Eliyahu M. Goldratt Quotes
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I say an hour lost at a bottleneck is an hour out of the entire system. I say an hour saved at a non-bottleneck is worthless. Bottlenecks govern both throughput and inventory.
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For most work centers every such switch necessitates spending time to do the required setup. Since the containers, by design, called for a relatively small number of parts the production batches that they dictated were, many times, ridiculously smaller relative to the setup required. Initially for many work centers the time required for setups was more than the time required for production, resulting in a significant drop in throughput. It is no wonder that Ohno faced enormous resistance—so much so that Ohno wrote that his system was referred to as the ‘abominable Ohno system’ from the late 1940’s to the early 1960’s.8 Ohno (and his superiors) certainly had an extraordinary determination and vision to continue to push for the implementation of a system, that for any person who looked at it from a local perspective, as most shop personnel must have, simply didn’t make sense.
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Kanban system directs each work center when and what to produce but, more importantly, it directs when not to produce. No card—no production.
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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.
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And if quality were truly the goal, then how come a company like Rolls Royce very nearly went bankrupt?
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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.
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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.
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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.
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If you don't manufacture a quality product all you've got at the end is a bunch of expensive mistakes.
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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?
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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 improvements on the CCRs will always be sufficient to prevent them from becoming bottlenecks.
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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’.
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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.
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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.
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Cost Accounting is enemy number one of productivity.
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So this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.
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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.
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Putting it precisely, activating a resource and utilizing a resource are not synonymous.
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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.
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Okay, so why was the plant built in the first place? It was built to produce products. Why can’t that be the goal? Jonah said it wasn’t. But I don’t see why it isn’t the goal. We’re a manufacturing company. That means we have to manufacture something, doesn’t it? Isn’t that the whole point, to produce products? Why else are we here?
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The important thing is you’ve just proven that any organization should be viewed as a chain. I can take it from here. Since the strength of the chain is determined by the weakest link, then the first step to improve an organization must be to identify the weakest link. “Or links,” I correct. “Remember, an organization may be comprised of several independent chains.”
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The entire bottleneck concept is not geared to decrease operating expense, it’s focused on increasing throughput.
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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.
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Ford’s starting point was that the key for effective production is to concentrate on improving the overall flow of products through the operations. His efforts to improve flow were so successful that, by 1926, the lead time from mining the iron ore to having a completed car composed of more than 5,000 parts, on the train ready for delivery, was 81 hours!3 Eighty years later, no car manufacturer in the world has been able to achieve, or even come close, to such a short lead time.