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The Goal (Goldratt E M)

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Everyone was telling Ralph how impressed they were when Jonah said, "But, in fact, Ralph, you can do much more than that with the same information."

"Like what?" asked Ralph.

Jonah said, "You can also attack the inventory problems in front of assembly."

"You mean we not only can do something about excess in- ventory on the bottleneck parts, but on the non-bottleneck parts as well?" I asked.

"Exactly," said Jonah.

But Ralph said, "Sorry, folks, I'm not sure how I'd do that."

Then Jonah explained it to him-and all of us. If Ralph can determine a schedule for releasing red-tag materials based on the bottlenecks, he can also determine a schedule for final assembly. Once he knows when the bottleneck parts will reach final assem- bly, he can calculate backwards and determine the release of the non-bottleneck materials along each of their routes. In this way, the bottlenecks will be determining the release of all the materials in the plant.

I said, "You know, that's going to produce the same effect as

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moving the bottlenecks to the head of production, which is what I'd intended for us to do."

"Yeah, it sounds good," said Ralph. "But I have to warn you, I can't say how long it'll take before I can do all that. I mean, I can have schedule for the red-tagged materials worked out in a fairly short order. The rest of it will take awhile."

"Aw, come on, Ralphie," said Bob, "a computer wiz like you ought to be able to crank that out in no time."

"I can crank something out in no time," said Ralph, "but I'm not going to promise it'll work."

I told him, "Relax; as long as we ease the load on the milling machines, we'll be okay for the short haul. That'll give you the time to get something basic in place."

"You may feel you have the time now to relax," said Jonah, "but I have to catch a plane for Chicago in thirty-five minutes."

"Oh, shit," I muttered, automatically glancing at my watch. "I guess we'd better move."

It was not a graceful parting. Jonah and I ran out of the building, and I broke numerous speed limits-without incident- getting him to the airport.

"I have, shall we say, a special interest in plants like yours," said Jonah. "So I'd appreciate it if you'd keep me informed of what happens."

"Sure," I told him. "No problem. In fact, I'd planned on it."

"Good," said Jonah. "I'll be talking to you."

And with that he was out of the car and, with a wave, was

sprinting through the terminal doors. I didn't get a call, so I

suppose he made it.

When I go to work the next morning, we have a meeting about how to implement this approach. But before we can get down to talking about it, Bob Donovan starts waving a red flag at us.

"You know, we could be walking into a big problem," says Bob.

"What's that?" I ask.

"What happens if efficiencies all over the plant go down?" he asks.

I say, "Well, I think that's a risk we'll have to take."

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"Yeah, but it sounds like we're going to have a lot of people idle around here if we do this," says Bob .

"Yeah, we might have some people idle from time to time," I admit.

"So are we just supposed to let everyone stand around out there?" asks Bob.

"Why not?" asks Stacey. "Once the somebody is already on the payroll, it doesn't cost us any more to have him be idle. Whether somebody produces parts or waits a few minutes doesn't increase our operating expense. But excess inventory... now that ties up a lot of money."

"Okay," says Bob, "but what about the reporting system? Seems to me that at the end of the month, when old Bill Peach is ready to decide if we stay open or if we close down, he's not going to be awfully positive about us if he sees our efficiencies have taken a dive. I hear they do tend to frown upon that at headquar- ters."

There is quiet in the room. Then Lou says, "He does have a point, Al."

I listen to the hum of the air conditioning for a moment.

"All right, look," I say finally. "If we don't go ahead with a system to withhold inventory and release it according to the bot- tlenecks, we'll be missing a major opportunity to improve perfor- mance and save the plant. And I'm not about to stand by and let that happen just to maintain a standard that obviously has more impact on middle management politics than it does on the bot- tom line. I say we go ahead with this. And if efficiencies drop, let them."

After those brave words, so reminiscent of Admiral Farragut and his Damn-the-Torpedoes speech, the others are a little misty- eyed.

"And, ah, Bob," I tell Donovan, "if there is a lot of idle time out there, don't hassle anybody-just make damn sure it doesn't show up in the efficiency reports next month, okay?"

"Gotcha, boss."

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27

"... Let me say in conclusion that had it not been for the in- crease in revenue generated last month by the Bearington plant and its products, the UniWare Division's losses would have con- tinued for the seventh consecutive month. All of the other manu- facturing operations in the division reported only marginal gains in performance or sustained losses. Despite the improvement at Bearington and the fact that as a result the division recorded its first operating profit of this year, we have a long way to go before we are back on solid financial footing."

Having said that, Ethan Frost gets the nod from Bill Peach and sits down. I'm sitting halfway down a long table where all the plant managers are gathered. On Peach's right is Hilton Smyth, who happens to be glowering at me in the aftermath of Frost's tribute to my plant. I relax in my chair and for a moment allow myself to contemplate the view through the broad plateglass win- dow, a sunny city on an early summer day.

May has ended. Aside from the problem with the shortages of non-bottleneck parts, which have now gone away, it's been an excellent month. We're now timing the release of all materials according to a new system Ralph Nakamura developed, which is keyed to the speed of the bottlenecks. He's got a data terminal now at both of the bottlenecks, so as inventory is processed, the latest information can be fed directly into the plant data base. With the new system we're beginning to see excellent results.

Ralph did a little experimenting with the system and soon discovered we can predict within a day, more or less, when a shipment will leave the plant. Based on this, we've been able to put together a report to marketing listing all customer orders and dates when they will be shipped. (I don't know if anybody in marketing really believes that report, but so far it's been highly accurate.)

"Rogo," says Peach, "because you seem to be the only one among us who has improved to any degree, we'll let you start the round of reports."

I open up the cover of my report and launch into a presenta- tion of the highlights. By almost every standard, we've had a

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