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The Goal Review

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The goal Review

Q1. What does Jonah say is the goal of an organization? Do you agree?

From the conversation with Jonah, Alex concludes that the goal of a manufacturing organization is to make money, instead of merely producing quality products efficiently, pursuing latest technology or capturing market share.

I partially agree. As it mentions in the book, adopting “making money” as the goal of an organization seems like a good assumption, because a company cannot sustainably develop and will cease to function if it does not have enough money. If set “making money” as the goal, then the organization will put effort in reducing both variable and fixed costs, attracting more customers to expand market share and revenue and etc. It is good for a company’s development.

However, sometimes if the company only focus on making money, then it will lose a lot. For example, in order to produce enough products to meet customer’s needs, employees are required to work overtime and treated as money-making machines. Employee satisfaction decreases and this will eventually harm the company.

Q2. How does Jonah recommend that performance be measured and how do these measurements relate to the goal?

Jonah recommends three operational measurements.

  • Throughput is the rate at which the system generates money through sales. It related to the value added to the organization. Higher throughput means making more money.
  • Inventory is all the money that the system has invested in purchasing things which it intends to sell. It is the money stuck inside the system. To achieve goal, we need to reduce this part of money.
  • Operational expense is all the money the system spends to turn inventory into throughput.", which flows out of the system. The ultimate objective of turning inventory into throughput with less operational expenses is to generate more money, which is consistent with the goal.

Q3. What lessons did Rogo learn from his boy scout hike and how were they used to improve the performance of his factory with respect to the above performance measures?

From his boy scout hike, Alex discovers the true meaning of “dependent events” and “statistical fluctuations”, which are mentioned by Jonah. Related to hiking through the mountains and dice game, he realizes that “dependent events” will result in “statistical fluctuations” accumulated and “balanced plant” is not correct answer. It is necessary to make the slowest resource, just like let slowest kid in the front of team, set pace to improve overall performance of the operation. This measure learned from hike not only is able to balance the fluctuations, but also increase the productivity, which eventually increase the total throughput and decrease inventory and operational expense.

Q4. How do the lessons of The Goal apply to the cases discussed in this course?

The first issue The Goal addresses is the goal of the organization, which is consistent with our course, since when we analyze a case, the first thing is to identify the goal and then analyze the design, control and measure of the process. Regarding design of process, from The Goal, I know that bottleneck prevents the organization from achieving its production goal. Only address the bottleneck, can the organization improve the overall throughput rate and improve the overall performance. This is related to what we learn in this course. We are taught to calculate the throughput rate and capacity rate of each stage and identify bottleneck of the process, but also try to find solutions to address these problems.

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