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The Goal (Goldratt E M)

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why the plant exists. After all, how many people have we laid off so far?

And anyway, even if UniCo offered lifetime employment like some of the Japanese companies, I still couldn't say the goal is jobs. A lot of people seem to think and act as if that were the goal (empire-building department managers and politicians just to name two), but the plant wasn't built for the purpose of paying wages and giving people something to do.

Okay, so why was the plant built in the first place?

It was built to produce products. Why can't that be the goal? Jonah said it wasn't. But I don't see why it isn't the goal. We're a manufacturing company. That means we have to manufacture something, doesn't it? Isn't that the whole point, to produce products? Why else are we here?

I think about some of the buzzwords I've been hearing lately.

What about quality?

Maybe that's it. If you don't manufacture a quality product all you've got at the end is a bunch of expensive mistakes. You have to meet the customer's requirements with a quality product, or before long you won't have a business. UniCo learned its les- son on that point.

But we've already learned that lesson. We've implemented a major effort to improve quality. Why isn't the plant's future se- cure? And if quality were truly the goal, then how come a com- pany like Rolls Royce very nearly went bankrupt?

Quality alone cannot be the goal. It's important. But it's not the goal. Why? Because of costs?

If low- cost production is essential, then efficiency would seem to be the answer. Okay... maybe it's the two of them together: quality and efficiency. They do tend to go hand-in-hand. The fewer errors made, the less re-work you have to do, which can lead to lower costs and so on. Maybe that's what Jonah meant.

Producing a quality product efficiently: that must be the goal. It sure sounds good. "Quality and efficiency." Those are two nice words. Kind of like "Mom and apple pie."

I sit back and pop the top on another beer. The pizza is now just a fond memory. For a few moments I feel satisfied.

But something isn't sitting right. And it's more than just indi- gestion from lunch. To efficiently produce quality products

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sounds like a good goal. But can that goal keep the plant work- ing?

I'm bothered by some of the examples that come to mind. If the goal is to produce a quality product efficiently, then how come Volkswagen isn't still making Bugs? That was a quality product that could be produced at low cost. Or, going back a ways, how come Douglas didn't keep making DC-3's? From ev- erything I've heard, the DC-3 was a fine aircraft. I'll bet if they had kept making them, they could turn them out today a lot more efficiently than DC-10's.

It's not enough to turn out a quality product on an efficient basis. The goal has to be something else.

But what?

As I drink my beer, I find myself contemplating the smooth finish of the aluminum beer can I hold in my hand. Mass produc- tion technology really is something. To think that this can until recently was a rock in the ground. Then we come along with some know-how and some tools and turn the rock into a light- weight, workable metal that you can use over and over again. It's pretty amazing-

Wait a minute, I'm thinking. That's it!

Technology: that's really what it's all about. We have to stay on the leading edge of technology. It's essential to the company. If we don't keep pace with technology, we're finished. So that's the goal.

Well, on second thought... that isn't right. If technology is the real goal of a manufacturing organization, then how come the most responsible positions aren't in research and develop- ment? How come RD is always off to the side in every organiza- tion chart I've ever seen? And suppose we did have the latest of every kind of machine we could use-would it save us? No, it wouldn't. So technology is important, but it isn't the goal.

Maybe the goal is some combination of efficiency, quality and technology. But then I'm back to saying we have a lot of impor- tant goals. And that really isn't saying anything, aside from the fact that it doesn't square with what Jonah told me.

I'm stumped.

I gaze down the hillside. In front of the big steel box of the plant there is a smaller box of glass and concrete which houses the offices. Mine is the office on the front left corner. Squinting at

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it, I can almost see the stack of phone messages my secretary is bringing in my wheelbarrow.

Oh well. I lift my beer for a good long slug. And as I tilt my head back, I see them.

Out beyond the plant are two other long, narrow buildings. They're our warehouses. They're filled to the roof with spare parts and unsold merchandise we haven't been able to unload yet. Twenty million dollars in finished-goods inventory: quality products of the most current technology, all produced efficiently, all sitting in their boxes, all sealed in plastic with the warranty cards and a whiff of the original factory air-and all waiting for someone to buy them.

So that's it. UniCo obviously doesn't run this plant just to fill a warehouse. The goal is sales.

But if the goal is sales, why didn't Jonah accept market share as the goal? Market share is even more important as a goal than sales. If you have the highest market share, you've got the best sales in your industry. Capture the market and you've got it made. Don't you?

Maybe not. I remember the old line, "We're losing money, but we're going to make it up with volume." A company will sometimes sell at a loss or at a small amount over cost-as UniCo has been known to do-just to unload inventories. You can have a big share of the market, but if you're not making money, who cares?

Money. Well, of course... money is the big thing. Peach is going to shut us down because the plant is costing the company too much money. So I have to find ways to reduce the money that the company is losing...

Wait a minute. Suppose I did some incredibly brilliant thing and stemmed the losses so we broke even. Would that save us? Not in the long run, it wouldn't. The plant wasn't built just so it could break even. UniCo is not in business just so it can break even. The company exists to make money.

I see it now.

The goal of a manufacturing organization is to make money.

Why else did J. Bartholomew Granby start his company back in 1881 and go to market with his improved coal stove? Was it for the love of appliances? Was it a magnanimous public gesture to bring warmth and comfort to millions? Hell, no. Old J. Bart did it to make a bundle. And he succeeded-because the stove was a

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