Quotes from Eliyahu M. Goldratt

to avoid feeling disappointed, one has to expect that things will, most probably, not work the first time.

But how do we know the value of our finished goods?" she asks. "First of all, the market determines the value of the product," says Lou. "And in order for the corporation to make money, the value of the product—and the price we're charging—has to be greater than the combination of the investment in inventory and the total operational expense per unit of what we sell.

Five Focusing Steps 1. IDENTIFY the system's constraint. 2. Decide how to EXPLOIT the system's constraint. 3. SUBORDINATE everything else to the above decisions. 4. ELEVATE the system's constraint. 5. If in the previous steps a constraint has been broken Go back to step 1, but do not allow inertia to cause a system constraint.

productivity is the act of bringing a company closer to its goal.

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.

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.

An expert is not someone that gives you the right answer, it is someone that asks you the right question

We want to make production a dominant force in getting good sales. Sales which will fit both the client's needs and the plant's capabilities like a glove.

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.

You forced us to view production as a means to satisfy sales. I want to change the role production is playing in getting sales.

utilizing" a resource means making use of the resource in a way that moves the system toward the goal. "Activating" a resource is like pressing the ON switch of a machine; it runs whether or not there is any benefit to be derived from the work it's doing. So, really, activating a non-bottleneck to its maximum is an act of maximum stupidity.

Incidentally, common sense is not so common and is the highest praise we give to a chain of logical conclusions.

What's happening isn't an averaging out of the fluctuations in our various speeds, but an accumulation of the fluctuations. And mostly it's an accumulation of slowness—because dependency limits the opportunities for higher fluctuations.

Let's not forget that in the throughput world the linkages are as important as the links. Which means that if we decided to do something in one link, we have to examine the ramifications on the other links.

What my people and I have done is to examine daily the queues in front of the assembly and in front of the bottlenecks— we call them 'buffers.' We check just to be sure that everything that's scheduled to be worked on is there—that there are no 'holes.' We thought that if a new bottleneck pops up it would immediately show up as a hole in at least one of these buffers.

Any money we've lost is operational expense; any investment that we can sell is inventory.

Cuando el debate pasa de echarle culpas a pedirle a la otra parte que resuelva la percepción equivocada, todo mejora.

You see, whenever there's a hole in a buffer—and I'm not talking about just the work that's supposed to be done on a given day, but the work for two or three days down the road—we go and check in which work center the materials are stuck.

Increase throughput while simultaneously reducing both inventory and operating expense.

We don't break setups, or light a fire. We just point out to the foreman of that work center which job we would prefer he gets to next.

And it became even more interesting when we realized that we were visiting the same six or seven work centers every time. They're not bottlenecks, but the sequence in which they perform their jobs became very important. We call them 'capacity constraint resources,' CCR for short.

What you're saying is that making an employee work and profiting from that work are two different things.

Don't you realize that we've concentrated our improvement efforts too narrowly? We tried so hard to improve our bottlenecks, when what we should do is improve the CCRs as well. Otherwise we'll run into an 'inter-active' bottleneck situation. "See, the key is not in the hands of the materials people. If interactive bottlenecks emerge, chaos is inevitable; we'll have to expedite all over the place.

The key is in the hands of production. These techniques to manage the buffers should not be used just to track missing parts while there is still time, they should be used mainly to focus our local improvement efforts. We must guarantee that the improvements on the CCRs will always be sufficient to prevent them from becoming bottlenecks.