Eliyahu M. Goldratt Quotes
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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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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.
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We’re dealing with the fact that we haven’t got any idea of what we’re doing. If we’re just looking for some arbitrary order, and we can choose among so many possibilities, then what’s the point in putting so much effort in collecting so much data? What do we gain from it, except the ability to impress people with some thick reports or to throw the company into another reorganization in order to hide from the fact that we don’t really understand what we’re doing? This avenue of first collecting data, getting familiar with the facts, seems to lead us nowhere. It’s nothing more than an exercise in futility. Come on, we need another way to attack the issue.
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Putting it precisely, activating a resource and utilizing a resource are not synonymous.
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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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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.
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I sit there marveling that we’re going to reduce the efficiency of some operations and make the entire plant more productive.
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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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All those calls and meetings were fire fighting. I remind myself. No fires, no fighting. Now, everything is running smoothly— almost too smoothly.
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While they go get the others, I figure out the details. The system I’ve set up is intended to "process’’ matches. It does this by moving a quantity of match sticks out of their box, and through each of the bowls in succession. The dice determine how many matches can be moved from one bowl to the next. The dice represent the capacity of each resource, each bowl; the set of bowls are my dependent events, my stages of production. Each has exactly the same capacity as the others, but its actual yield will fluctuate somewhat.
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If synchronized efforts are required and the contribution of one link is strongly dependent on the performance of the other links, we cannot ignore the fact that organizations are not just a pile of different links, they should be regarded as chains.
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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.
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We had physical constraints that helped us to focus our attention, to zoom in on the real policy constraint. That isn’t the case in the division. Over there we have excess capacity going through our ears. We have excess engineering resources that we succeed so brilliantly in wasting. I’m sure that there is no lack of markets. We simply don’t know how to put our act together to capitalize on what we have.
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Never let something important become urgent.
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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?
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In order to significantly increase sales we have to increase the perception of value of the market for our products.
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Somewhere in the scientific method lies the answer for the needed management techniques. It is obvious.
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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?
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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.
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We need financial measurements 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; measurements should induce the parts to do what’s good for the organization as a whole.
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You forced us to view production as a means to satisfy sales. I want to change the role production is playing in getting sales.
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What was the nature of the answers, the solutions, that Jonah caused us to develop? They all had one thing in common. They all made common sense, and at the same time, they flew directly in the face of everything I’d ever learned. Would we have had the courage to try to implement them if it weren’t for the fact that we’d had to sweat to construct them? Most probably not. If it weren’t for the conviction that we gained in the struggle—for the ownership that we developed in the process—I don’t think we’d actually have had the guts to put our solutions into practice.
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Incidentally, common sense is not so common and is the highest praise we give to a chain of logical conclusions.
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Whenever we think we have final answers progress, science, and better understanding ceases.