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

by Eliyahu M. Goldratt

  ments should induce the parts to do what's good for the organiza-

  tion as a whole. What's become apparent to me is that neither of

  these two objectives is being met.

  "For example, this conversation we just had. We knew very

  well that the plant had drastically improved, but the distorted

  measurements have almost condemned us. I'm submitting effi-

  ciency reports, product-cost reports, and now we both know to

  what extent they just lead workers and management alike to do

  what's bad for the company."

  I've never heard Lou talk for so long. I agree with every-

  thing he just said, but I'm totally confused. I don't know what

  he's getting at.

  "Alex, I can't stop here. I can't retire now. Do me a personal

  favor, take me with you. I want the opportunity to devise a new

  measurement system, one that'll correct the system we have now,

  so that it will do what we expect it to do. So that a controller can be proud of his job. I don't know if I'll succeed, but at least give

  me the chance."

  What am I supposed to say? I stand up and stretch out my

  hand. "It's a deal."

  Back at my desk I ask Fran to call Bob Donovan in. With Lou

  on one side and Bob on the other, I'll be free to concentrate on

  the two areas I know the least, engineering and marketing.

  What am I going to do about marketing? The only person I

  appreciate in that department is Johnny Jons; no wonder Bill has

  decided to take him along.

  The phone rings. It's Bob.

  "Hey Al, I'm sitting with Stacey and Ralph, we're really cook-

  ing. Can you join us?"

  "How long will it take?" I ask.

  "No way to tell. Probably 'til the end of the day."

  "In that case, I'll pass. But Bob, we need to talk. Can you get

  away for a few minutes?"

  "Sure, no problem."

  And in no time, he enters my office. "What's up, boss?"

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  I decide to give it to him straight, "How'd you like to be

  responsible for all production of the division?"

  The only thing he manages to say is a long "Wow." He puts

  his big body in a chair, looks at me, and doesn't say any more.

  "Well, Bob, surprised?"

  "You bet."

  I go to pour us coffee and he starts to talk to my back. "Alex,

  I don't want that job. Not now. You know, a month ago I would

  have grabbed the offer with both hands. It's way beyond what I

  expected."

  Puzzled, I turn around, a cup in each hand. "What's the

  matter Bob, afraid?"

  "You know better than that."

  "So what happened in the past month to change your per-

  spective?"

  "Burnside."

  "You mean he made you a better offer?"

  He fills the room with his booming laughter. "No, Alex,

  nothing like that. What gave me a new perspective was the way

  we handled Burnside's urgent order. I learned so much from

  how we handled that case that I would rather stay in this plant

  and develop it further."

  Surprises all around me. I thought I knew these people. I

  expected it would be impossible to convince Lou, and he almost

  begged me for the job. I didn't expect any problems with Bob,

  and he just declined my offer. It's really annoying.

  "You'd better explain," I hand him his cup.

  Bob's chair squeaks in protest as he fidgets. If I were staying

  here longer, I would have ordered a more massive chair just for

  him.

  "Haven't you noticed how unique the events of Burnside's

  order were?" he says at last.

  "Yes, of course. I've never heard of the president of a com-

  pany going to thank the workers of a vendor."

  "Yeah, yeah, that too. But look at the whole chain of events.

  Johnny called you with an impossible client wish. He didn't be-

  lieve it could be done, and neither did the client. And on the

  surface, it was impossible. But we looked into it. We considered

  the bottleneck availability, we considered the vendor limitations,

  and we came back with something pretty unusual.

  "We didn't say a flat no, or a flat yes, and then miss the due

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  date by a mile, as we used to do. We re-engineered the deal; we

  came back with a counter-offer that was feasible and that the

  client liked even more than his original request."

  "Yes," I say, "it was good work. Especially considering what came out after that. But that was a peculiar set of circumstances."

  "It was peculiar because normally we don't take the initiative

  —but maybe there's a way to make it standard. Don't you see? We

  actually engineered a sale. We—in the plant, in production—en-

  gineered a sale."

  I think about it. He's right. Now I start to see where he's

  heading.

  Bob, probably misinterpreting my silence, says, "For you it's

  not a big deal, you always looked at production and sales as two

  links in the same chain. But look at me. All the time I'm buried

  out on the shop floor, thinking that my responsibility is to put out

  fires, and viewing the sales department as snake oil salesmen,

  spreading unrealistic promises to our clients. For me, this event

  was a revelation.

  "Look, we give sales a rigid lead time for each product. So if

  it's not in finished goods, those are the numbers they should use

  to promise to clients. Yeah, they deviate from it, but not by much.

