The Goal

by E M Goldratt

  "So that's what happened, you fox. Now I understand why Ethan became so supportive," I say, sitting back down.

  When we've finished grinning at each other, Lou says in a quiet voice, "Alex, I have another issue."

  "Another bomb?"

  "You might call it that, but it's sort of a personal matter. Ethan told me that he's going with Bill Peach to the group. I know that you will need a good divisional controller, someone who has experience in the more diverse subjects that are dealt with at the division level. I'm just one year from retirement; ev- erything that I know is old-fashioned. So..."

  Here it comes, I say to myself. I must stop him before he states that he doesn't want to come with me. Once he says it, it'll be much harder to change his mind.

  "Lou, wait," I interrupt him. "Look at the work that we've done in the last few months. Don't you think..."

  "That's exactly what I was about to bring up," he interrupts me in turn. "Look at it from my point of view. All my life I've gathered numbers and compiled reports. I've seen myself as somebody who has to supply the data, as an impartial, objective observer. But the last few months have shown me to what extent I was wrong. I wasn't an objective observer; I was following, al- most blindly, some erroneous procedures without understanding the far-reaching, devastating ramifications.

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  "I've given it a lot of thought lately. We need financial mea- surements for sure-but we don't need them for their own sake. We need them for two different reasons. One is control; knowing to what extent a company is achieving its goal of making money. The other reason is probably even more important; measure- ments should induce the parts to do what's good for the organiza- tion as a whole. What's become apparent to me is that neither of these two objectives is being met.

  "For example, this conversation we just had. We knew very well that the plant had drastically improved, but the distorted measurements have almost condemned us. I'm submitting effi- ciency reports, product-cost reports, and now we both know to what extent they just lead workers and management alike to do what's bad for the company."

  I've never heard Lou talk for so long. I agree with every- thing he just said, but I'm totally confused. I don't know what he's getting at.

  "Alex, I can't stop here. I can't retire now. Do me a personal favor, take me with you. I want the opportunity to devise a new measurement system, one that'll correct the system we have now, so that it will do what we expect it to do. So that a controller can be proud of his job. I don't know if I'll succeed, but at least give me the chance."

  What am I supposed to say? I stand up and stretch out my hand. "It's a deal."

  Back at my desk I ask Fran to call Bob Donovan in. With Lou on one side and Bob on the other, I'll be free to concentrate on the two areas I know the least, engineering and marketing.

  What am I going to do about marketing? The only person I appreciate in that department is Johnny Jons; no wonder Bill has decided to take him along.

  The phone rings. It's Bob.

  "Hey Al, I'm sitting with Stacey and Ralph, we're really cook- ing. Can you join us?"

  "How long will it take?" I ask.

  "No way to tell. Probably 'til the end of the day."

  "In that case, I'll pass. But Bob, we need to talk. Can you get away for a few minutes?"

  "Sure, no problem."

  And in no time, he enters my office. "What's up, boss?"

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  I decide to give it to him straight, "How'd you like to be responsible for all production of the division?"

  The only thing he manages to say is a long "Wow." He puts his big body in a chair, looks at me, and doesn't say any more.

  "Well, Bob, surprised?"

  "You bet."

  I go to pour us coffee and he starts to talk to my back. "Alex, I don't want that job. Not now. You know, a month ago I would have grabbed the offer with both hands. It's way beyond what I expected."

  Puzzled, I turn around, a cup in each hand. "What's the matter Bob, afraid?"

  "You know better than that."

  "So what happened in the past month to change your per- spective?"

  "Burnside."

  "You mean he made you a better offer?"

  He fills the room with his booming laughter. "No, Alex, nothing like that. What gave me a new perspective was the way we handled Burnside's urgent order. I learned so much from how we handled that case that I would rather stay in this plant and develop it further."

  Surprises all around me. I thought I knew these people. I expected it would be impossible to convince Lou, and he almost begged me for the job. I didn't expect any problems with Bob, and he just declined my offer. It's really annoying.

  "You'd better explain," I hand him his cup.

  Bob's chair squeaks in protest as he fidgets. If I were staying here longer, I would have ordered a more massive chair just for him.

  "Haven't you noticed how unique the events of Burnside's order were?" he says at last.

  "Yes, of course. I've never heard of the president of a com- pany going to thank the workers of a vendor."

  "Yeah, yeah, that too. But look at the whole chain of events. Johnny called you with an impossible client wish. He didn't be- lieve it could be done, and neither did the client. And on the surface, it was impossible. But we looked into it. We considered the bottleneck availability, we considered the vendor limitations, and we came back with something pretty unusual.

  "We didn't say a flat no, or a flat yes, and then miss the due

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  date by a mile, as we used to do. We re-engineered the deal; we came back with a counter-offer that was feasible and that the client liked even more than his original request."

  "Yes," I say, "it was good work. Especially considering what came out after that. But that was a peculiar set of circumstances."

  "It was peculiar because normally we don't take the initiative -but maybe there's a way to make it standard. Don't you see? We actually engineered a sale. We-in the plant, in production-en- gineered a sale."

