The next day, Alex presents these new metrics to Bob, Lou, and Stacey, the plant’s inventory control manager. “Operating expense” describes the money required to turn inventory into throughput. “Inventory” describes the money contained in that system as raw material or equipment. “Throughput” describes the money that a manufacturing system makes from sales. Lou agrees that it makes sense, but he thinks they would need particular metrics with which to measure that goal.Īlex calls Jonah and Jonah explains to determine whether the plant is making money, Alex only needs to measure three things: throughput, inventory, and operating expense. Alex discusses this idea with Lou, his chief accountant. After several hours, he decides that the goal of any business must be to make money, and thus he can measure the productivity of any action by whether it helps the plant make money. Now restless at the division meeting, Alex abruptly leaves to be alone and think. Jonah advised Alex that he needs to determine the overall goal of the manufacturing plant. He remembers advice that an old mentor, Jonah, gave to him two weeks ago when he ran into Jonah at an airport: though they hadn’t seen each other in years, within minutes of Alex talking about the plant, Jonah intuited exactly what problems it has.
THE GOAL ELIYAHU GOLDRATT SPARKNOTES HOW TO
While at a division meeting, Alex has the sense that nobody in their division has any real idea how to successfully manage a manufacturing system. Worse yet, Alex’s wife, Julie, wants to go out with him that evening, but Alex has to spend all evening at the plant, as he often does, which upsets her. Alex and his production manager, Bob, manage to push everyone in the plant and fulfill the order by that night, but Alex knows that they can’t keep operating the plant in such a hectic fashion. He tells Alex that the outstanding order must be shipped by that evening, and that if Alex can’t turn the plant around within three months, Peach will shut it down. Peach is angry about a customer order that is months overdue, as are most of the orders in Alex’s plant. One day, he arrives at work to find his corporate division manager, Bill Peach, waiting for him. Alex Rogo manages a failing manufacturing plant for the company UniCo in a small American town.
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