  Maybe there should be another way. Maybe the quoted lead times

  should be done case by case, according to the load on the bottle-

  necks. And maybe we shouldn't regard the quantities required as

  if we have to supply them in one shot.

  "Alex, I'd like to look into it more. Actually, that's what

  Stacey, Ralph, and I are doing right now. We were looking for

  you, you should join us. It's pretty exciting."

  It certainly sounds it, but I can't allow myself to get sucked in

  right now. I have to continue with preparations for my next job.

  "Tell me again what you are up to," I finally say.

  "We want to make production a dominant force in getting

  good sales. Sales which will fit both the client's needs and the

  plant's capabilities like a glove. Exactly as we did in Burnside's

  case. But you see, for that I have to be here, in the plant. As long as we don't understand it in full, as long we don't develop the

  new procedures, we have to be intimately involved with all the

  details."

  "So what you want to do is to find those procedures. I see.

  This is interesting—but Bob, that's not like you. Since when have

  you been interested in such things?"

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  "Since you came and forced us to rethink the way we were

  doing stuff. Do you think somebody needs better proof than

  what's happened here in the past months? Here we were, run-

  ning things li
ke we'd always done it—by the seat of our pants,

  slowly but surely sinking. And then we took the time and re-

  examined it from basic principles. And look at how many sacred

  cows we've had to slaughter! Worker efficiency—whoops, out the

  window. Optimum batch sizes—there it goes. Releasing work just

  because we have the material and the people—that's gone as well.

  And I can go on and on. But look at the result. If I hadn't seen it

  myself, I wouldn't believe it.

  "Yeah, Alex, I want to stay here and continue what you've

  started. I want to be the new plant manager. You caused us to

  change almost every rule in production. You forced us to view

  production as a means to satisfy sales. I want to change the role

  production is playing in getting sales."

  "Fine with me. But Bob, when you nail those procedures,"

  and to myself I add, 'if/ "will you consider taking on responsibil-

  ity for all the plants in the division?"

  "You bet, boss. I'll teach 'em a trick or two."

  "Let's drink to it," I say. And we toast with our coffee.

  "Who do you suggest should take your place?" I ask him.

  "Frankly, I'm not impressed with any of your superintendents."

  "Unfortunately, I agree with you. The best would be Stacey,

  but I don't give it much chance she'd take it."

  "Why don't we ask her. You know what? Let's call both

  Stacey and Ralph in and discuss your idea."

  "So, at last you found him," Stacey says to Bob, as she and

  Ralph enter the room, each loaded with papers.

  "Yes, Stacey," I answer. "And it definitely looks like a promising idea. But before that, there's another thing that we'd like to

  discuss with you. We've just agreed that Bob will take my place as

  plant manager. How about you taking his place as production

  manager?"

  "Congratulations, Bob." They both shake his hand. "That's

  no surprise."

  Since Stacey hasn't answered my question, I continue,

  "Think about it, you don't have to answer now. We know that you

  love your job and that you don't want the burden of all the per-

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  sonnel problems that go with being a production manager, but

  we both think that you'd do a fantastic job."

  "You bet," Bob adds his two cents.

  She looks calmly at me, and says, "Last night I was lying in

  bed, praying. I was praying that this job would be offered to me."

  "Done," Bob shouts quickly.

  "Now that you've accepted," I say to Stacey, "can you tell us why you want this job so badly?"

  "Looks like being a material manager," Bob booms, "is starting to be boring around this plant—not enough expediting, not

  enough rush calls. ... I didn't know that you liked that type of

  excitement."

  "No, I didn't, and I don't. That's why I was so happy with

  our new method, timing the release of material according to the

  bottlenecks' consumption. But you know my fear, what happens

  if new bottlenecks pop up?

  "What my people and I have done is to examine daily the

  queues in front of the assembly and in front of the bottlenecks—

  we call them 'buffers.' We check just to be sure that everything

  that's scheduled to be worked on is there—that there are no

  'holes.' We thought that if a new bottleneck pops up it would

  immediately show up as a hole in at least one of these buffers. It

  took us some time to perfect this technique, but now it's working

  smoothly.

  "You see, whenever there's a hole in a buffer—and I'm not

  talking about just the work that's supposed to be done on a given

  day, but the work for two or three days down the road—we go

  and check in which work center the materials are stuck. And

  then . . ."

  "And then you expedite!" Bob jumps in.

