Research Korner: Book Report Samples

BOOK REPORT ON " THE GOAL " BY ELIYAHU M. GOLDRATT & JEFF COX, NORTH RIVER PRESS, LATEST EDITION

Book Report: The Goal             This paper is a book report on the novel entitled The Goal written by Eliyahu Goldratt and Jeff Cox. The 40-chapter book is actually a business book written in the form of a novel that makes it interesting to read unlike other business textbook. As a novel, the book is entertaining but at the same time, very informative for management or accounting students as well as for the real-life company managers and CEOs who wanted to apply different managerial practices. The paper summarizes the novel and makes analyses in relation to Operations Management.               The novel took place at a fictitious town called Bearington where the Uniware manufacturing plant of the UniCo company is situated. Whatever products the plant manufactures was not mentioned in the novel. The plant is headed by the 38-year old plant manager Alex Rogo who is also the lead character of the novel. Alex is a dedicated and workaholic employee as described in the novel. His dedication to his work posed some family problems: losing time for his wife aside from her not being used to living at his hometown where there is a big difference form the city life his wife is used to.   Mr. Bill Peach is the other character who can be considered as the protagonist who confronted Alex about the overdue order at the beginning of the story. Mr. Peach is the Division Vice President of the company. He gave Alex three months to show an improvement with the production plant or the plant will be shut down.             Jonah plays the role of an “angel in disguise” to Alex life. He was Alex’s college Physics professor. They happened to come across each other at the airport during Alex’s business trip. Jonah was the one who made Alex realized the problems confronting Alex and the plant. Jonah played as a business consultant and adviser as it seems like he knows how to run a manufacturing plant. He made Alex realized the real goal of the company and the things that should be accomplished to be able to achieve that goal.               Other characters in the story are the people who comprise Alex team: Lou, from the accounting department, Bob from the production department, Stacey from inventory control, and Ralph who has a good background in computer and the one who did the schedule for the production and release for bottleneck parts. Herbie, the slow kid in the hiking who serves as the bottleneck is also worth mentioning.               The story begins with a confrontation between Alex and Mr. Peach over order no. 41427 which was already overdue and is demanded to be shipped that same day. Mr. Peach added that since the plant headed by Alex is neither productive nor profitable, it will be shut down after three months if no improvement is made during that period. He did make the shipment for order no.41427 that day but problems do not end for that.               The biggest challenge to Alex is improving the plant to prevent its closure. The major conflict in the book is that Alex can not identify the cause of the problems in the plant that resulted to bigger problems such as lower productivity leading to delay of delivery and shipments; low profitability or almost non-profitability at all; and high inventory. Alex cannot understand why, despite of being competent and efficient due to the robots used in the plant that is said to increase productivity by 36%, the plant was still unproductive. Another conflict is that his wife cannot understand the situation Alex is up to causing his family and marriage life to fail too.               In a meeting with Mr. Peach, all other plant managers and staff, everybody found out that the division headed by Mr. Peach, which include the Bearington plant, is in trouble and is losing money. Everybody was given goals to achieve for the next three months because the division has one year to improve or it will be sold.               During the meeting, he remembered his last business trip when he, by chance, met his college physics professor Jonah and had some conversations. He told Jonah that the plant he is working with installed some robots that have increased productivity by 36%. Jonah replied with “so your company is making 36% more money from your plant, just by installing some robots?” Alex said no and Jonah asked again “was your plant able to ship even one more product per day as a result of what happened in the departments where the robots were installed?” Alex answered again with a no while Jonah asked again if the plant has fire anybody and if the inventories go down but Alex’s answers are no. Jonah again asked “with such high efficiencies you must be running your robots constantly? Alex said yes and Jonah continued with predictions that the plant’s inventory is very high and Alex’s plant can not deliver products on time. Jonah added that Alex thinks he is running an efficient plant but he is not.   Through that conversation, Alex realized that “productivity is the act of bringing a company closer to its goal” ( 1992). Alex thought the company’s goal is to increase efficiencies but he later realized that every company’s goal, including his plant, is to make money or to be profitable and anything that comes closer to the goal is considered as productive.             Due to this realization, the next thing he did was to talk to the plant’s accountants to determine how the company can make money. The company will have money if the net profit increased along with the return on investment and cash flow. To be able to increase what are needed to be increased, the company must start with the operations in the production department. With this realization, he decided to stay in the company over the next three months and try to make improvements. His decisions required him to give more time and devotion to his work that affected negatively his marriage life and triggered his wife to leave him.             Along with his decision of staying with the company, he also decided to consult Jonah. Jonah explained the three important terms in running the plant that is needed to be understood: throughput which is the rate at which the system generates money through sakes; inventory which is all the money that the system has invested in purchasing things which intends to sell; and operational expense which is all the money the system spends in order to turn inventory into throughput (, 1992).   When the head of the company wanted to take pictures with one of the robots in the plant, Alex thought of investigating the robots. He found out, with the help of Lou, Stacey and Bob that the robots, instead of increasing the plant’s productivity as expected, they increased costs and operational expenses thus do not contribute to productivity. Since the robots and other machines in the production departments are part of inventory and are the ones directly involved in production, they decided to make necessary changes. He then again consulted Jonah who told him to forget about the robots but suggest Alec to analyze how he manages the plant’s capacity and consider the concept of a balanced plant. A balanced plant according to Jonah is a plant where the capacity of each resource is balanced exactly with the demand from the market (1992). Jonah added that a balanced plant is not a good idea because the closer a company come to a balanced plant, the closer it is to bankruptcy. Jonah gave Alex some more terms to be discovered: ‘dependent events’ and ‘statistical fluctuations’.   