The Goal – Chapter 29 – Nightmares & Sales

Alex awakens from a nightmare just as Bill Peach’s Mercedes is about to run him over.  Nightmare episodes are a common trope, and it is easy to imagine first time author Goldratt smiling at his choice of story-telling tool.  Julie sleeps next to Alex.  Alex reviews the plant’s continued improvements brought on by cut batch sizes and walks through a plan to recapture business lost in the first chapter with Bucky Burnside.

Highlights

There are a number of great quotes and concepts in this chapter.

“The units will ship when we say they will,” I tell him.

Rogo has integrated sales and operations – he knows his schedule, his constraints and his capabilities.

“The only work-in-process out there now is for current demand.”

Why do otherwise?

“Financially speaking, it doesn’t make a damn bit of difference.”

Vanity metrics change the way numbers are presented, but core financial and accounting metrics are the same.

Page by Page

P237 – “When the excess inventories were exhausted—which happened quickly as a result of the increase in throughput—efficiencies came back up again.”

Cutting batch size improves the flow of an operation.  Boulders become gravel, gravel becomes sand.

P238 – “But now that the batches are smaller, the parts are ready to be moved to the next work station sooner than they were before.”

“The only work-in-process out there now is for current demand.”

Why pursue any work other than that required to meet current demand?  Speculative capacity is a fool’s game – this is why The Lean Startup focuses so much on product-market-fit and preventing premature scale-up.

P239 – “Politically speaking, yes,” I tell her. “Financially speaking, it doesn’t make a damn bit of difference.”

P240 – “The measurement assumes that all of the workers in the plant are always going to be fully occupied, and therefore, in order to do more set-ups, you have to hire more people. That isn’t true.”

Helping an organization increase throughput by more efficiently organizing personnel is a great way to create growth.  People have capacity to learn.  Teams that can learn and redeploy with new skillsets create flexible production sites.

P241 – “Remember our dear friend Bucky Burnside?” says Jons.

P242 – “He tells me he did some digging and found out that the order had originally gone to our number-one competitor, who makes a product similar to the Model 12.”

P243 – “What if we cut the batch sizes by half again?”

If a game plan has worked – keep running the play.

P244 – “And how soon could they ship the first week’s quantity to us?”

This is a step towards iteration.  Rogo is negotiating with the buyer (always a good sign) and is trying to find a way to unlock the business.  By getting Bucky to take deliveries as they are done, he keeps Bucky’s plant full and shows commitment to being a good supplier.

P245 – “The units will ship when we say they will,” I tell him.

Committing to tasks that aren’t possible is a great way to fail.  There are times to take risk – such as with the 15% that was committed to Peach earlier in Chapter 27.  Rogo isn’t taking risk here – he knows his team’s method and he knows he can hit the target.  This is excellent integration of sales and operations.

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