That is because each minute of downtime at a bottleneck translates into lost throughput for the entire plant! Chapter 20 (The Goal)Īrmed with these definitions, Alex has a sound basis to analyse whether his decisions are helping the plant move towards the Goal (to make money, as characterized by increasing throughput and/or decreasing inventory and operational expense). Jonah then reveals that when the bottlenecks are down for just an hour, the true opportunity cost is more like $2,735. How many working hours are available per month? About 585. And how much does it cost when the whole plant goes down? About $1.6 million. How much does it costs when the bottlenecks (NCX-10 and heat treatment) machines go down? Lou quotes $32 per hour for the former and $21 per hour for the latter. Jonah muses that more machines to do the bottleneck operations might help, but weren’t they forgetting about making the existing machine run more effectively? What must he do to increase the capacity of the plant? Ideally he would like to purchase an additional machine, but they have neither the time nor the budget for that. He explains to Alex that every plant should have bottlenecks (!), and that a system can only increase production by increasing capacity at the bottleneck operations.īut Alex is confused. Jonah finally visits the plant in person. Alex is promoted to President at UniCo and entrusted with the task of implementing Jonah’s advice throughout the entire division. He wins back his wife’s affection and his plant suddenly becomes the most productive one in the company.
Once the plant’s operations stabilize, Alex finds himself spending more time with his family.
Along the way they discover the importance of constraints and learn how to manage them to achieve growth and profitability.Īlex eventually realizes that the goal is not cost-effective purchasing, employing the right team members, the latest technology, producing quality products, capturing market share, customer satisfaction, etc.
Every action that does not bring a company closer to its goal is not productive." But what is the goal?įollowing Jonah's clues, Alex mobilizes his team at the plant to find ways to improve the flow of production and somehow ship the huge backlog of orders on time. For example: " Every action that brings a company closer to its goal is productive. Jonah takes on complex subjects like "productivity" and defines them in simple terms. Given three months to turn the plant around, Alex chances to bump into his old Physics professor, Jonah, who challenges his thinking and gives a series of clues about how to save the division.
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