[The smartest summary of Goldratt’s The Goal][Video guide to Chapter 8]
Our narrator disappoints his wife, ransacks his home and tracks down a mentor.
“And the measurements I use inside the plant . . . well, I’m not absolutely sure, but I don’t think they’re really telling the whole story…”
Page by Page
P055 – “Look, don’t give me any grief, Julie; this is important.” Not a good thing to the person who should be most important in your life. Privileging one thing as ‘important’ implies that everything else is not.
P056 – “Your old address book . . .” Our narrator is quizzing his mother on the location of things in his childhood bedroom.
P057 – “Mom, I need to use your phone.” With urgency, Alex prioritizes finding a solution to his problem. Finding Jonah will help him achieve his corporate goal – but perhaps at the cost of his personal goals.
P058 – “The goal of a manufacturing organization is to make money,” I say to him. “And everything else we do is a means to achieve the goal.” BINGO.
P059 – “”And the measurements I use inside the plant . . . well, I’m not absolutely sure, but I don’t think they’re really telling the whole story,” I say.” The writer is surrounded by word salad, gobbledy-gook and vanity metrics when he tries to analyze his plant. Bureaucracy has surrounded itself with silly words.
P060 – “Their names are throughput, inventory and operational expense.” These are the terms that matter.
“Throughput,” he says, “is the rate at which the system generates money through sales.” The closest accounting concept is ‘cash conversion cycle’ – this metric does wonders in helping a company understand the rate at which a customer request is turned into profit.
P061 – “Everything you manage in your plant is covered by those measurements,” he says.
“We are not concerned with local optimums.”
Creating a profit center on one part of the business, while losses at another – makes no sense to shareholders. A business is a portfolio of profits produced from a portfolio of activity – grow the profitable portfolio.
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