During a weekend, Alex had hiking with his kids when he discovered the importance of dependent events with statistical fluctuations through the match bowl game.  The match bowl game is basically a model of a production process where each bowl represents a production line. A production line represents dependent events; the production in each bowl which is represented by matches depends on the production of the preceding bowl. Each player has its own bowl; the first player rolls a die to determine how many matches to place in his bowl. The number that will result in the roll out of the die represents statistical fluctuations which are also the number of matches that should be moved from the preceding bowl to the next. The number of matches represents the productivity of each player. If the second player rolls only four, he can only move four matches from the first bowl to his bowl. When the third player rolls out five, he can be able to move only four because that is the available number of matches in the preceding bowl. The player with the lowest number of productivity becomes the bottleneck.   Therefore, low productivity is caused by dependencies of each production line to one another and is slowed by the bottlenecks. Since the productivity rate of each production line depends on the other while each production line’s output is undetermined, the management’s problem is how to recognize the bottlenecks in the system.   Alex’s understanding of dependent events because of the bowl match game was applied when he recognized that the hike was getting slower because of Herbie, the slowest kid with heavy backpack. Alex put Herbie in front of the hike and lessens his load which balances the fluctuations and increased the kid’s productivity and the throughput of the team.   In Chapter 18, Jonah explained to Alex that “bottleneck is any resource whose capacity us equal to or less than the demands placed upon it while a non-bottleneck is any resource whose capacity is greater than the demand placed on it” ( 1992). Jonah further explained that Alex should balance the flow of product instead of balancing the capacity with demand. Alex and his team, with further investigations, identified the bottlenecks in the plant and realized the need to reorganization of the plant just like how Alex reorganized the hike. But the problem was, it is not easy to reorganize a process such as production.   Jonah then visited the plant saying that every plant should have bottlenecks or the plant will have much excess capacity. The answers to the company’s problems are to increase the capacity at the bottlenecks by adding more machines to do the bottlenecks, and to avoid downtime within the bottlenecks because downtime at a bottleneck generates loss in the throughput; that is, without the parts made from the bottlenecks, no product can be made and delivered.   Alex organized the plants production operations by prioritizing overdue orders. The bottlenecks worked only on overdue orders and were kept busy by the production workers. They color-coded priority materials; red for priority, bottleneck parts and green for priority, non-bottleneck parts. This reorganization and strategies resulted to completion of twelve orders. Bob, the production manager, added some old machines that helped increased the production of one of the bottlenecks. Ralph complement the color-coding system by making a schedule for the production and release of bottleneck parts that help decrease excess inventory in front of the bottlenecks.   At another corporate meeting, Mr. Peach did not even recognize Alex’s accomplishments instead challenge him to make a 15% improvement for the coming month if Alex does not want the plan to be closed. However, the plant experienced more inventories but lesser throughputs during the next few weeks. Jonah advised Alex to reduce batch sizes by half which resulted to shipping the products in installment basis or smaller batches. After a month, the plant computed 17 percent improvement but with the auditors from the Division computation, Alex and the plant gained only 12.8 percent improvements. Most of these were from new orders that the owner of the company approached Alex and everybody in the plant to congratulate them and give them a new contract for ten thousand parts instead of closing the plant.   The day after, Alex had meeting in the Division where he found out that he was promoted as the Division Vice President, Mr. Peach’s position. He now has to manage three plants that comprise a whole division. He formed his Division team which also comprises of the same people in his team at the plant except for the production manager who opted to be a plant manager instead. As the head of the division, he and his team formulated the theory of constraints which involved: step 1 – identify the system constraints; step 2 – decide how to exploit the systems constraints; step 3 – subordinate everything else to the decisions of step 2; step 4 – evaluate the systems constraints; step 5-if a constraint is broken in step 4, go back to step 1. As the Division head, he encountered problems due to new orders that created bottlenecks. He analyzed the problem and found out that the solution is to increase inventory in front of the bottlenecks and not to promise new order deliveries for four weeks. This solution will have effect on the plant’s sales bu Alex decided to proceed realizing that production is an ongoing process of improvement that is needed to be approached with proper solutions. Conclusion The story has a happy ending: Alex reunited with his wife and has been promoted. He was now armed with the knowledge, practice and experiences that will help him perform his new job. Basically, wanted to give impart the theory of constraints with through this novel. The bottlenecks served as the constraints that served as the hindrances towards achieving the goal. The bottlenecks in the story lengthen manufacturing time thus having recognition of which are the constraints in a process, some practice can be applied in order to shorten manufacturing time. Such practices include reduction of batch sizes so that a product would wait less time for its batch to be completed, and the practice of how to balance line or capacity.  Constraints force managers to redesign, reorganize or reengineer their system for maximum throughput.   Having orders fulfilled at lesser time means greater and faster return on investment and the ability to accept new more orders, but having more unresolved constraints means slower return on investment, less production and therefore lesser profit. What the authors are trying to convey here is that some managers overlooked on the real goal of the company they are managing. Like in the novel, Alex said that the company’s goal is to be efficient, others would say is to be competent, while others would say is to provide consumers with what they need. But the very obvious goal of the every business existence is to make money. This goal can be achieved by identifying the constraints that hinder the company in achieving it and by proper applications of different practices that can be able to remove or lessen constraints.     Reference:

BOOK REPORT ON " THE GOAL " BY ELIYAHU M. GOLDRATT & JEFF COX, NORTH RIVER PRESS, LATEST EDITION

Book Report: The Goal This paper is a book report on the novel entitled The Goal written by Eliyahu Goldratt and Jeff Cox. ...