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the goal-finaliiii vr. the goal-finaliiii vr. Document Transcript

  • The GoalGSC #7620- Fall 2012Mr. Michael SilvioSamar Dalal Yasso September 28, 2012 1
  • Executive SummaryThe benefits of the “Goal” novel book are numerous and the author highlights several aspects identifyingproblems and possible solutions to improve overall performance & management processes as an ongoingdevelopment. Alex Rogo, Manufacturing Plant Manager and the main character in the book reviews thefundamentals of redefining priorities in the process to achieve this goal. As I continued to read, the authorelucidates diversified scientific, mathematic and upper level management methods. He identifies theproblems as intrinsic constraints which are limiting people minds from moving forward and thinking out ofthe box. For instance, many businesses wasted labor hours and cost for studies and project reviews whenthe data is not applicable.Alex engages his team to list questions concerning daily operations, procedures and in some casesabandoned company policies. i.e., he replaced outdated methods with robot which required less overalllabor hours but was costly. If the robot ran side by side with the old methods, the production could increaseto almost double. The author embraces the magnitude of continues process improvement method formanagement processes in all different forms of businesses by relating scientific methods such as bottleneck“Theory of Constraints” to improve management processes, “Socratic Method” to lead people to thesolution of future problems, and “Evaporating Cloud” to think laterally hence out of the box whileutilizing available resources. I learned from the author that management is science which can solveproblems with logical and scientific methods rather than relying only on explicit experience. An examplefrom actual business news, the sustainable success of Toyota Motor Company’s management that applies“Kizen” method (in Japanese means continues process improvement) and it is integral part of thecompany’s core competencies and competitive advantage. I agree with the author’s statement: “the Goal ofany company is to gain profit” by focusing on minimizing inventory, reducing operational costs andincrease throughput and not necessary following the traditional measures such as layoffs and reducingwages …etc. 2
  • Theory of Constraints “Bottleneck”, Socratic Method &Evaporating CloudIt’s imperative to learn and deeply understand how to apply these methods as it helps in taking necessarymeasures to improve the overall procedure in business and personal life. As Dr. Jonah, Alex’s distantadvisor suggested to brainstorm with his team members and arrive at logical solution of various Q&A as aprocess of Socratic Method which is a form of inquiry and debate between individuals with opposing pointof views based on Q&A to stimulate critical thinking and to illuminate ideas. He simultaneously appliedthese scientific methods in business while realizing its contribution to facilitate the ongoing processimprovement and in his personal life trying to save his marriage.Alex was able to increase the throughput and net profit of the company by setting common mutual goals.Further, with Lou, chief accountant identified the feasible application of the theory on each divisionalmanager. He engaged his wife and applied Socratic Method by finding 5 logical steps to improve the plantperformance as well as to resolve their marital problems. Later on this theory was recognized as Goldratt’stheory of constraints and taught in management courses.1. Identification of the constraint – The outdated technology and the heat treatment process was criticalfactor in reducing the preparation time in manufacturing process through correct identification of constraint.2. Exploitation of the constraint – If outdated technology and heat treatment process is taking too muchtime to complete the program for each type of component, monitoring and evaluation bill of materials isnecessary for exploiting the constraint rather than simply eliminating the constraint.3. Subordinate other works to the constraint – Parallel processing of quality control prior the bottleneckreduces the idle time of machines to speed up the capacity of NCX-10 machine.4. Elevate the constraint – Increase the throughput of the constraints irrelevant to the costs as they limit theentire system throughput.5. Repetition for further improvement – Repeat with new constraints. As constraints improve, new constraints 3
  • will emerge, repeat with these next. Careful observation of constrains made the plant successful and embraceAlex and his team.In my view, Alex portrayed a lateral analytical thinking while paying attention to the details; he was able tosolve the production capacity. Similarly, he solved the production delays by forming batch sizes accordingto an economical batch quantity of the heat treatment process and the time lost in getting full batches ofparts at once to fill the furnace caused repeated heat-treatment. Theory of Constraints comes into practiceto balance the following 3 critical areas, minimizing inventory, reducing operational costs and increasethroughput of the plant’s operations simultaneously.The other concept that I learned is applying Evaporating Cloud which is out of the box thinking processthat Alex applied when he wanted to increase the plants throughput, but he couldn’t do so due to the lackof contracts. Eventually, he found out that there is a deal from a French client who wants a certain parts at alow price in large quantities. Presumably, we all should learn from Alex’s excellent example of team workand how he and his team were able to group the quantity in pieces which raised the price back up as theclient doesn’t order in bulk anymore. The plant produced 1000 parts in 2 weeks and managed to groupthem and produced 250 parts a week for 4 weeks to satisfy the client, maintain agreed upon price, and keepthe production flow. Therefore, both manufacturer and buyer gained from Alex’s efficient team work andmanagement style in which he was able to overcome bottleneck constrains and to maintain businesssustainability.In sum, the key is to maintain minimum inventory with high turnover ratio to keep sustainable cash flow.Since, inventory booked in current assets and evaluated according to the cost of goods sold. To IncreaseThroughput, the emphasis on effective production leads to the rate at which a corporation can produce forsales. Traditionally the throughput is the rate which the plants generates money through production. Butrealizing the effectiveness of “through sales” if the products are just produced, but not sold, they’ll not bethroughput. 4
  • On the other hand, it is imperative to appreciate a further use of the Theory of Constraints; Alex wasstruggling with personal family issues with his wife Julie due to his extensive work life style, several issueswere absorbed. He and his wife were drifting apart as he got more and more wrapped up with work.Eventually, both began communicating to balance between achieving job objectives and dedicating qualityfamily time. She unintentionally was involved and became part of his Team.When I finished my high school and during the summer vacation, my brother needed my help working inhis appliances repair store. Now I go back with my memory to point a problem he solved in a simple wayapplying constrains method with his limited knowledge. The problem was finding an alternative of stockingdifferent parts with shorter life cycles for different appliances brands (fridge’s, stoves, washer & dryer,dishwashers, microwaves…etc. In addition, he was dealing with a complex distribution of order picksystem that was a basic operated system started with ordering list of stock for fast moving items along withother information such as the due date waiting for repair items. The emphasis is to review the ordering anddistribution systems with the supplier for better delivery time and accuracy standards (JIT). The supplierwas moving ordered items to point of delivery to reduce cycle time and make efficient order picking withlow cost. When we analyzed the entire system process, we identified the order picking as the number onearea needs improvement in the supplier warehouse. I remember well working with the warehouse managertracking our orders and smoothing the parts movement cycle inside the warehouse in which we were able toclassify our orders with three colors labels as critical (red), emergency (yellow), and standard (green). Itwas really fun to follow a process from the start to finish and see how setting up logical system (constrainsmethod) to meet our customer expectations of reliable repairs and delivery time.In conclusion, back to the focal idea of this book, I believe the title of the book infers that change andprocesses should be ongoing. Concurrently, from my experience, many employers and even employees yetprefer not to move out of their comfort zone, reject “change” and function as we always hear, if it works,don’t fool with it. 5
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