It is about the Management Philosophy

Understanding the Goal as an Operations Management Philosophy

The research in organizational management usually presents the system of indicators to calculate the efficiency of production processes and other quantitative properties. However, the theory of constraints suggested by the scholars examines the organizations’ activities in depth. The authors tried to provide the global understanding of the corporations’ fundamental objectives. What is the goal of a firm according to the authors? How do companies can achieve the major goals? The current essay analyzes their work The Goal: A process of ongoing improvement in order to find the answers to the aforementioned questions.

The main character of the novel, Alex Rogo, is a director of a plant that faces problems with the efficiency. On his way to a corporate conference, Rogo meets his old physics professor, Jonah. Throughout the novel, the authors reveal the main principles of the theory of constraints in the form of Jonah’s teachings to Alex and his team. For the better understanding of the principles, it is important to briefly describe the conversations between Alex and Jonah, and explain the lessons learned from the professor.

The first meeting occurs at O’Hara airport. Alex tells Jonah that he works as a director at the plant in Barrington. Alex is proud to explain that his plant uses robots in the production process, and the approach helps to increase the productivity of the firm. Jonah asks some questions about the company. It appears that the robotic innovation did not help reduce plant inventories, employee expense nor did it improve shipping amounts. Jonah asks the question about the goal of the company, which Alex cannot answer. After the conversation, Rogo realizes that the goal of a firm is to make money. Moreover, the idea pushes him to seek answers to many other questions.

Alex tries to find some measurements to evaluate the plant’s management quality. Rogo finds his old address book, calls Jonah and asks him for advice. The teacher gives him three measurements of throughput, inventory, and operational expenses. Throughput is the rate, at which the system generates money through sales. The inventory dimension includes the money that a company has invested in the manufacturing. Operational expenses calculate the finances that a firm spends in order to turn inventory into throughput.

During their third conversation in New York, Jonah gives Alex the definitions of two important variables of dependent phenomenon and statistical fluctuations. Rogo faces challenges in understanding the measurements, but the scout’s hike with his son helps him to come up with a real-life example of the variables’ usage. The further experiments at the plant were the results of his experiment with the kids’ line during the hike, which he interprets as a dependent event with statistical fluctuations.

After the realization of the given measurements meanings, Alex’s team of Lou, Bob, Ralph, and Stacey, try to find weak links in their plant production process. However, the task is too complicated, and they need Jonah’s advice again. The professor suggests distinguishing two types of resources: bottleneck (the capacity is less or equal to demand) and non-bottleneck (the capacity is bigger than demand). He also highlights that the bottleneck resources determine the product flow in the company.

Alex finds two bottlenecks at the plant, but he does not know how to fix them. Jonah visits the factory and checks each bottleneck. He points out that the machines are not operating at their full capacity, which is a main problem. The professor stressed that the operations of the plant depends on the effectiveness of bottlenecks, so it is necessary to ensure that they work in the non-stop mode.

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Alex fixes the problem; his plant gets enough products assembled by bottlenecks. However, there is a lack of other components availability. In the response to problems, Jonah arrives at the plant for the second time to explain that the equipment, except weak links, has to work less, as the final performance of the plant depends on the productivity of bottlenecks.

After the establishment of the performance balance between two types of resources, the plant becomes much more successful. However, when Jonah calls Alex from Singapore, Rogo points out that he is forced to reduce the stocks of non-bottlenecks by half. The action will enable the faster response to changes in demand and reduced inventories. Thus, Alex tries to improve the plant performance before the meeting of the Board of Directors that will decide the plant’s future.

After the report’s presentation on the progress at the plant, Alex receives a promotion. After lengthy discussions with the colleagues, Alex creates five basic principles of the theory of constraints. They include identifying the constraints, the search for the ways to exploit the constraints, subordination of all industrial processes to the aforementioned ways, evaluation of the constraints, and the return to the first step after the break of a bottleneck. Moreover, he concluded that the principles work well at the plant, but they are difficult to implement into the corporation management system. Finally, he formulated three postulates of the new operations management philosophy called the theory of constraints. They are the answers to three questions: what to change, how to change, and how to cause the changes.

To summarize, the goal of the firm is to make money. The goal can be achieved by finding the answers to three questions defined above. The authors note that there are two reasons that cause the absence of the effect of the approach. The first reason is the lack of demand for products, the second is the lack of openness to changes. Thus, the basic idea of the operations management theory is to be open to changes and find solutions by asking questions.

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Author of the article

Lola Nickson