Book Report 3: The Goal

   In the last segment of The Goal: A Process of Ongoing Improvement, the protagonist, Alex, realizes that within his plant, production of a good is only a fast as it's slowest process or machine, and that production is not complete until all components of production have been finalized. He discovers this after leading his son's boy scout troop on a hike and observing the group's ability to stay together and moving around boys within the group based on their speed, and eventually distributing the weight of the slowest boy's backpack to alleviate his work load and speed up the whole group. Alex calls the slowest machines that are holding up production in the plant "Herbies" after the slowest boy on the hike. When Alex sent his team searching for Herbie in the plant, the team discovered that the plant actually had two Herbies, and both machines perform very important processes that are necessary for at least eighty percent of all parts that are produced in the plant. Alex calls Jonah, an acquaintance who has been advising him, for advice. 

   Jonah describes what he calls "bottlenecks," which are resources with capacity less than or equal to market demand, and "non-bottlenecks," which are resources with excess capacity. The bottlenecks are essentially the Herbies of the plant. They do not have the capacity to handle the demand placed upon them, and hold up other processes in the plant because of their importance. Essentially, the bottlenecks determine the effective capacity of the plant. Ideally, the flow of products through the bottlenecks should be slightly less than that of market demand, so that in case market demand decreases, the plant does not experience a loss. The group identified the bottlenecks as the heat-treat furnace that all materials run through, and the NCX-10 machine that handles the work that used to take three separate machines. Looking through the plant, the group can find no reasonable alternative to using these two machines, and purchasing more machines would be beyond their means. Jonah visits the plant to help find solutions. 

   One change that Jonah recommends is to move quality control from after heat-treat to before heat-treat. By making this change, defective batches will not waste time and room in the furnace. He also advises to have the bottlenecks working constantly during every available production hour, and that the group should negotiate with the union to find a way to keep the machine running during breaks. Next, Jonah wants to know if processes can be moved to other machines, such as the old machines that were replaced by the NCX-10. Unfortunately, the old machines were sold and no other machines in the plant can do the same job. Jonah discusses outsourcing some batches instead of performing bottleneck tasks in-house. He then tells the group that the bottlenecks should work only on parts that are immediately necessary, rather than working on spare parts. Basically, the plant should only focus on production that will contribute to throughput. Finally, to put an emphasis on how important the bottlenecks are to the plant, Jonah explains that the actual operating cost of a bottleneck is the total expense of all work in progress in the system divided by the operating hours of the bottleneck, because the bottlenecks are vital to almost every product that passes through the plant. 

   Taking Jonah's advice into consideration, the group decides to produce strictly according to overdue orders in order of lateness, making sure that this priority system is carried through to the bottlenecks. Quickly, Alex notices issues with his priority system because the machinists on non-bottleneck machines cannot distinguish important orders from unimportant orders, and were working on orders that didn't need to be run through the bottlenecks. The group then decides to mark orders with red and green tags so that workers in the plant know which orders are necessities. Alex is able to convince the plant's union representative to change the policy on lunch and coffee breaks for workers who are running the bottleneck machines, so that they can keep the machines working without wasting operating hours and slowing down production. The plant is also able to acquire an older piece of equipment for free from another plant that, combined with another piece of equipment the plant already owned, is able to do the work of the NCX-10 machine. Finally, after observing the effects of the changes on the plant, it becomes clear that one team of workers on heat-treat furnace have been significantly more productive than the teams working in other shifts. Alex speaks to the team leader to discover what they had been doing differently to get such stellar results, which involved arranging and mixing batches of materials to be placed in the furnace while the previous batch was being heated. Alex gives the team leader the night off and asks him to come in the following day to explain his strategy to teams working the other shifts. After making these changes, the team celebrates a new plant record of fifty-seven orders shipped in one month, totaling approximately three million dollars, with a twelve percent decline in inventory!