AN INTERVIEW WITH ELI GOLDRATT AND OTHERS
DW: The Goal was published 20 years ago. Since then a lot has changed in operations. New, powerful methodologies to im- prove operations, such as LEAN and Six Sigma, are widespread. The emphasis on reducing lead time and improving due-date performance has become the norm. Even The Goal's subtitle - a process of ongoing improvement - is a statement that is now taken for granted by every organization.
So, my first question: Is The Goal still relevant?
EG: How does a scientist go about judging the relevancy of a particu- lar body of knowledge? I believe that the decisive way is to choose an organization where all the competing knowledge is implemented. We should choose a large company that is already using all the new methodologies you mentioned; an organization that is using these methodologies so extensively that there is an institutionalized orga- nizational structure - like a formal 'black-belt' central office. The next step is to choose a significant section of that organization, and properly implement in it the body of knowledge in question. In our case it will mean implementing TOC in one of the plants of that large company. Then, compare the performance of the chosen plant with the performance of the rest of the organization. Now we are able to reach a conclusion: if no real difference is detected then the conclusion will be that the examined body of knowledge in question is not relevant. But, if there is a decisive difference, then the conclusion must be that the examined body of knowledge has relevancy; the bigger and more significant the difference, the more relevant it is.
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DW: Did you conduct such an experiment? And if so can you tell us about the results?
EG: Fortunately, I don't have to initiate such experiments, since many readers of
Judge for yourself if this letter fits our bill perfectly.
Dow Corning Corporation
Healthcare Industries Materials Site 635 N. Gleaner Road Hemlock, MI 48626
May 20, 2004 Dear Dr. Goldratt:
I wanted to share with you what we have accomplished within our organization by using the tools presented in your books, 'The Goal' and 'It's Not Luck.'
When a colleague gave me a copy of 'The Goal,' the plant at which I work was in a similar situation as Alex's plant in the book. At that time, in 1998, our plant's on-time delivery was approximately 50%. We were carrying over 100 days of inventory and we had customers on allocation because we could not meet the demand for orders. In addition, our man- agement had given us six months to turn things around, or else. I was the new production team leader for approximately thirty percent of the plant sales and forty percent of the plant production employees. My units performance was similar to the plant's overall performance.
As I read 'The Goal' I quickly realized one person alone could
not solve the problems within my unit, or within our plant. I ordered several copies of 'The Goal,' and my colleague and I distributed them to our production manager, plant manager and manufacturing and quality engineers. Everyone was eager for a solution to our problems.
Within my unit we identified the bottleneck and began to focus our resources there. Our plant is a non-union facility and many of the workers were also interested in what we were doing. I ordered copies of 'The Goal' for everyone who worked for me. By the time the six-month ultimatum came, my unit and another had started to make significant changes, and the plant was spared any ill recourse. However, the expectation was that we would continue to improve. For the five years that followed, we continued to work on breaking our bottlenecks. When one moved, we attacked it again. We got pretty good, and could determine where the bottleneck would occur next. Eventually, the bottleneck moved outside our plant as depicted in 'The Goal.' However, we knew this would happen ahead of time and had already begun the indoctrination of our sales and marketing group.
I recently moved out of production, but before I left, the results within my unit were: cycle time reduction of ~85 /o. Operator headcount reductions of 35% through attrition; no layoffs were needed. Work in process and finished goods inventory down ~70%. On-time delivery went from ~50% to ~90% and the number of material handling steps were cut by over half. Our plant, and business unit have done very well too. And me, I received a promotion while in that position, and a compensa- tion award. Dow Corning, like many other corporations, has downsized multiple times in the past five years. During each one, our plant, and business unit were affected very little or completely passed over. I am convinced that if we hadn't read and followed the methods in 'The Goal' and 'It's Not Luck' the situation would be much different today. There is still much to do, as our business unit is the only one to really have embraced 'The Goal.' I am hoping in my new role in Six Sigma that I can further share your tools and methods.
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Thank you for signing the book Dr. Sirias has forwarded to you on my behalf. I am honored.
Sincerely,
Robert (Rob) Kain P.E.
Six Sigma Black Belt
Dow Corning Corporation
Life Sciences/Specialty Chemical Business
DW: Impressive, but why is only one business unit of Dow Corn- ing using TOC? What bothers me is that this person is talking about a span of over five years. If it worked so well, why didn't it spread to the other business units? Is it the Not-Invented-Here (NIH) syndrome?
EG: Before we dive into speculation about psychology of organiza- tions, let's examine the facts. We are talking about a middle manager who works in one corner of a large company. Why should we be surprised that, in five years, this person was not yet able to take his whole company through a major paradigm shift? And, by the way, as you read in his letter, he is making nice progress; he has already moved into a much more influential position.
DW: Still, even with enough time, is it possible for a middle manager to influence his whole company?
EG: Yes. But of course, such a person will need a lot of stamina and patience.
DW: What makes you so sure that it is possible at all?
EG: What evidence will convince you that it is possible?
DW: Give me an example of a middle level manager working for a large company who has
