Life is indeed a serious business. Put yourself in Alex’s shoes and you’ll find out. So, who’s Alex, never heard of him! A cricketer, a star, a politician… want to know who is Alex Rogo!
Alex is the central character in a management –oriented business novel, The Goal written by Dr Eliyahu Goldratt. Dr. Goldratt was a Physicist-Thinker-Author turned Business Guru who’s Theory of Constraints has become an exemplar for managing systems.
In the novel, Alex is the guy next door, a family man with wife and two children. This story is about his journey into the discovery of common sense in business processes. Alex is a Plant Manager whose manufacturing unit (read boat) is sailing in troubled waters. One day Bill Peach, the VP of Manufacturing arrives at the plant with a complaint from a customer about an unfulfilled order. Peach hands over a business ultimatum to Alex that the plant will be scrapped unless he turns the table. At home Alex’s wife, Julie is disturbed with the fact that he spends too much time at work. Neither she nor the children can spend quality time. As the situation in the plant worsens every passing day, one evening Julie leaves home ad hoc.
Was Alex able to save his Plant & his Family! Curious now, I’m sure you’d read the book! Let me tell you the highlights.
In the first chapter, Alex reaches the plant and finds that the Peach is already there. Peach’s visit to the plant was to expedite an order because he received a complaint from a customer for an unfulfilled delivery. And he throws his weight on Alex by giving him three months to save the plant or lose the job! The production plant is out of control! The inputs have not been taken before planning, communication is lacking, and time management is poor. Well, it’s so common to find stumbling blocks born out of inefficiencies and unrealistic goals.
The details are typical of a manufacturing set-up. Any given day the employees are found busy in displaying their excellent crisis management skills. The customers are not at all happy and the management is either busy in getting new technology or automatic machines. In all such cases, the quality levels go down and deliveries are always met late.
The other day Alex meets Jonah by chance at an airport. Jonah is a professor at the University where he studied Industrial Engineering. In this meeting Alex claims that buying new robots have increased productivity in one of the departments. Jonah does not agree and this petite meeting proves to be an eye-opener for Alex.
Here onwards Alex starts seeking his guru’s help. Jonah helps him in this journey to save plant using Theory of Constraints (TOC). He discovers an innovative way to do business through a process of ongoing improvements to increase productivity and achieve profitability. Jonah explains his philosophy and raises astounding questions in order to understand Alex’s teething troubles. Alex implements the concept with the help of his colleagues. He finds that traditional rules can be replaced by new standards and there is smart way to make money by increasing the cash flow and simultaneously increasing the return on investment.
TOC is articulated through controlling three measurements which yield practical rules for running a business effortlessly. The measurements are throughput, inventory and operational expense. Throughout is defined as the rate at which an organization makes money through actual sales. If you produce it but don’t sell, it is not throughput. Inventory is the amount that the system has invested in purchasing things it intends to sell. Operational expense is all the money that the system spends in order to convert inventory into throughput.
Alex sums up his understanding by using the Socratic method of asking questions. This methodology of inquiry and discussion are key to TOC. The three questions that he asks himself are – what to change! To what to change! And How to cause the change?
The Goal is the book where Dr Goldratt for the first time demonstrates his viewpoint behind TOC concepts. The Goal is describes the process of ongoing improvement or continual improvement in detail. I am delighted by the common sense approach which I believe is very hard to find. There must be some way out of here, sang Bob Dylan and I believe Dr Goldratt found it and shared it in the most fascinating way he could, by weaving a story. Everybody can read this book. If you think it is not for you, let me tell you another fact that he also wrote a sequel to it, It’s not Luck. Itfull of examples from different industries that show a way for applying TOC in different systems and processes.
Alex finds personal fulfillment as he goes on to transform the plant and also finds a way to get Julie back. I would highly recommend you to read the book if you want to find out “how to cut the cake and have it too!” You may leave your feedback with me.
Happiness is found along the way and not at the end of the road…Wish you all the best for your Lean Journey!
Biography of Dr. Eliyahu M. Goldratt
What Is Theory Of Constraints (TOC)
Goldratt, E. M. and J. Cox. 1986. The Goal: A Process of Ongoing Improvement. New York: North River Press
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