  I think about it. He's right. Now I start to see where he's heading.

  Bob, probably misinterpreting my silence, says, "For you it's not a big deal, you always looked at production and sales as two links in the same chain. But look at me. All the time I'm buried out on the shop floor, thinking that my responsibility is to put out fires, and viewing the sales department as snake oil salesmen, spreading unrealistic promises to our clients. For me, this event was a revelation.

  "Look, we give sales a rigid lead time for each product. So if it's not in finished goods, those are the numbers they should use to promise to clients. Yeah, they deviate from it, but not by much. Maybe there should be another way. Maybe the quoted lead times should be done case by case, according to the load on the bottle- necks. And maybe we shouldn't regard the quantities required as if we have to supply them in one shot.

  "Alex, I'd like to look into it more. Actually, that's what Stacey, Ralph, and I are doing right now. We were looking for you, you should join us. It's pretty exciting."

  It certainly sounds it, but I can't allow myself to get sucked in right now. I have to continue with preparations for my next job. "Tell me again what you are up to," I finally say.

  "We want to make production a dominant force in getting good sales. Sales which will fit both the client's needs and the plant's capabilities like a glove. Exactly as we did in Burnside's case. But you see, for that I have to be here, in the plant. As long as we don't understand it in full, as long we don't develop the new procedures, we have to be intimately involved with all the details."

  "So what you want to do is to find those procedures. I see. This is interesting-but Bob, that's not like you. Since when have you been interested in such things?"

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  "Since you came and forced us to rethink the way we were doing stuff. Do you think somebody needs better proof than what's happened here in the past months? Here we were, run- ning things like we'd always done it-by the s
eat of our pants, slowly but surely sinking. And then we took the time and re- examined it from basic principles. And look at how many sacred cows we've had to slaughter! Worker efficiency-whoops, out the window. Optimum batch sizes-there it goes. Releasing work just because we have the material and the people-that's gone as well. And I can go on and on. But look at the result. If I hadn't seen it myself, I wouldn't believe it.

  "Yeah, Alex, I want to stay here and continue what you've started. I want to be the new plant manager. You caused us to change almost every rule in production. You forced us to view production as a means to satisfy sales. I want to change the role production is playing in getting sales."

  "Fine with me. But Bob, when you nail those procedures," and to myself I add, 'if/ "will you consider taking on responsibil- ity for all the plants in the division?"

  "You bet, boss. I'll teach 'em a trick or two."

  "Let's drink to it," I say. And we toast with our coffee.

  "Who do you suggest should take your place?" I ask him. "Frankly, I'm not impressed with any of your superintendents."

  "Unfortunately, I agree with you. The best would be Stacey, but I don't give it much chance she'd take it."

  "Why don't we ask her. You know what? Let's call both Stacey and Ralph in and discuss your idea."

  "So, at last you found him," Stacey says to Bob, as she and Ralph enter the room, each loaded with papers.

  "Yes, Stacey," I answer. "And it definitely looks like a promis- ing idea. But before that, there's another thing that we'd like to discuss with you. We've just agreed that Bob will take my place as plant manager. How about you taking his place as production manager?"

  "Congratulations, Bob." They both shake his hand. "That's no surprise."

  Since Stacey hasn't answered my question, I continue, "Think about it, you don't have to answer now. We know that you love your job and that you don't want the burden of all the per-

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  sonnel problems that go with being a production manager, but we both think that you'd do a fantastic job."

  "You bet," Bob adds his two cents.

  She looks calmly at me, and says, "Last night I was lying in bed, praying. I was praying that this job would be offered to me."

  "Done," Bob shouts quickly.

  "Now that you've accepted," I say to Stacey, "can you tell us why you want this job so badly?"

  "Looks like being a material manager," Bob booms, "is start- ing to be boring around this plant-not enough expediting, not enough rush calls... I didn't know that you liked that type of excitement."

  "No, I didn't, and I don't. That's why I was so happy with our new method, timing the release of material according to the bottlenecks' consumption. But you know my fear, what happens if new bottlenecks pop up?

  "What my people and I have done is to examine daily the queues in front of the assembly and in front of the bottlenecks- we call them 'buffers.' We check just to be sure that everything that's scheduled to be worked on is there-that there are no 'holes.' We thought that if a new bottleneck pops up it would immediately show up as a hole in at least one of these buffers. It took us some time to perfect this technique, but now it's working smoothly.

  "You see, whenever there's a hole in a buffer-and I'm not talking about just the work that's supposed to be done on a given day, but the work for two or three days down the road-we go and check in which work center the materials are stuck. And then..."

  "And then you expedite!" Bob jumps in.

  "No, nothing of the sort. We don't break setups, or light a fire. We just point out to the foreman of that work center which job we would prefer he gets to next."

  "That's very interesting," I say.

  "Yeah. And it became even more interesting when we real- ized that we were visiting the same six or seven work centers every time. They're not bottlenecks, but the sequence in which they perform their jobs became very important. We call them 'capacity constraint resources,' CCR for short."

