Our book this month is “The Goal” by Eli Goldratt. This book was originally published in 1984 and was the groundbreaking book on the Theory of Constraints.
The book is written as a narrative surrounding a manufacturing plant manager named Alex who moves to a small town to take over the management of the plant. But the plant is struggling. Deliveries are late, the plant is losing money, and customers are unhappy. Senior management is threatening to shut it all down in less than 3 months if things don’t improve. Along the way, our hero encounters a scientist named Jonah who leads our protagonist through the thinking process to discover the principles that lead him to solving the problems that are plaguing his organization. In the story, Jonah clearly sees through all the talk of efficiency and correctly identifies the business is in trouble.
The problem is that the business is being measured against the wrong goals.
By focusing on efficiency and lowest cost per component, inventories were building in virtually all areas. Work in process inventory was growing, finished goods inventory was growing, but still shipments of some products were continually late.
The theory of constraints centers around practical methods for identifying solutions to business problems by deciding:
- What to change
- What to change it to
- How to cause the change
The specific book I’m recommending today is the first in a series of books that apply to theory of constraints to specific business problems. This first one is a manufacturing plant. But the method can be applied to project management, and to sales, and retail management. The theory of constraints is a universal way of thinking that can be applied to virtually any business problem.
Host: Victor Menasce