The story started off by relaying the current situation of Mr. Alex Rogo and the dire state of his metal working plant, UniCo. Being the plant manager and head honcho, Mr. Rogo was the represented all the problems the plant was experiencing. The business was down and not profiting at all due to efficiency and process related problems. The business was not producing the necessary inventory levels to sustain the business. It already had too many issues, which had to be fixed soon especially since Mr. Peach, who is Mr. Alex Rogo’s boss, blew his top over another urgent yet delayed order. Mr. Peach gave Mr.
Rogo the ultimatum that if the plant operations would not shape up and improve within the next three months, he will shut the plant down. If the first chapter talked about the Mr. Rogo’s state of affairs at work, the second chapter talked about his personal life. Mr. Rogo was dissatisfied about his life. He was not at all too happy about the fact if he was thirty-eight years old and still where he was when he started. His family was also not happy, most especially his wife. He moved his family from the city six months ago to live in his hometown because he was determined to fix the problems UniCo was facing.
His wife was very unhappy with this move because it was hard for them to adjust especially since they were used to the city life. In this chapter, issues about the delayed order in chapter one continued to resurface. It is with this reason Mr. Rogo called for a general meeting in the third chapter. Immediate changes needed to be done in order to avoid the issues they’ve been experiencing for a long time. This had to be communicated to his staff in order for them to help him with the situation. Mr. Rogo relayed the grim circumstance UniCo was facing and pointed out all the items that were not working for the company.
To move forward, he gave directions on how to manage the scenario by stating the objectives that needed to be addressed within the next three months. It was in this chapter Mr. Rogo finds out that it may not only be UniCo that will perish but the holding company where Mr. Peach is a part of. As the meeting goes on in the fourth chapter, Mr. Rogo goes back in time and reminisces about a discussion he had with his old professor, Jonah, who also was a physicist. During that meeting, Jonah openly talked about the problems Mr.
Rogo’s company was facing. Johan had made mention of all the possible issues that could happen with UniCo, which includes spiraling high inventory levels and delivery issues, where the company will be unable to meet deadlines for shipment. Johan hypothesized that in order for Mr. Rogo to fix his situation, he must define what his goal should be. Everything should always start with the definition of a goal. In order to figure out what the goal is, Mr. Rogo must apply the Theory of Constraints in order to successfully implement effective management.
The Theory of Constraints includes knowing all the constraints that is hindering the company from experiencing efficient productivity. Once the constraints are identified, Mr. Rogo will be able to take measurable next to address these issues. The staff meeting continued to the fifth chapter, where Mr. Rogo leaves the meeting to be alone. He needed to sort out his thoughts and figure out what his ultimate goal should be. He wanted to figure out the goal he should have in order for him to be able to fix the predicament his company is facing.
Deep in thought, while having pizza and beer, he begins to realize that it would be money, income, profitability that would inch him towards turning around his company and making it a successful business. Having a clear direction on where to go, Mr. Rogo sits with the group in the sixth chapter. It was in this chapter, they checked on the financial statements of the company. After evaluating the financial statements, the group was able to pinpoint that the return of investment is very low while the operating and investment expenses greatly needed improvement.
In order for this improvement to take place, the company must increase profit to ensure increased return of investment and sufficient cash flow. To achieve this, Mr. Rogo ponders in the seventh chapter on how he will be able to make changes. Based on the initial evaluation his Finance group advised him, he will need to find a way to make sure he would be able to increases the monies that would flow within the company without increasing costs. He then decides to look for Jonah to learn more about how he can save the company especially since Jonah seemed to know so much about UniCo. In the eighth chapter, Mr.
Rogo was able to talk to Jonah. It was in this chapter wherein Jonah educated him about three important concepts he must understand before he tries to implement new changes within the company. These three concepts include throughput, operational expenses and inventory levels. Jonah defined throughput as the rate of which a process is able to produce sales revenue from sales volume. He defined inventory to be the monetary asset within the system that needs to be sold in order for cash to pour in. Jonah also defined operational expense as the money spent to turn raw materials and all other resources into throughput.
In the ninth chapter, Mr. Rogo discovered that robots and machines that were being used within the company are not efficient assets. Instead of the machines being able to solve cost reduction programs and bring down costs, it was doing quite the opposite bring bringing costs up. With this in mind, he gives his first direction by using these machines in other areas of the plant. In the tenth chapter, Mr. Rogo discussed the concepts he has learned from Jonah with Bob, Lou and Stacey, who represents Accounting, Inventory Control and Production Division.
They discussed line-by-line how these concepts worked within the company and how it affected their profitability. The problem about the cost inefficiency of machine arose again, which made it even more urgent for them to discover how they can lower their costs without affecting other efficiencies within the plant. Since he was running out of ideas, Mr. Rogo decided to go to New York to have another talk with Jonah. Mr. Rogo arrived in New York in the eleventh chapter. It was in this chapter where he started telling Jonah about his dire situation at the plant. Jonah advised Mr.
