2. BUY it! · Business · Management

BR 159: The Goal by Eliyahu Goldratt

Priority: 2 – BUY it! (All Categories are 1) Read ASAP! 2) BUY it! 3) SHELF it 4) SOMEDAY it)

Comments: Outstanding book. The only reason it is priority 2 vs. 1 is because Operations Management may not be everyone’s forte. I read this just beforegraduate  school and I’m sure it’ll be covered in the Operations Management introduction class. I can’t wait.

The other note – it is an excellent audio book as it is produced like an audio movie. Makes for a very interesting read.

Top 3 Learnings:

1. First, understand the goal and ONLY optimize with respect to the goal. Once you understand the goal, understand the bottlenecks. Imagine a plant’s bottleneck / constrained resource can produce 400 units. Having non bottleneck machines produce more than 400 only excess inventory. In fact, if market demand is 300, we are in our interest to produce around 300. The rest is waste.

2.  “Local efficiencies” are useless. Having one part of the plant product top class equipment while everyone is below average and late is useless. The big picture is what matters. Once again, understand the goal and only optimize for it. Beware metrics that result in optimizing parts of the picture at the expense of the whole (e.g. cost cutting on R&D that messes with future pipeline)

3. When trying to understand a problem, think of the Toyota 5 Why system. Ask why 5 times so you get to the route of the problem.

Book notes here.

Add on Mar 16, 2016: This book has had a huge impact on me in retrospect. Some very powerful life analogies here. 2 lessons I’ve repeated many a time –

1. Productivity is actions that us move toward the goal.

2. You can’t optimize sub-systems (point 2).

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