  "No, nothing of the sort. We don't break setups, or light a

  fire. We just point out to the foreman of that work center which

  job we would prefer he gets to next."

  "That's very interesting," I say.

  "Yeah. And it became even more interesting when we real-

  ized that we were visiting the same six or seven work centers

  every time. They're not bottlenecks, but the sequence in which

  they perform their jobs became very important. We call them

  'capacity constraint resources,' CCR for short."

  "Yeah, I know all about it. Those foremen have become al-

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  most dependent on your people to prioritize their work," Bob

  says. "But Stacey, you're not answering our question."

  "I'm coming to it. See, these holes have become more and

  more dangerous lately—sometimes to the extent that assembly

  has to deviate significantly from their scheduled sequence. And

  it's become apparent that the foremen of the CCRs have more

  and more difficulty supplying on time. Ralph was telling me that

  these work centers still have enough capacity, and maybe on the

  average he's right, but I'm afraid that any additional increase in

  sales will throw us into chaos."

  So here's a bomb, ticking below our feet, and I didn't even

  realize it. I'm pressing so hard on marketing to bring more sales,

  and according to what Stacey's just revealed that might blow up

  the whole plant. I'm still trying to digest it when she continues.

  "Don't you realize that we've concentrated our improvement

  efforts too narrowly? We tried so hard to improve our bottle-

  necks, when what we should do is improve the CCRs as well.

  Otherwise we'll run into an 'inter-active' bottleneck situation.

  "See, the key is not in the hands of the materials people. If

  interactive bottlenecks emerge, chaos is inevitable; we'll have to

  expedite all over the place."

  "So what are you suggesting?" I ask.

  "The key is in the hands of production. These techniques to

  manage the buffers should not be used just to track missing parts

  while there is still time, they should be used mainly to focus our

  local improvement efforts. We must guarantee that the improve-

  ments on the CCRs will always be sufficient to prevent them from

  becoming bottlenecks.

  "Alex, Bob, that's why I want this job so badly. I want to

  make sure that the material manager's job will continue to be

  boring. I want to demonstrate how local improvements should be

  managed. And I want to show all of you how much more

  throughput we can squeeze from the same resources."

  "What about you Ralph, it's your turn to surprise me."

  "What do you mean?" he says in his quiet voice.

  "It looks like everyone around here has a pet project. What

  ace are you hiding up your sleeve?"

  He smiles gently, "No aces, just a wish."

  We all look at him encouragingly.

  "I've started to like my job. I feel like I'm part of a team."

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  We all nod in approval.
>
  "It's not just me and the computer anymore, trying to fiddle

  with inaccurate or untimely data. People really need me now, and

  I feel like I'm contributing. But you know what? I think that the

  change, at least as it relates to my function, is very fundamental.

  What I'm holding in my files is data. What you are usually asking

  for is information. I always regarded information as those sec-

  tions of the data which are needed in order to make a decision—

  and for that, let me admit it, for most decisions my data was

  simply unsuitable. Remember the time we were trying to find the

  bottlenecks?" He looks at each of us in turn. "It took me four

  days to admit that I simply couldn't find the answer. What I

  started to realize is that information is something else. Informa-

  tion is the answer to the question asked. The more I am able to

  do it, the more a part of the team I become.

  "This bottleneck concept has really helped me to move along

  these lines. Let's face it, today the plant obeys a schedule that's

  . released from the computer.

  "What's my wish, you ask? I want to develop a system that'll

  help in what Bob wants to do, that will help to shrink drastically

  the time and effort needed to engineer a sale, as he calls it. I want

  to develop a system to help Stacey manage the buffers, and even

  to help in managing the local improvements. I want to develop a

  system to help Lou measure, in a much more beneficial way, the

  local performance. You see, like everyone else, I have my

  dreams."

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  The Goal: A Process of Ongoing Improvement

  Captured by Plamen T.

  287

  34

  It's quite late, the kids are already fast asleep. Julie and I are

  sitting in the kitchen; we're each holding a warm cup of tea in our

  hands. I tell her about what happened today at the plant. She

  seems to be more than mildly interested; she actually claims that

  she finds it fascinating.

  I love it. Rehashing the day's events with Julie really helps

  me to digest it all.

  "So what do you think?" I ask her at last.

  "I'm starting to see what Jonah meant when he warned you

  about increasing the dependency," she replies.

  That makes me think for a while, but I still can't see the

  connection. "What do you mean?"

  "Maybe I'm wrong, but you gave me the impression that

  you're not too sure that Lou'll be able to come up with a good,