of course I remember it," he says. "And I presume you have something to tell me now."
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
65
I freeze for a moment. Then I realize he's referring to his
question, what is the goal?
"Right," I say.
"Well?"
I hesitate. My answer seems so ludicrously simple I am sud-
denly afraid that it must be wrong, that he will laugh at me. But I
blurt it out.
"The goal of a manufacturing organization is to make
money," I say to him. "And everything else we do is a means to
achieve the goal."
But Jonah doesn't laugh at me.
"Very good, Alex. Very good," he says quietly.
"Thanks," I tell him. "But, see, the reason I called was to ask you a question that's kind of related to the discussion we had at
O'Hare."
"What's the problem?" he asks.
"Well, in order to know if my plant is helping the company
make money, I have to have some kind of measurements," I say.
"Right?"
"That's correct," he says.
"And I know that up in the executive suite at company head-
quarters, they've got measurements like net profit and return on
investment and cash flow, which they apply to the overall organi-
zation to check on progress toward the goal."
"Yes, go on," says Jonah.
"But where I am, down at the plant level, those measure-
ments don't mean very much. And the measurements I use inside
the plant . . . well, I'm not absolutely sure, but I don't think
they're really telling the whole story," I say.
"Yes, I know exactly what you mean," says Jonah.
"So how can I know whether what's happening in my plant is
truly productive or non-productive?" I ask.
For a second, it gets quiet on the other end of the line. Then
I hear him say to somebody with him, "Tell him I'll be in as soon
as I'm through with this call."
Then he speaks to me.
"Alex, you have hit upon something very important," he
says. "I only have time to talk to you for a few minutes, but
perhaps I can suggest a few things which might help you. You
see, there is more than one way to express the goal. Do you
understand? The goal stays the same, but we can state it in differ-
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
66
ent ways, ways which mean the same thing as those two words,
'making money.' '
"Okay," I answer, "so I can say the goal is to increase net profit, while simultaneously increasing both ROI and cash flow,
and that's the equivalent of saying the goal is to make money."
"Exactly," he says. "One expression is the equivalent of the other. But as you have discovered, those conventional measurements you use to express the goal do not lend themselves very
well to the daily operations of the manufacturing organization. In
fact, that's why I developed a different set of measurements."
"What kind of measurements are those?" I ask.
"They're measurements which express the goal of making
money perfectly well, but which also permit you to develop oper-
ational rules for running your plant," he says. "There are three of them. Their names are throughput, inventory and operational
expense."
"Those all sound familiar," I say.
"Yes, but their definitions are not," says Jonah. "In fact, you will probably want to write them down,"
Pen in hand, I flip ahead to a clean sheet of paper on my
tablet and tell him to go ahead.
"Throughput," he says, "is the rate at which the system generates money through sal e s."
I write it down word for word.
Then I ask, "But what about production? Wouldn't it be
more correct to say—"
"No," he says. "Through sal e s—not production. If you produce something, but don't sell it, it's not throughput. Got it?"
&nb
sp; "Right. I thought maybe because I'm plant manager I could
substitute—"
Jonah cuts me off.
"Alex, let me tell you something," he says. "These defini-
tions, even though they may sound simple, are worded very pre-
cisely. And they should be; a measurement not clearly defined is
worse than useless. So I suggest you consider them carefully as a
group. And remember that if you want to change one of them,
you will have to change at least one of the others as well."
"Okay," I say warily.
"The next measurement is inventory," he says. "Inventory is all the money that the system has invested in purchasing things
which it intends to sell."
E.M. Goldratt
The Goal: A Process of Ongoing Improvement
Captured by Plamen T.
67
I write it down, but I'm wondering about it, because it's very
different from the traditional definition of inventory.
"And the last measurement?" I ask.
"Operational expense," he says. "Operational expense is all the money the system spends in order to turn inventory into
throughput."
"Okay," I say as I write. "But what about the labor invested in inventory? You make it sound as though labor is operational
expense?"
"Judge it according to the definitions," he says.
"But the value added to the product by direct labor has to be
a part of inventory, doesn't it?"
"It might be, but it doesn't have to be," he says.
"Why do you say that?"
"Very simply, I decided to define it this way because I believe
it's better not to take the value added into account," he says. "It eliminates the confusion over whether a dollar spent is an investment or an expense. That's why I defined inventory and opera-
tional expense the way I just gave you."
"Oh," I say. "Okay. But how do I relate these measurements
to my plant?"
"Everything you manage in your plant is covered by those
measurements," he says.
"Everything?" I say. I don't quite believe him. "But going
back to our original conversation, how do I use these measure-
ments to evaluate productivity?"
"Well, obviously you have to express the goal in terms of the
measurements," he says, adding, "Hold on a second, Alex." Then I hear him tell someone, "I'll be there in a minute."
"So how do I express the goal?" I ask, anxious to keep the
conversation going.
"Alex, I really have to run. And I know you are smart
enough to figure it out on your own; all you have to do is think