What is the goal for Alex’s firm?
Generally speaking, they determine that their goal is for their company to be profitable and make money. They want to increase net profit while simultaneously increasing return on investment and cash flow. More specifically, their goal is to reduce operational expense and inventory while simultaneously increasing throughput.
What noise was there in Alex’s environment that distracted him from seeing the goal?
He was too concerned with simplified and amorphous “goals” of “increasing efficiencies” and “increasing productivities” – since he didn’t know what his true manufacturing goal was, he had no valid way to measure “efficiency” or “productivity” to see if they were bringing them closer to what was truly their goal. Since Alex didn’t know what his true goal was, the local performance measurements that he was using to gauge “efficiency” and “productivity” were not really telling him anything, since his metrics were not created with his goal in mind.
One example of this is where Alex talks about how the robotics improved productivity within one department by 36%, but after discussing this with Jonah, discovered that he really didn’t make any kind of overall productivity improvements (in terms of inventory reduction, number of products shipped, more revenue, etc.) at all.
What are the symptoms/problems that Alex is experiencing? Divide these into two categories – 1) Root Causes, and 2) Results of Root Causes.
One problem that Alex is experiencing is excessive inventory. By drilling down, Alex, the controller, the production manager, and the inventory control manager found that the root cause of th ...