Great Quotes from Goldratt’s The Goal & Critical Chain

Here’s a list of great quotes from from The Goal: A Process of Ongoing Improvement that I found via Duke’s Tool Page which is a great starting point for a bunch of web pages full of good tips and ideas on management created by Duke Rohe of the Office of Performance Improvement at the University of Texas M.D. Anderson Cancer Center.

I’ve gone on to start adding to the list with my own picks from Critical Chain as I’m re-read through it.

  1. If you are like nearly everyone else in this world, you have accepted so many things without question that you’re not thinking at all.
  2. Every action that does not bring the company closer to its goal is not productive.
  3. Productivity is meaningless unless you know what your goal is.
  4. Your problems are you don’t know what your goal is.
  5. You company’s goal is to make money or it’s not in business.
  6. If quality was your goal, then how come Rolls Royce nearly went bankrupt?
  7. Can we assume that people not working and making money are the same thing?
  8. The best way to be shut down is to make money AND leave the competitors in the dust.
  9. It is possible for a company to show net profit and a good ROI and go bankrupt. Bad cash flow is what kills most industries.
  10. We need to increase net profits AND return on investment AND cash flow.
  11. Throughput is the rate at which the system generates money through sales.
  12. Inventory is the money that the system has invested in purchasing things it intends to sell.
  13. Operational expense is the money the system spends to turn inventory into throughput.
  14. Most people haven’t been managing according to the goal.
  15. We are too busy turning process time into piles of inventory.
  16. Investment is the same thing as inventory.
  17. Knowledge:

    • Which gives a new manufacturing process that turns inventory into throughput is operational expense.
    • Which we intend to sell is inventory.
    • Which is used to build the system is investment.
  18. Just pay me for the value of what you learn from me.
  19. What’s more important to your management, efficiencies or money? (Better be money)
  20. Do you realize the only way you can create excess inventory is by having excess manpower?
  21. The goal is not to improve one measurement in isolation. The goal is to reduce operational expenses AND reduce inventories and increase throughput simultaneously.
  22. Whatever lets us turn inventory into throughput is operational expense.
  23. Bowl and match game is awesome to understand the accumulation of inventory and its effect on the throughput. Pg 106.
  24. A bottleneck is any resource whose capacity to or less than the demand placed upon it.
  25. You should not balance capacity with demand. Instead, balance flow of product through the plant with demand.
  26. Does excess capacity equals waste. Yes and no. Yes if its products are stockpiling big time behind it. No if the fluctuations in the process behind it are starved for more inventory.
  27. You have to learn how to run your plant by its constraints.
  28. Most manufacturing plants don’t have bottlenecks. They have enormous excess capacities.
  29. Most manufacturers have capacity hidden from us because our thinking is incorrect.
  30. Loss in throughput is loss on the bottom line.
  31. Whatever the bottleneck produces in an hour is equivalent to what the plant produces. Every hour lost at a bottleneck is an hour lost in the entire system.
  32. A bottlenecks time is wasted when:

    1. Its product is sitting idle during a lunch break
    2. It is processing part that are defective
    3. It is producing parts that are not needed
  33. Do all the parts have to be processed at the bottleneck or shifted to a non-bottleneck for processing?
  34. We need specific fluctuation-reducing procedures for bottleneck-routed parts and processes.
  35. The level of utilization of a non-bottleneck process is not determined by its own potential, but by some other constraint in the system.
  36. A system of local optimums is not an optimum system at all.
  37. Four elements of time:

    1. Setup where part spends time waiting for a resource.
    2. Process time where part modified into a new more valuable form.
    3. Queue where part spend time in line waiting while a resource is busy working on something ahead of it.
    4. Wait where waits for another part so it can be assembled.
  38. Setup and Process are small in comparison of queue and wait. Queue is the dominant portion.
  39. An hour saved at a non-bottleneck is a mirage.
  40. Balance flow of a system, not capacity.
  41. Incentives we usually offer are based on the assumption that the utilization of any worker is determined by his own potential. Faulty.
  42. An hour saved at a non-bottleneck is worthless.
  43. Good way to teach: How to persuade other people, how to peel away the layers of common practice, how to overcome the resistance to change.
  44. Inventory is definitely a liability.
  45. Process of optimizing throughput:

    1. Identify the system’s bottleneck.
    2. Decide how to exploit bottlenecks
    3. Subordinate everything else to the bottlenecks
    4. Elevate the systems bottlenecks
    5. Fix the next bottleneck
    6. Warning! do not let inertia to cause a system constraint
  46. Eliminating priorities improve throughput.
  47. If your system has excess capacity? You can produce product at the cost of the materials.
  48. There are times when non-bottlenecks must have more capacity than the bottlenecks. If the upstream resources don’t have spare capacity, when this doesn’t happen, we are starving the bottleneck.
  49. The more complex the organization the more interdependencies between the various links and the smaller the number of independent chains it composed of.
  50. Policies can be a constraint of a system and it follows the same five steps to optimizing to.
  51. Major obstacles to putting principles of the Goal in practice:

    1. Lack of ability to propagate the message throughout the company.
    2. Lack of ability to translate the books learning to the company’s procedure.
    3. Lack of ability to persuade decision makers to change some measures.

From Critical Chain

  1. We all know that focusing is important" Johnny speaks softly "A manager who does know how to focus will not succeed in controlling cost and will not protect throughput. But what is focusing for us? We have come to know it as the Pareato Principle. Focus on solving twenty percent of the important problems, and you’ll reap eighty percent of the benefits. This is a statistical rule. But those who teach statistic know that the twenty-eighty rule applies only to systems composed of independent variables; it applies only to the cost world where each link is managed individually. (pg 91)
  2. In the throughput world, focusing and process of on-going improvement are not two different things, they are one in the same (pg 95)

  3. The higher the uncertainty the longer the tail of the distribution.
  4. "The difference between the median of the probability distribution and the actual estimate is the safety we put in" (pg 46)
  5. "What you claim is that the major, negative financial ramification does not stem from spending too much money"
  6. "Financially , the overruns are much less important that the overdue"
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5 Responses to “Great Quotes from Goldratt’s The Goal & Critical Chain”

  1. Say Keng LEE September 2, 2008 at 6:09 am #

    Hi:
    What a great collection of brilliant insights from Goldratt, whose works I have heard of, but have yet to read them. Something for me to ponder.
    Regards, Say Keng

  2. Gordon White December 28, 2009 at 4:23 pm #

    I bookmarked your site, this is very useful, thank you. Please check mine : crm – customer resource management

  3. Melinda Hogan June 14, 2010 at 12:24 am #

    A Excellent write up, I will save this in my Mixx account. Have a awesome evening.

  4. Richard July 20, 2010 at 7:29 pm #

    People resist change! Really? Check this out… from Goldratt

    http://www.youtube.com/watch?v=hcz1aZ60k7w

  5. Alex Fuller January 7, 2014 at 1:50 pm #

    I know this list is over 10 years old now, but it still has a lot of good nuggets of wisdom from Goldratt. Thanks for sharing. We’re doing our best to incorporate many of these into our business.

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