Book Report

Name: Date:

Book Title: The Goal, Goldratt

Book Overview: Theory of Constraints

 Identify the system´s bottlenecks: That means a resource whose capacity is

equal or less than the demand. It determines the effective capacity of the plant. If
we identify the constraint means find the root cause of the problem.
 Decide how to exploit them (bottlenecks): Increasing capacity = new
personnel, new equipment or squeezing the capacity of that resource.
 Subordinate every other decision to Step 2: Once the constraint was identified
and we took actions to solve it, any other activity can not be more important than
this, we have to be congruent with our decisions.
 Elevate the system´s bottlenecks: Focus our efforts on those areas
(constraints) with the greatest potential to improve the benefits.
 If in a previous step, a bottleneck has been broken, go back to the
beginning (S1): When we have solved the constraint we can start again with the
next one.

My main learning points:

 Throughput: the rate at which the system generates money through sales net of
variable cost. This means value added by the system.
 Inventory: all the money that the system has invested purchasing things which it
intend to sell (property, equipment)
 Operating expense: all the money the system spends in order to turn inventory
into throughput (rent, salaries, etc)
 Again with the limitations constraints, the important to me is identifying the correct
one because if we attack to non-bottleneck instead solves a constraint we will be
creating another one.

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What will I apply to my business?:
Identify if our metrics are according with the Goal of our plant. Also teamwork is very
important to driving the change and improvement.

There is always an opportunity to recover as long our business is still running, never
give up and focus on the right areas, this way we can achieve breakthrough results but
not only to individual parts if not to overall system.