Compare and contrast major approaches to managing and improving organizational performance from the book The Goal,

Passage 1: “Stacey, are you positive that your warning about those constraint resources was just a false alarm? Can we safely take more orders?...I think so, she says… it explains one of my biggest mysteries, why there are so few holes in the bottlenecks’ buffers, while there are more and more in the assembly buffer. By the way fellows, the fact that there are more and more holes indicates that eventually we will run into the problem of insufficient capacity but not right now” (Goldratt, E., The Goal).

This makes me think about how all the effective measures the team took in order to increase production cost and time, but if I am understanding this correctly, we are seeing that the team is not effectively taking care of the problems that come up immediately and that they have address problems as a whole. Furthermore, in “The synergy of continuous process improvement”, the author illustrates why “it is your responsibility as a system or process owner to ensure that your processes are being monitored and improved continuously to avoid the phenomenon of natural entropy and regression” (The synergy of continuous process improvement, p. 42).

Passage 2: “Don’t you see, the problem is much bigger; it’s not only cost accounting. We put on the green and red tags not because of cost accounting, but because we realized the importance of bottlenecks” (Goldratt, E., The Goal).

Throughout this passage, Alex and his team learn a lesson after Stacey creating order for finished goods in order to prevent them from wasting. The team now has an understanding of the actual production cycle and the importance of bottleneck. The Theory of constraints that we recently learned about illustrates how the output of the different machines in the factory varies from machine to machine, and the bottleneck of UniCo is the machine that produces the products the slowest. Furthermore in “Three-Questions Accounting”, Corbett illustrated the popularity of companies utilizing cost accounting systems as their management accounting; “part of the logic behind cost accounting methodologies is that when we reduce the cost of a product we are increasing the company’s profitability. This is one way that cost accounting creates the bridge between our decisions/actions and the company’s profitability” (Corbett, T., 2006).

Passage 3: “After we began withholding the release of materials and timing the releases according to the completed processing of heat-treat and the NCX-10, efficiencies dipped somewhat. But that was because we were consuming excess inventories. When the excess inventories were exhausted-which happened quickly as a result of the increase in throughput- efficiencies came back up again” (Goldratt, E., The Goal)

Throughout “The Goal”, Alex gives the reader 3 measurements of turnover, inventories and operational expenses. The two bottlenecks identified by Alex and his team within the plant were the NCX-10 and heat-treat. After knowing the number of products being produces and multiplying the sales price of the final product, we are able to see how much one hour of the bottleneck machine costs the factory. After reading “Trimming Waste? A guide to six sigma, lean, and the theory of constraints, the author describes lean thinking as “a production process that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination”, in which this program’s theory is based on removing wastes from the production line and focusing more on the flow of successful products with the employees only working on the product needed (Stephen, M., 2009 Jan.).

References:

Corbett, T. (2006). Three-Questions accounting. Strategic Finance, 87(10), 48-55.

Goldratt, E. & Cox, J. (2014). The Goal: A Process of Ongoing improvement. (4th ed.). Great Barrington, MA: North River press.

Stephen, M. (2009). Trimming Waste? A guide to six sigma, lean, and the theory of constraints. Canadian Plastics, Jan/Feb. 19-21.

Piraseth, R.M., Kannappan, S. (2013). The synergy of continuous process improvement. Industrial Engineer, June. 41-45.