Eliyahu M. Goldratt Quotes
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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?
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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.
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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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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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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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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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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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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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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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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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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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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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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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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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Cost Accounting is enemy number one of productivity.
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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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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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Putting it precisely, activating a resource and utilizing a resource are not synonymous.
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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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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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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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The most demanding assumption that TPS makes about the production environment is that it is a stable environment. And it demands stability in three different aspects.
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I’ve got the machines. I’ve got the people. I’ve got all the materials I need. I know there’s a market out there, because the competitors’ stuff is selling. So what the hell is it?