The Goal by Eli M. Goldratt

Read a very interesting book “The Goal” by Eli M. Goldratt describing the principles of “Theory of Constraints” in a novel way

The underlying key focus steps as outlined in the book is below

  1. Identify the constraint (the resource/policy that prevents the organization from obtaining more of the goal
  2. Decide how to exploit the constraint (make sure the constraint’s time is not wasted doing things that it should not do)
  3. Subordinate all other processes to above decision (align the whole system/organization to support the decision made above)
  4. Elevate the constraint (if required/possible, permanently increase capacity of the constraint; “buy more”)
  5. If, as a result of these steps, the constraint has moved, return to Step 1

The book explains how a plant manager Alex Rogo increases the throughput of the Organization while simulataneously reducing the throughput and expenses.

The simple definitions of the three terms which can make sense for any organization are described as below

  1. Throughput as the money coming in to the Organization (a.k.a Revenue)
  2. Inventory as the money that is put into the system or already invested in (a.k.a working capital)
  3. Expenses are the money to be paid out to make the throughput happen (a.k.a operating expenses)

 It also explains ways of identifying the system constraints by identifying the set of dependent events creating the throughput and the statitsitical fluctutations associated the the performances of activities contributing to these dependent events. He explains this using a very nice example of “Overnight Hike” expedition of Alex Rogo with his son and his friends

The ways and means of exploiting the constraints are very interesting which results in overall increase in throughput of the system.

Also the methods used to reduce the inventory by bringing down the output generated by non bottleneck activities to match with the input required for bottleneck activities with a small buffer in between was very interesting

Adding capacity to bottleneck activities with limiting constraints is also nice

Somehow when i later think about this, a close analogy to the above in IT is something that we generally do as part of any application performance tuning exercise / Project Planning Exercise:-)


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