The Goal: A Process of Ongoing Improvement

So this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.

What you have learned is that the capacity of the plant is equal to the capacity of its bottlenecks,” says Jonah.

STEP 1. Identify the system’s bottlenecks. (After all it wasn’t too difficult to identify the oven and the NCX10 as the bottlenecks of the plant.) STEP 2. Decide how to exploit the bottlenecks. (That was fun. Realizing that those machines should not take a lunch break, etc.) STEP 3. Subordinate everything else to the above decision. (Making sure that everything marches to the tune of the constraints. The red and green tags.) STEP 4. Elevate the system’s bottlenecks. (Bringing back the old Zmegma, switching back to old, less “effective” routings. . . .) STEP 5. If, in a previous step, a bottleneck has been broken go back to step 1.

Well, I don’t. Not absolutely. But adopting "making money’’ as the goal of a manufacturing organization looks like a pretty good assumption. Because, for one thing, there isn’t one item on that list that’s worth a damn if the company isn’t making money.

More importantly, our software worked. I don't just mean that it didn't bump, or that it performed according to the written specifications, or that it was efficient in producing reports. It really worked

I smile and start to count on my fingers: One, people are good. Two, every conflict can be removed. Three, every situation, no matter how complex it initially looks, is exceedingly simple. Four, every situation can be substantially improved; even the sky is not the limit. Five, every person can reach a full life. Six, there is always a win-win solution. Shall I continue to count?

The entire bottleneck concept is not geared to decrease operating expense, it’s focused on increasing throughput.

Putting it precisely, activating a resource and utilizing a resource are not synonymous.

utilizing” a resource means making use of the resource in a way that moves the system toward the goal. “Activating” a resource is like pressing the ON switch of a machine; it runs whether or not there is any benefit to be derived from the work it’s doing.

For the ability to answer three simple questions: ‘what to change?’, ‘what to change to?’, and ‘how to cause the change?’ Basically what we are asking for is the most fundamental abilities one would expect from a manager.

In summary, both Ford and Ohno followed four concepts (from now on we’ll refer to them as the concepts of flow): Improving flow (or equivalently lead time) is a primary objective of operations. This primary objective should be translated into a practical mechanism that guides the operation when not to produce (preventsoverproduction). Ford used space; Ohno used inventory. Local efficiencies must be abolished. A focusing process to balance flow must be in place. Ford used direct observation. Ohno used the gradual reduction of the number of containers and then gradual reduction of parts per container. The

They’re measurements which express the goal of making money perfectly well, but which also permit you to develop operational rules for running your plant,” he says. “There are three of them. Their names are throughput, inventory and operational expense.

Since the strength of the chain is determined by the weakest link, then the first step to improve an organization must be to identify the weakest link.

Bob comes into the office with a smear of grease on his white shirt over the bulge of his beer gut, and he’s talking nonstop about what’s going on with the breakdown of the automatic testing machines. “Bob,” I tell him, “forget about that for now.

Henry Ford achieved the highest throughput per worker of any car manufacturing company of his time.

Mr. Granby next time you two have

The secret of being a good scientist, I believe, lies not in our brain power. We have enough. We simply need to look at reality and think logically and precisely about what we see. The key ingredient is to have the courage to face inconsistencies between what we see and deduce and the way things are done. This challenging of basic assumptions is essential to breakthroughs.

Eli Goldratt passed away at his home in Israel on June 11th, 2011, in the company of his family and close friends.

Whenever we think we have final answers progress, science, and better understanding ceases.

No,” he says. “Through sales— not production. If you produce something, but don’t sell it, it’s not throughput. Got it?

Inventory is all the money that the system has invested in purchasing things which it intends to sell.” I

Operational expense,” he says. “Operational expense is all the money the system spends in order to turn inventory into throughput.

productividad es el acto de acercar a la empresa a su meta. Las acciones que acercan a una compañía a su meta son productivas. Las acciones que no acercan a la compañía a su meta no son productivas.

bringing a company closer to its goal. Every action that brings a company closer to its goal is productive. Every action that

If you don’t manufacture a quality product all you’ve got at the end is a bunch of expensive mistakes.

Science is simply the method we use to try and postulate a minimum set of assumptions that can explain, through a straightforward logical derivation, the existence of many phenomena of nature.