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Inventory is all the money that the system has invested in purchasing things which it intends to sell.
Eliyahu M. Goldratt -
Money for knowledge has us stumped for a while. Then we decide it depends, quite simply, upon what the knowledge is used for. If it’s knowledge, say, which gives us a new manufacturing process, something that helps turn inventory into throughput, then the knowledge is operational expense. If we intend to sell the knowledge, as in the case of a patent or a technology license, then it’s inventory. But if the knowledge pertains to a product which UniCo itself will build, it’s like a machine—an investment to make money which will depreciate in value as time goes on. And, again, the investment that can be sold is inventory; the depreciation is operational expense.
Eliyahu M. Goldratt
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If Ralph can determine a schedule for releasing red-tag materials based on the bottlenecks, he can also determine a schedule for final assembly. Once he knows when the bottleneck parts will reach final assembly, he can calculate backwards and determine the release of the non-bottleneck materials along each of their routes. In this way, the bottlenecks will be determining the release of all the materials in the plant.
Eliyahu M. Goldratt -
But, there is another effect that stems from restricting the accumulation of inventory. It makes it very visible to spot the real problems that jeopardize the flow—when one work center in a line stops producing for more than a short while, soon the whole line stops. Ford took advantage of the resulting clear visibility to better balance the flow by addressing and eliminating the apparent stoppages.4 The end result of abolishing local efficiencies and balancing the flow is a substantial increase in throughput. Henry Ford achieved the highest throughput per worker of any car manufacturing company of his time.
Eliyahu M. Goldratt -
Why not make the work easier and more interesting so that people do not have to sweat? The Toyota style is not to create results by working hard. It is a system that says there is no limit to people’s creativity. People don’t go to Toyota to ‘work’ they go there to ‘think’.
Eliyahu M. Goldratt -
And if quality were truly the goal, then how come a company like Rolls Royce very nearly went bankrupt?
Eliyahu M. Goldratt -
To efficiently produce quality products sounds like a good goal. But can that goal keep the plant working? I’m bothered by some of the examples that come to mind. If the goal is to produce a quality product efficiently, then how come Volkswagen isn’t still making Bugs?
Eliyahu M. Goldratt -
Cost Accounting is enemy number one of productivity.
Eliyahu M. Goldratt
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That’s how Jonah knew. He was using the measurements in the crude form of simple questions to see if his hunch about the robots was correct: did we sell any more products (i.e., did our throughput go up?); did we lay off anybody (did our operational expense go down?); and the last, exactly what he said: did our inventories go down?
Eliyahu M. Goldratt -
The improvement efforts of other companies are misguided since they are aimed at achieving cost savings rather than being totally focused on improving the flow.
Eliyahu M. Goldratt -
Productivity is the act of bringing a company closer to its goal. Every action that brings a company closer to its goal is productive. Every action that does not bring a company closer to its goal is not productive.
Eliyahu M. Goldratt -
If any organization was built for a purpose and any organization is composed of more than one person, then we must conclude that the purpose of the organization requires the synchronized efforts of more than one person.
Eliyahu M. Goldratt -
I still claim that there are only few constraints. Our division is too complex to have more than a very few independent chains. Lou, don’t you realize that everything we mentioned so far is closely connected? The lack of sensible long-term strategy, the measurement issues, the lag in product design, the long lead times in production, the general attitude of passing the ball, of apathy, are all connected. We must put our finger on the core problem, on the root that causes them all. That is what actually is meant by identify the constraint. It’s not prioritizing the bad effects, it’s identifying what causes them all.
Eliyahu M. Goldratt -
His best-selling book, The Goal, has sold over 6 million copies and has been translated into 35 languages. It continues to be required reading in major business schools.
Eliyahu M. Goldratt
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The entire bottleneck concept is not geared to decrease operating expense, it’s focused on increasing throughput.
Eliyahu M. Goldratt -
Never let something important become urgent.
Eliyahu M. Goldratt -
When a proto-type—a new initiative—doesn't work, we face two alternatives: one is to bitch about reality and the other is to harvest the gift it just gave us, the knowledge of what has to be corrected.
Eliyahu M. Goldratt -
There is an explanation to these companies’ failure to implement Lean; an explanation that is apparent to any objective observer of a company like Hitachi Tool Engineering. The failure is due to the fundamental difference in the production environments. When Taiichi Ohno developed TPS, he didn’t do it in the abstract; he developed it for his company. It is no wonder that the powerful application that Ohno developed might not work in fundamentally different production environments.
Eliyahu M. Goldratt -
But when the nature of the constraint has changed, one would expect to see a major change in the way we operate all non-constraints.
Eliyahu M. Goldratt -
I sit there marveling that we’re going to reduce the efficiency of some operations and make the entire plant more productive.
Eliyahu M. Goldratt
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Eli Goldratt passed away at his home in Israel on June 11th, 2011, in the company of his family and close friends.
Eliyahu M. Goldratt -
Putting it precisely, activating a resource and utilizing a resource are not synonymous.
Eliyahu M. Goldratt -
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.
Eliyahu M. Goldratt -
I smile and start to count on my fingers: One, people are good. Two, every conflict can be removed. Three, every situation, no matter how complex it initially looks, is exceedingly simple. Four, every situation can be substantially improved; even the sky is not the limit. Five, every person can reach a full life. Six, there is always a win-win solution. Shall I continue to count?
Eliyahu M. Goldratt