The Goal by Eliyahu M.

Goldratt: An
Executive Summary
The Goal is a very compelling novel. The author has made the production managers have quite an
epiphany. In one book he might have changed the whole world of cost accounting. Eliyahu approached
the production world with a common sense view. Using just one goal, making money, he referenced
every activity to.
This book is about a plant manager at UniCo, Mr. Alex Rogo. He is caught in a situation where his plant is
losing money and he only has three months to get it back on track or they will shut it down. Alex does
this while battling family issues at home with his wife. In the beginning Alex has no idea where he is
going to start and no understanding of why they are losing money. Everything that he reads according to
the numbers of the company says that he is running a very efficient company. However, Shipments are
constantly late and there exists months of production backlog, yet inventories of finished and in-process
goods are soaring. The production managers wonder why they can't consistently get a quality product
out the door on time at the cost that can beat competition.
The plant manager Mr. Rogo, turns to a manufacturing guru Jonah, who has a unique and potentially
risky approach to addressing the problems. First, he takes what can be a complicated
subject, productivity, and defines it simply as 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." This demands the question: What is the goal? The plant manager
wonders if the goal is cost-effective purchasing, employing good people, high technology, producing
quality products, capturing market share, customer satisfaction, etc. He finally decides that making
money is the appropriate goal and so, based on the guru's definition of productivity, an action that
moves the plant toward making money is productive. And an action that takes away from making money
is non-productive.
Next, Jonah gives him three exact measurements with specific definitions. They are throughput,
operational expenses, and inventory. Jonah tells Alex to figure out what these measurements are
equivalent to in his plant. Alex ponders with others in the plant and then returns yet again with answers
to his questions. The management team agrees on three metrics to determine if the plant is making
money: net profit, return on investment (ROI), and cash flow. It becomes obvious, then, that it is critical
to build a connection between these three measures and what goes on in the plant. Higher throughput,
lower inventories, and reduced operational expenses become their areas of focus to improve plant
profitability.
Jonah next gives him three quick rules which are the opposite of what anyone else in the business has
taught him. He continues to tell him about dependent events and statistical fluctuations.
Jonah also tells him about bottlenecks and non-bottlenecks in the plant then as usual tells Alex to
return once again when he has a better understanding. They experiment with different ways to supply

parts to the bottlenecks and do notice an increase in productivity, until they run into another problem
at the plant.
Jonah decides this time he needs to come to the plant and see for himself, what is going on. Jonah walks
through the plant and shows them a few things and asks them questions to figure out for themselves.
They eventually get the plant running better than any other plant in the division, maybe even the
industry. The plant does not get shut down and Alex and all of the other members of the group that
saved the plant get well earned promotions.