-Eliyahu M. Goldratt(& Jeff Cox)

• “Genius” , “Guru to industry”

• Management- a Science not an Art

• Introduced the concept ofongoing improvement.

ABOUT THE AUTHOR

ABOUT THE BOOK

FINDING THE GOAL

TO MAKE MONEY

•Net Profit

•Return On Investment

•Cash Flow

MEASUREMENTS AS STANDARDPRINCIPLES

•On being called by Alex, Jonah gave him the 3 money measurements:

IncreaseThroughput

DecreaseInventory

DecreaseOperational Expense

JONAH’S MEASUREMENTS

•Gathers focus group for operational solutions

•Several concepts which are polar opposites from general business operations.

STORY PROCEEDS…..

TWO PHENOMENA IN PLANT

•Jonah reveals that a balanced plant is where the capacity of every resource is balanced exactly with demand from the market.

DEPENDENT EVENTS & STATISTICAL FLUCTUATIONS

•A series of events

•Predictive information thatcannot be determined precisely.

•Interlinked.

THE HIKE

•Alex takes his son, David, on a hike with his Boy Scout troop.

•Uses this hike to understand the two phenomena.

•Used to understand theory of bottlenecks later.

OBSERVATIONS

•Final throughput-measured by rate of slowest operation.

•Inventory should be minimized.

•Operational expense must be conserved.

•Bottleneck - Capacity = or < than the demand placed upon it

•Non-bottleneck - Capacity is > than the demand placed upon it.

BOTTLENECKS AND NON-BOTTLENECKS

•Maximum speed = speed of the slowest operation

•Bottlenecks must be identified and improved if the process is to be improved.

WHAT A BOTTLENECK SIGNIFIES

•Allows management to take action to alleviate the constraint in the future

•Reduce cycle time

•Improve manufacturing cycle efficiency (MCE)

WHAT A BOTTLENECK SIGNIFIES

TO OPTIMIZE BOTTLENECKS , YOU MUST

•Make sure bottleneck time is notwasted

•Take the load off the bottlenecks

•Quality controls

A PLANT IN WHICH EVERYONE IS WORKING ALL

THE TIME IS VERY “INEFFICIENT”

FOUR ELEMENTS OF TIME A MATERIAL SPENDS IN A PLANT

Types of elapsed time

Setup time

Process time

Queue time Wait time

• 15% increase on sales promised

• Cutting the batch sizes to half.

• Gets his plants improvementmarketed

STEPS TAKEN TO SAVE THE PLANT

PLANT IS SAVED

• Manages a huge contract

• Accomplishes an increase of about 17%

• Promoted to the division head.

A PROCESS OF ON-GOING IMPROVEMENT

Define Goal

Define Measure

mentsDetermin

e Bottlenec

ks

Relieve stress from

bottlenecks and

increase productivi

ty of bottlenec

ksIncrease

SalesCut batch

sizes in half

Reduce lead times

THEORY OF CONSTRAINTS(TOC)

• Minimum one constraint at a time in a system

• Over time constraints may change

• The 5 focusing steps of theory of constraints are:

Identify the system’s constraints.

Decide how to exploit the system’s constraints.

Subordinate everything else to the decisions of Step 2.

Elevate the system’s constraints

If a constraint is broken in Step 4, go back to Step 1.

• Improves capacity decisions in the short-run

• Avoids build up of inventory

• Improves communication between departments

ADVANTAGES OF TOC

•Negative impact on non-constrained areas

• Ignores long-run considerations

•Not a substitute for other accounting methods

DISADVANTAGES OF TOC

BOOK REVIEW

• Global principles of manufacturing

•Helps to bring order and avoid chaos

•Not only applicable to manufacturing world

CRITICISM

• Each concept and theory elongated

•Extremely technical

•Lots of thinking required. Difficult to read at one go