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The Goal (Goldratt E M)

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"What's wrong with shifting the ones you already have to the bottlenecks?" asks Jonah.

"That's something we can think about," I tell him.

"Good. Let's go back to the offices," says Jonah.

We go back to the office building and meet in the conference room.

"I want to be absolutely sure you understand the importance of the bottlenecks," says Jonah. "Every time a bottleneck finishes a part, you are making it possible to ship a finished product. And how much does that mean to you in sales?"

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"It averages around a thousand dollars a unit," says Lou.

"And you're worried about spending a dollar or two at the bottlenecks to make them more productive?" he asks. "First of all, what do you think the cost of, let's say, the X machine is for one hour?"

Lou says, "That's well established. It costs us $32.50 per hour."

"And heat-treat?"

"That's $21 per hour," says Lou.

"Both of those amounts are incorrect," says Jonah.

"But our cost data-"

"The numbers are wrong, not because you have made a cal- culating error, but because the costs were determined as if these work centers existed in isolation," says Jonah. "Let me explain: when I was a physicist, people would come to me from time to time with problems in mathematics they couldn't solve. Thev wanted me to check their numbers for them. But after a while I learned not to waste my time checking the numbers-because the numbers were almost always right. However, if I checked the assumptions, they were almost always wrong."

Jonah pulls a cigar out of his pocket and lights it with a match.

"That's what's going on here," he says between puffs. "You have calculated the cost of operating these two works centers ac- cording to standard accounting procedures... without consid- ering the fact that both are bottlenecks."

"How does that change their costs?" asks Lou.

"What you have learned is that the capacity of the plant is equal to the capacity of its bottlenecks," says Jonah. "Whatever the bottlenecks produce in an hour is the equivalent of what the plant produces in an hour. So... an hour lost at a bottleneck is an hour lost for the entire system."

"Right, we're with you," says Lou.

"Then how much would it cost for this entire plant to be idle for one hour?" asks Jonah.

"I really can't say, but it would be very expensive," admits Lou.

"Tell me something," asks Jonah. "How much does it cost you to operate your plant each month?"

Lou says, "Our total operating expense is around $1.6 mil- lion per month."

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"And let's just take the X machine as an example," he says. "How many hours a month did you say it's available for produc- tion?"

"About 585," says Ralph.

"The actual cost of a bottleneck is the total expense of the system divided by the number of hours the bottleneck produces," says Jonah. "What does this make it?"

Lou takes out his calculator from his coat pocket and punches in the numbers.

"That's $2,735," says Lou. "Now wait a minute. Is that right?"

"Yes, it's right," says Jonah. "If your bottlenecks are not working, you haven't just lost $32 or $21. The true cost is the cost of an hour of the entire system. And that's twenty seven hundred dollars."

Lou is flabbergasted.

"That puts a different perspective on it," says Stacey.

"Of course it does," says Jonah. "And with that in mind, how do we optimize the use of the bottlenecks? There are two princi- pal themes on which you need to concentrate...

"First, make sure the bottlenecks' time is not wasted," he says. "How is the time of a bottleneck wasted? One way is for it to be sitting idle during a lunch break. Another is for it to be pro- cessing parts which are already defective-or which will become defective through a careless worker or poor process control. A third way to waste a bottleneck's time is to make it work on parts you don't need."

"You mean spare parts?" asks Bob.

"I mean anything that isn't within the current demand," he says. "Because what happens when you build inventory now that you won't sell for months in the future? You are sacrificing pres- ent money for future money; the question is, can your cash flow sustain it? In your case, absolutely not."

"He's right," admits Lou.

"Then make the bottlenecks work only on what will contrib- ute to throughput today ... not nine months from now," says Jonah. "That's one way to increase the capacity of the bottle- necks. The other way you increase bottleneck capacity is to take some of the load off the bottlenecks and give it to non-bottle- necks."

I ask, "Yeah, but how do we do that?"

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"That's why I was asking those questions when we were out in the plant," he says. "Do all of the parts have to be processed by the bottleneck? If not, the ones which don't can be shifted to non- bottlenecks for processing. And the result is you gain capacity on your bottleneck. A second question: do you have other machines to do the same process? If you have the machines, or if you have a vendor with the right equipment, you can offload from the bottle- neck. And, again, you gain capacity which enables you to increase throughput."

I come into the kitchen for breakfast the next morning and sit down to a big steaming bowl of my mother's oatmeal... which I have hated ever since I was a kid. I'm staring at the oatmeal (and the oatmeal is staring back) when Mom/Grandma asks, "So how did everything go last night?"

I say, "Well, actually, you and the kids were on the right track at dinner."

"We were?" asks Dave.

"We need to make the Herbies go faster," I say. "And last night Jonah pointed out some ways to do that. So we learned a lot."

"Well, now, isn't that good news," says my mother.

She pours a cup of coffee for herself and sits down at the table. It's quiet for a moment. Then I notice that Mom and the kids are eyeing each other.

"Something wrong?" I ask.

"Their mother called again last night while you were gone," says my mother.

Julie has been calling the kids regularly since she left. But for whatever reason of her own, she still won't tell them where she is. I'm debating whether to hire a private detective to find out where she's hiding.

"Sharon says she heard something when she was on the phone talking," says my mother.

I look at Sharon.

"You know that music Grandpa always listens to?" she says.

I say, "You mean Grandpa Barnett?"

"Uh- huh, you know," she says, "the music that puts you to sleep, with the-what are they called?"

"Violins," says Dave.

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