The Goal by Eliyahu Goldratt

“The Goal” (of a manufacturing company) – to make money; everything else is a means to
achieving the goal (i.e. produce products to make money)

Reworded: The goal is to increase net profit, while simultaneously increasing both ROI
and cash flow

Measurements which express the Goal (pgs 60-61):

1. Throughput – the rate at which the system generates money through sales
2. Inventory – all the money that the system has invested in purchasing things which it
intends to sell
3. Operational Expense – all the money the system spends in order to turn inventory into
throughput

*Ideal Situation  Throughput increases simultaneously with decreasing Inventory and O.E.

Two phenomena in a plant (pgs 87-88):

1. Dependent Events – an event or a series of events must take place before another can
begin…the subsequent event depends upon the ones prior to it
2. Statistical Fluctuations – when information changes from one instance to the next

Two types of plant resources (pgs 138-139):

1. Bottleneck Resource – any resource whose capacity is equal to or less than the
demand placed upon it
2. Non-bottleneck Resource – any resource whose capacity is greater than the demand
placed on it

*BALANCE FLOW, NOT CAPACITY  make flow through a bottleneck equal (a little less than)
to market demand

“The capacity of the plant is equal to the capacity of its bottlenecks.”

To optimize bottlenecks, you must (pgs 158-159):

1. Make sure bottleneck time is not wasted

a. Sitting idle during lunch
b. Working on defective parts
c. Work only on the parts you need
2. Take the load off of bottlenecks and give it to non-bottlenecks
a. Outsource to another company
b. Other machines can do it

“A plant in which everyone is working all the time is very inefficient.” (pg. 205)

E. Goldratt’s The Goal Page 1 of 2

Notes compiled by Gina Carlier
 Four elements of time a material spends in a plant (pgs 231-232):
1. Setup
2. Process
3. Queue (large)
4. Wait (large)

Process of on-going improvement (pg 307):

Step 1 – Identify the system’s constraint(s)

Step 2 – Decide how to exploit the system’s constraint(s)
Step 3 – Subordinate everything else to the above decision
Step 4 – Elevate the system’s constraint(s)
Step 5 – Warning!! If in the previous steps a constraint has been broken, go back to Step 1, but
do not allow inertia to cause a system’s constraint

Example from “The Goal”

Relieve stress from
Define Define Determine bottlenecks and increase Increase Cut batch Reduce
Goal Measurements Bottlenecks productivity of bottlenecks Sales sizes in half lead times

“If…Then” relationship based from science research (pgs 317-318):

1. If the hypothesis is right, then logically another fact must exist

2. Verify whether or not the predicted effects do exist
3. Order is built on chaos
4. Socratic method

A good manager needs to be able to answer 3 questions (pg 337):

1. “What to change?”
2. “What to change to?”
3. “How to cause the change?”

The layers of resistance to change (pgs 349-350):

Layer 1 – raising problems have one thing in common…it’s out of our hands
Layer 2 – arguing that the proposed solution cannot possibly yield the desired outcome
Layer 3 – arguing that the proposed solution will lead to negative effects (“yes, but…”)
Layer 4 – raising obstacles that will prevent the implementation
Layer 5 – raising doubts about the collaboration of others (or worse, not raising their doubts)

** Peeling, in sequence, all these layers turns resistance **

to change into the enthusiasm of an inventor

The importance of not neglecting a relationship

“Nothing neglected will remain as it was or is, or will fail to deteriorate. All things need attention,
care and concern, and especially so in this most sensitive of all relationships of life.”
E. Goldratt’s The Goal Page 2 of 2
Notes compiled by Gina Carlier