  "Yeah, I know all about it. Those foremen have become al-

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  most dependent on your people to prioritize their work," Bob says. "But Stacey, you're not answering our question."

  "I'm coming to it. See, these holes have become more and more dangerous lately-sometimes to the extent that assembly has to deviate significantly from their scheduled sequence. And it's become apparent that the foremen of the CCRs have more and more difficulty supplying on time. Ralph was telling me that these work centers still have enough capacity, and maybe on the average he's right, but I'm afraid that any additional increase in sales will throw us into chaos."

  So here's a bomb, ticking below our feet, and I didn't even realize it. I'm pressing so hard on marketing to bring more sales, and according to what Stacey's just revealed that might blow up the whole plant. I'm still trying to digest it when she continues.

  "Don't you realize that we've concentrated our improvement efforts too narrowly? We tried so hard to improve our bottle- necks, when what we should do is improve the CCRs as well. Otherwise we'll run into an 'inter-active' bottleneck situation.

  "See, the key is not in the hands of the materials people. If interactive bottlenecks emerge, chaos is inevitable; we'll have to expedite all over the place."

  "So what are you suggesting?" I ask.

  "The key is in the hands of production. These techniques to manage the buffers should not be used just to track missing parts while there is still time, they should be used mainly to focus our local improvement efforts. We must guarantee that the improve- ments on the CCRs will always be sufficient to prevent them from becoming bottlenecks.

  "Alex, Bob, that's why I want this job so badly. I want to make sure that the material manager's job will continue to be boring. I want to demonstrate how local improvements should be managed. And I want to show all of you how much more throughput we can squeeze from the same resources."

  "What about you Ralph, it's your turn to surprise me." "What do you mean?" he says in his quiet voice. "It looks like everyone around here has a pet project. What ace are you hiding up your sleeve?"

  He smiles gently, "No aces, just a wish."

  We all look at him encouragingly.

  "I've started to like my job. I feel like I'm part of a team."

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  We all nod in approval.

  "It's not just me and the computer anymore, trying to fiddle with inaccurate or untimely data. People really need me now, and I feel like I'm contributing. But you know what? I think that the change, at least as it relates to my function, is very fundamental. What I'm holding in my files is data. What you are usually asking for is information. I always regarded information as those sec- tions of the data which are needed in order to make a decision- and for that, let me admit it, for most decisions my data was simply unsuitable. Remember the time we were trying to find the bottlenecks?" He looks at each of us in turn. "It took me four days to admit that I simply couldn't find the answer. What I started to realize is that information is something else. Informa- tion is the answer to the question asked. The more I am able to do it, the more a part of the team I become.

  "This bottleneck concept has really helped me to move along these lines. Let's face it, today the plant obeys a schedule that's. released from the computer.

  "What's my wish, you ask? I want to develop a system that'll help in what Bob wants to do, that will help to shrink drastically the time and effort needed to engineer a sale, as he calls it. I want to develop a system to help Stacey manage the buffers, and even to help in managing the local improvements. I want to develop a system to help Lou measure, in a much more beneficial way, the local performance. You see, like everyone else, I have my dreams."

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  34

  It's quite late, the kids are already fast asleep. Julie and I are sitting in the kitchen; we're each holding a warm cup of tea in our hands. I tell her about what happened today at the plant. She seems to be more than mildly interested; she actually claims that she finds it
fascinating.

  I love it. Rehashing the day's events with Julie really helps me to digest it all.

  "So what do you think?" I ask her at last.

  "I'm starting to see what Jonah meant when he warned you about increasing the dependency," she replies.

  That makes me think for a while, but I still can't see the connection. "What do you mean?"

  "Maybe I'm wrong, but you gave me the impression that you're not too sure that Lou'll be able to come up with a good, new measurement system."

  "That's right," I smile.

  "Is a new measurement system important for you?"

  "Are you kidding? I don't know of another single thing which is as important as that."

  "So if it weren't for Jonah's refusal to continue giving you pointed questions, am I right in assuming that you'd be on the phone right now, trying to squeeze more hints from him?"

  "Most probably," I admit. "It's certainly important enough."

  "And what about Bob's idea," she continues. "Do you regard that as something important?"

  "If he pulls it off it'll be a revolution. It'll guarantee that we take a big share of the market. Definitely our problem with get- ting more sales will be over."

  "And how much hope do you have that he'll be able to do it?"

  "Not much, I'm afraid. Ah. I see your point. Yeah, I would have run to Jonah with these questions as well. And the same with the issues that Stacey and Ralph have raised, each one of them is essential."

  "And how many more things will pop up when you start to manage the division?"

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  "You're right, Julie. And Jonah is also right. I felt it today as well. When each one of them spelled out their immediate dream in such a tangible form, I wondered what mine is. The only thing that kept popping into my mind is that I must learn how to man- age. But where on earth am I going to find the answer to Jonah's question: What are the techniques needed for management? I don't know, Julie. What do you think I should do now?"