Rogo that he should not maintain a balanced plant. A balanced plant means that capacity is only enough for the demand of the market. If this is the case, then the company would be much closer to being bankrupt. Before they had ended the conversation, Jonah advised Mr. Rogo to look into the relationship of dependent events with statistical fluctuations and how these two things would affect his company. As soon as Mr. Rogo got back to his hometown in Chapter Twelve, he continued to face problems at home. His wife questioned his devotion to their family versus his devotion to the company.
Because of the extra workload on this plate, his relationship with his life partner had suffered. It was a very grueling situation he was in. He had problems not only at work but at home as well. In the thirteenth chapter, Mr. Rogo goes on a camping trip and thought of what Jonah mentioned to him in their last meeting. It was during this trip that he understood the relationship of dependent events with statistical fluctuations. He was able to get this realization while he was hiking. The realization became clearer to Mr. Rogo in the next chapter.
He now understood what Jonah was trying to point out. If importance would not be given to throughput, operational expenses and inventory levels, and if a balance plant will be maintained, inventory levels will decrease and operational expenditures will increase. In the fifteenth chapter, Mr. Rogo decided to do an experiment to test his realization. He assisted the lowest kids of the pack by carrying the kid’s backpack. Since the kid could walk faster, it did not delay the group. In effect, the group became faster and efficiency had been achieved. It was a good weekend for Mr.
Rogo because his mind was open as all the realizations poured to his head. However, when he and his children got home in the sixteenth chapter, they found out that his wife—the mother of his children, had packed all her bags and left them without leaving word where she would go. She left because she was already angry with Mr. Rogo. As man and wife, they had an agreement that they were going to spend time together during that weekend; however, it didn’t push through because he had to go with his children on the camping trip. In the next chapter, Mr. Rogo relayed his realizations to his staff.
During the cascade, it seemed as if his staff was not taking him seriously. They acted uninterested and bored until a new problem surfaced. There was another overdue order, which had not been delivered, which had to be met right away. In Chapter Eighteen, Mr. Rogo again talked to Jonah, who in turn briefed him about the difference of bottlenecks with non-bottlenecks. A bottleneck according to Jonah is when capacity meets demand or when capacity is less than the demand, while a non-bottleneck is the opposite, wherein capacity is more than demand. Jonah subtly suggested to Mr.
Rogo that he should first fix the bottlenecks. In next chapter, as Jonah visited the plant, he pointed out to Mr. Rogo that he should improve capacity in the bottlenecks by using the machines more effectively. If machines would be used more efficiently, Mr. Rogo will be able to maintain correct inventory levels and will be able to decrease operational expenses. Jonah and Mr. Rogo went around the plant evaluating these machines, stopping at one area at a time, to evaluate the cost and efficiency of each machine. In Chapter Twenty, Mr. Rogo started working on what he and Jonah discussed.
He had to make the bottlenecks efficient to the whole production process of the plant. He did this by first giving directions that the bottlenecks should only be used for overdue orders. In terms of ranking, production in bottlenecks should prioritize the most overdue orders to the most little overdue orders. It was also in this chapter wherein Mr. Rogo was able to talk to his wife about the problems they were going through. She had been residing in her parent’s home since she left Mr. Rogo’s house. In spite of being able to talk to her, she did not go back home with him. In Chapter Twenty, Mr.
Rogo went back to work and focused his efforts on knowing how he can continually improve the process within the company. Since a system has been placed with regards to priority orders for bottlenecks, Mr. Rogo directed that to guide the workers about this change, there should be some sort of communication relaying the different areas of the bottlenecks. Mr. Rogo proposed and implemented the use of red and green tags to distinguish the bottleneck areas. The next chapter showed the success of this initiative. Mr. Rogo had received twelve orders and these were successfully delivered on time.
Mr. Rogo, happy with how everything was turning well, pushed his production manager to continue what they started by evaluating more old machines and bottlenecks. Even if Mr. Rogo had tasted success, he still found that this was not enough. He still wanted to do more to change and improve the company. He wanted to make sure that the company would have constant returns in the long run. Another problem arose in the Twenty-Third Chapter, wherein delays in two bottlenecks were experienced. These bottlenecks transpired because the workers would not stay in place during the whole time.
In order to maximize the workers, they were given directions to stay busy and move from one area to another. In order to solve this problem, Mr. Rogo directed that there would be a dedicated worker—foreman, who will watch over each bottleneck area. This was a good move in Rogo’s end because one of his foremen was able to bring a good idea to the table, which helped increase efficiency by another ten percent. The foreman also suggested that they should mix and match orders based on priority. With the changes implemented and the new system in place, Mr.
Rogo found out in Chapter Twenty-Four that there were more bottlenecks that what they had expected, which continued to pose as problems. At the last same, there was decreasing inventory, which should not be happening. This puzzled Jonah, who agreed to go back to the plant to evaluate this phenomenon. In Chapter Twenty-Five, Jonah pointed out to Mr. Rogo that there were no bottlenecks in actuality. It only seemed that way because there was no balance between the bottlenecks and non-bottlenecks. Because of this evaluation, direction to modify the tags had been given by Mr. Rogo.
