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in about 1989 or 1990 when I was finance director of a manufacturing business in the UK West Midlands.Bought on the Saturday and finished on the Sunday, I couldn’t put it down.
If machine A and B operate at 200 units per hour, only 150 units will be processed by Machine C so work in progress builds in front of machine C at the rate of 50 units per hour.
The theory of constraints says that the only way performance of the system can be improved is through improvements in the bottleneck machine C.
Whilst you walk in their steps in the search, you are given the answers.
The essential idea is that business is a system, and just as the strength of a chain is determined by its weakest link, a system is constrained by one particular operation – the bottleneck.
Even worse, each hour lost on machine C – through breakdowns or operator issues – is an hour of output lost to the entire system.
The other machines can catch up but, output at machine C can never be recovered. In a series of vivid examples, The Goal introduces you to the ideas which will improve the constraint but the first thing is to recognise which is your constraint.The logic is that every system must have a bottleneck because otherwise, output would be infinite.[If we think of the business as a system, then the constraint is whatever is stopping it from making an infinite amount of money.That’s how compelling the book and the ideas in the Theory of Constraints.It may sound strange to read “the story of The Goal” but I think this was the first popular management book to be written as a story and that was one element that made it so hard to put down.According to Eliyahu Goldratt and The Goal, the only performance measures that matter are: 1.The throughput – effectively defined as sales less material costs 2. Inventory – money tied up in the system The Goal is to make money and you do that by increasing throughput, decreasing operating expenses and inventory or some combination of all three.It may seem strange to consider that a book about production planning and which has had major effects on the way manufacturing businesses work is really a book on business strategy.That’s because The Goal is the book that introduced Theory of Constraints thinking and is therefore a logical starting point although the ideas have developed into a general improvement theory that applies just as much to strategy and marketing issues as it does to production.The Goal’s main message is that in the Theory of Constraints, you must focus all your attention on the constraint. Get it wrong and your ongoing improvement efforts are wasted.If you want to fight back against your finance department because their guidance doesn’t make much sense, The Goal can give you the ammunition.