The Goal by Eli Goldrat - Book Report/Review Example

 The Goal by Eli Goldrat The book is about Alex Rogo, a plant manager. His boss Mr. Peach to improve the profitability of the factory has given Him three months to develop. Mr. Peach threatens to shut down the plant if there are no improvements at a given time. Alex has marital problems at home with his wife who is not adjusting well since moving from the city. Alex learned that the company is facing closure if it does not improve within a year at an executive meeting. Alex remembers his friend Jonah who is an old physicist during the meeting. Jonah surprised Alex by the knowledge he had about the company operating well and making profits. He however predicts a problem with high inventories and late shipping dates. He states that there is only one goal to achieve and anything that brings one closer to make it is productive and if it does not it is not productive. Alex discovers that the goal is money. He establishes a team including an accountant, an inventory control manager, and a production manager. They work together to make the plant profitable. Jonah helps Alex to build his management by first giving him three terms to help him that is throughput, inventories, and operating expenses. He then leaves Alex with a riddle on ‘dependable variables” and “statistical fluctuations”. He finally understands how they affected the production when he was acting as a troop master using the single file analogy. When he puts the slowest kid in front and relieves him off some extra weight in his backpack. The kid’s productivity increased which in turn increased the throughput of the whole team. Alex understands their application during a dice game or matches bowl experiment that when they increase performance decreases and inventories, and operating expenses increase in a balanced plant. Jonah introduced Alex to the concept of bottlenecks and non-bottle necks. He gets an order to ship a thousand products; he breaks them into batches and ships 250 each month for four months. Alex improves on finding solutions to problems and he discovers an effective way to manage the three plants that are under him by asking three questions what to change? What to change to? In addition, how to change? The skills needed to answer them are the essential elements of a good manager. The overarching theme of the whole book is that the production process focuses on one goal, and that goal is making money. This is important in supply chain management as the entire process is to ensure an increase in revenues for the company. Supply Chain Management is a process that involves coordinating the flow of materials, information, and fiancés as they move from supplier to the manufacturer to the retailer and to the consumer. The ultimate goal of any system involving supply management is to reduce inventory and operating expenses. When conducting these processes the ultimate aim is to make money. How the book key points apply to supply chain management The book by Goldratt is very practical for the supply managers as in it; there are various key points that are covered to ensure a profitable production system. The book explains how production plants should be operated to get goods to customers within the set time limits. The following is a discussion of some major key points found in the book. The first key point that was indicated by Jonah was that for a plant to operate efficiently there are three essential elements to be considered .they are throughput, inventories, and operating expenses. These are explained as follows; throughput is the profits from a production process, inventory is the money that is currently in the plant and operating expenses are the costs that must be met in order to gain throughput. Therefore, for a plant to achieve performance it has to reduce the inventory and the operating expenses. The supply chain management system must incorporate the three in order to get high revenues. The second key point is on the ‘dependable variables’ and ‘statistical valuations’. They are imperative as Alex noted through the analogy of a single file. Therefore, for the supply chain management system to be effective the manager has to evaluate the two because they can cause losses. The third key point is on the bottle -necks and non –Jonah as any resource whose capacity is equal defines bottlenecks what known in SCM as the theory of constraints (TOC).Bottlenecks or less than the total demand placed on it. On-bottlenecks are those resources whose capacity is more than the total demand placed on them. In supply chain management, this theory is important because as we have learned in class the solution to supply chains is to ensure a flow of inventories in order to create availability and reduce surpluses that are the bottlenecks. The bottlenecks contribute to creating a competitive edge by providing an extraordinary availability of stock and reducing the damages caused by shortages. The fourth key point is the use of teamwork in order to achieve results. Alex had to use a group of his employees who helped him in making decisions in the plant. For a supply, chain system to be effective teamwork is required from the supplier to the retailer. They all need each other in the process to achieve results. The fifth key point is that when a manager at a plant receives a big order he or she should produce the order in small batches. Delivery of the batches is at different pre-determined times. This will ensure that production is perpetual and the ordering in time. Supply chain management system focuses on getting goods on time to consumers; application of this essential point is very vital. The sixth key point is on the division of labor; employees should have specified tasks and activities. This will ensure accountability and responsibility. This ensures that no process is stopped in case of an urgent order in the factory. The managers in the supply chain should identify the tasks and a duty of each staff the whole processes is effective and efficient. The seventh key point is about setting goal and objectives. In supply chain management, it is important to set the goals to be achieved. The whole process relies on them. Also, managers should develop skills like knowing when to change, what to change to and how to effect change, as they are the core competencies of the supply chain manager. In class, there are various readings discussed and one of them is the ‘Innovations that Control Supply Chains. ‘The two principles for supply chain managers are supply chain analytics and multi-channel fulfillment. Supply chain analytics deals with reducing supply costs and offering quality services. The multichannel aims at delivering products quickly to the consumers. The book has used the example of producing small batches for an order of a thousand units that ensured that the client got his order on time. This also helped in reducing costs as the other processes in the company was still taking place. The discussion on the case study of ‘How Motorola put CPFR into Action.’ CPFR (collaborative planning, forecasting, and replenishment).An example from the book that used this process was when Alex was made the C.E.O, and he had to plan on how the processes of the company had to be done. His team helps him to come up with decision steps. Replenishment was determined by considering the demand and supply of finished products and using the theory of bottlenecks. The management for discovered not all the employees are involved in the production process. They are allocated various tasks that are described to them. It also covers on marketing and finding the response of consumers to find the demand and supply of finished products. Alex discovers that there was a non-bottle neck in the storage of finished goods. The employees were very idle because the need for the products was flat. Therefore, marketing was carried out locally and internationally to sells the products. The company stopped focusing on the local community only. They only produced goods that were demanded by the consumers. The book also covers partly on how managers should gather information Alex knows through grapevine that the company closure is within a year. Jonah who is a physicist also helps Alex with expert advice and the wife of Alex gives him some tips on how to effect changes. The story of Alex fits an experience I had as an intern. The boss had given me extra tasks to accomplish, and I did not know where to start. I had to seek advice from an expert on how to go about the process like Jonah. The book will enable me to develop my career objectives of being an effective manager by applying the various management principles that I have learned. It also relates to other topics in supply chain management like practical human resource and how to manage personal stress. Word Cited Eliyahu, Goldratt's, The Goal by Eli Goldrat.3rd edition, North River : North River Press, 2004. Read More