The Goal - Jacob A Kesterson Dr Alidaee Report on The Goal...

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Jacob A. Kesterson March 27, 2008 Dr. Alidaee Report on The Goal The Goal: A Process of Ongoing Improvement We all know that the business world is constantly changing. However, it is only so often when an idea comes along that completely turns the way we think upside down. This is exactly what happened when the theory of constraints came about. Those who chose to follow its methodology began thinking in a new way that allowed them to see their operations as a system instead of individual processes. They began using a five-step process that allowed them to find the underlying problem in their system. When that is determined, then it is important to find out how to exploit that problem. Then, the process leads to subordination, elevation, and ultimately the search for new constraints. Many other factors determine the performance of the system such as dependencies, statistical fluctuations, and batch sizing to name a few. The theory’s main idea is that the process of improvement is ongoing. An organization cannot be satisfied with a new level of performance when a constraint is broken. The theory of constraints illuminates the idea that the system must be seen as a whole. When the system is analyzed as a whole, you can see the effects of your decisions in relation to your goal. One example of this fact was with the installment of robots in the plant. Alex tried to make it clear to Jonah that the robots were increasing the plant’s productivity. Although efficiencies did
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increase by thirty six percent, what Alex did not realize is that it only increased in that one area. That is why Alex was perplexed when Jonah asked if the 36% increase in productivity meant a 36% increase in sales. Alex did not realize that the increase in production by those robots was only contributing to building more assembled inventory, which moved them away from their goal. How can an increase in efficiency lead you away from making more money? Alex was not seeing the big picture. The increase in production meant more money tied up in inventory and less money being spent on improvements to their system. Many business people believe that breaking down situations to their essential parts is necessary in solving the problems they create. That may be true to an extent, but when they break down and analyze the situation, they need to find a solution that benefits the entire operation. Another side effect of problem-by-problem solutions is that when seen individually, they do not allow an organization to see the consequences of their actions. This whole idea is represented by the industry term “local optimums”. Local optima represent the idea that there is a problem or set of problems that need to be fixed. When they are fixed, the solution is accepted and then it is on the next local optima. Again, the problem arises that when the local optima is fixed, it is not in relation to the main goal of making money, but it is to increase the efficiency or output of that particular local
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This note was uploaded on 04/07/2008 for the course MGMT 372 taught by Professor Adilaee during the Spring '08 term at Ole Miss.

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The Goal - Jacob A Kesterson Dr Alidaee Report on The Goal...

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