Eliyahu M. Goldratt Quotes

If the first thinking process should lead us to answer the question ‘what to change?’ the second thinking process should lead us to answer the question ‘what to change to?’ I can already see the need for a third thinking process.” “Yes, so can I. ‘How to cause the change.’ ” Pointing to the fifth step I add, “with the amount of inertia that we can expect in the division, the last one is probably the most important.

You’re right,” I say. And then, “It’s a little odd to call the market or the system of material release a bottleneck. Why don’t we change the word, to . . .” “Constraint?” Stacey suggests. We correct it on the board. Then we just sit there admiring our work.

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.

Alex, the goal is not to reduce operational expense by itself. The goal is not to improve one measurement in isolation. The goal is to reduce operational expense and reduce inventory while simultaneously increasing throughput,” says Jonah.

Tell me how you measure me, and I will tell you how I will behave.

Somewhere in the scientific method lies the answer for the needed management techniques. It is obvious.

The more complicated the situation seems to be, the simpler solution must be. .. People believe that reality is complex, and therefore they are looking for sophisticated explanations for complicated solutions. .. Reality it is actually simple.

Look, we give sales a rigid lead time for each product. So if it’s not in finished goods, those are the numbers they should use to promise to clients. Yeah, they deviate from it, but not by much. Maybe there should be another way. Maybe the quoted lead times should be done case by case, according to the load on the bottlenecks. And maybe we shouldn’t regard the quantities required as if we have to supply them in one shot.

Actually, the flow should be a tiny bit less than the demand.

You know what, it really highlights another problem. Changing the measurements’ scale of importance, moving from one world into another, is without a doubt a culture change. Let’s face it, that is exactly what we had to go through, a culture change. But how are we going to take the division through such a change?

[Throughput is the] rate at which the system generates money through sales.

"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.

What you have learned is that the capacity of the plant is equal to the capacity of its bottlenecks,” says Jonah.

Maybe I should start with a question,” he says. “Do you agree that inventory is a liability?” “Of course, everybody knows that. And even if we didn’t know it, the last few months have shown to what extent inventory is a liability.

So this is the goal: To make money by increasing net profit, while simultaneously increasing return on investment, and simultaneously increasing cash flow.