In Chapter Twenty-Six, another suggestion was given to improve efficiency. According to one of his staff, they could do this by creating a schedule with the bottlenecks. Even Jonah agreed that this would enable the bottlenecks to keep busy and run efficiently without causing setbacks on costs and time. Another meeting with Mr. Peaches transpired in the twenty-seventh chapter. This was the day Mr. Rogo had been waiting for. Mr. Rogo reported the improvements and negotiated for the company to continue running. The meeting was concluded with the agreement Mr. Peaches would not close down the plant if Mr.
Rogo will be able to improve margins by another fifteen percent. In Chapter Twenty-Eight, Mr. Rogo anxiously spoke to Jonah once again. Jonah informs him in this chapter that he will be unavailable in the next few weeks. Mr. Rogo asks Jonah how he should reach the objective Mr. Peaches had challenged him to achieve. Jonah, his old professor, suggested that he lessen the batch production size by fifty percent. This would be beneficial to the company because this implementation would ensure lesser lead times and would reduce the costs by fifty percent as well.
In Chapter Twenty-Nine, Mr. Rogo became successful by doing what Jonah advised. He was able to deliver one thousand products by cutting the batch sizes and shipping 25% each week. The customer was so happy that he made a personal appearance at the plant. The customer even went to the extent of shaking hands with everybody visible in the plan, and to top it all, he handed UniCo a contract for ten thousand orders. In effect, this was ninety percent more orders than the initial one. Because of this achievement, Mr. Rogo got promoted to hold Mr.
Peaches position in Chapter Thirty-One. However, with bigger responsibilities, there are bigger problems especially since he will be managing not only one plant but three plants. Again, Mr. Rogo had to consult with Jonah once again. In Chapter Thirty-Two, Mr. Rogo finally got to converse with his wife over dinner. It was during dinner both husband and wife talked about the situation at work and how Mr. Rogo was faring. At the end of the conversation, the couple decided that the best way to go about the problem in Mr.
Rogo’s office is to call Jonah once again to ask for help. Mr. Rogo should seek advice from Jonah on how he can influence other people to use the same process UniCo has been using to turn around the business. In the next chapter, Mr. Rogo brought together his staff to discuss what is needed in order to solve Division’s problems and issues. At the meeting, he was puzzled why his production manager didn’t want to take part of this new project. Mr. Rogo was happy though that his accountant, who was supposed to retire soon, would still be able to help him.
He needed his staff to successfully achieve his new objectives. In Chapter Thirty-Four, Mr. Rogo continued to be anxious about the next steps he will take. It was in this chapter that he shows importance to the people that were under him since he started his mission in turning UniCo around. He started implementing a daily meeting with them to evaluate all the issues that needed to be fixed. He needed all of them since it was going to be a grueling undertaking to handle his new workload. He needed all the help he could get.
In the second meeting in Chapter Thirty-Five, the topic revolved around the periodic table of elements, which inspired them since the scientists started on scratch and was able to produce the table of periodic elements in an orderly fashion. They realized that they must all understand how order can be placed within the Division. It was in Chapter Thirty-Six wherein they were able to identify how they can implement order. They would be able to do this by first identifying all the bottlenecks. Once they know the issues, they would be able to turn into opportunities. Aside from knowing the issues, they must know the issues under the main issues.
Knowing all of this will enable them to evaluate the bottlenecks as efficiently as possible. The last step they identified was going back to repeat step one if something goes haywire with a bottleneck. This process was further revised or somehow reworded in Chapter Thirty-Seven. It was in this chapter that they found out the bottlenecks have been producing excess orders just to keep the machines busy. Because they were able to point this out, they were able to improve capacity by twenty percent. In Chapter Thirty-Eight, Mr. Rogo found out how he can further improve sales volume and profitability of his division.
He came out with the idea to sell the Division’s products in Europe at a cheaper gross selling price. If they would be able to achieve this, they would earn additional income from a new market. In Chapter Thirty-Nine, Mr. Rogo is faced with another problem. The additional orders they have accepted were causing more trouble than good as it created more bottlenecks. He sat down with his staff once again and evaluated how they could fix it. They decided that they would increase the inventory levels and mandate sales not to commit to shipping orders in the next four weeks.
This would cause a strain between Production and the Sales Group, however, they had to implement it to ensure balance within the company. In the last chapter, Mr. Rogo no longer needs Jonah to ask him questions, as he is now able to ask his own questions. As he poses the questions to himself, he realizes that he has finally answered Jonah’s main question. Wanting change, knowing what to change and the steps to achieve that change is key to successful management of a business. Reference: Goldratt, E. M. , & Cox, J. (1994). The Goal A Process of Ongoing Improvement. New York: North River Press.
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