Eliyahu M. Goldratt Quotes

Alex, you cannot understand the meaning of productivity unless you know what the goal is. Until then, you’re just playing a lot of games with numbers and words.” “Okay, then it’s market share,” I tell him. “That’s the goal.” “Is it?” he asks. He steps into the plane. “Hey! Can’t you tell me?” I call to him. “Think about it, Alex. You can find the answer with your own mind,” he says.

What we know now,” I tell him, “is that we shouldn’t be looking at each local area and trying to trim it. We should be trying to optimize the whole system. Some resources have to have more capacity than others. The ones at the end of the line should have more than the ones at the beginning — sometimes a lot more. Am I right?

sit there marveling that we’re going to reduce the efficiency of some operations and make the entire plant more productive.

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.

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?

Eli Goldratt passed away at his home in Israel on June 11th, 2011, in the company of his family and close friends.

I still claim that there are only few constraints. Our division is too complex to have more than a very few independent chains. Lou, don’t you realize that everything we mentioned so far is closely connected? The lack of sensible long-term strategy, the measurement issues, the lag in product design, the long lead times in production, the general attitude of passing the ball, of apathy, are all connected. We must put our finger on the core problem, on the root that causes them all. That is what actually is meant by identify the constraint. It’s not prioritizing the bad effects, it’s identifying what causes them all.

Throughput,” he says, “is the rate at which the system generates money through sales.

With the bottlenecks more productive now, our throughput has gone up and our backlog is declining. But making the bottlenecks more productive has put more demand on the other work centers. If the demand on another work center has gone above one hundred percent, then we’ve created a new bottleneck.

Deciding that the company is wasting too much money on duplicated efforts and thus moving to a more centralized mode. Ten years later, we want to encourage entrepreneurship and we move back to decentralization.

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.

Well, since we started keeping data on the bottlenecks, I’ve been noticing I’m able to predict several weeks in advance what each bottleneck will be working on at a particular time. See, as long as I know exactly what’s in queue, I just take the average setup and process times for each type of part, and I’m able to calculate when each batch should clear the bottleneck. Because we’re only dealing with one work center, with much less dependency, we can average the statistical fluctuations and get a better degree of accuracy.

Quality alone cannot be the goal. It’s important. But it’s not the goal.

What can I possibly do to be more competitive? I’ve done cost reduction. No other manager in this division has cut costs to the degree I have. There is nothing left to trim. And, despite what Peach says, my efficiencies are pretty damn good. He’s got other plants with worse, I know that. But the better ones don’t have the competition I do. Maybe I could push efficiencies some more, but . . . I don’t know. It’s like whipping a horse that’s already running as fast as it can.

Flow means that inventories in the operation are moving. When inventory is not moving, inventory accumulates. Accumulation of inventory takes up space. Therefore, an intuitive way to achieve better flow is to limit the space allowed for inventory to accumulate. To achieve better flow, Ford limited the space allotted for work-in-process between each two work centers.