The Goal: A Process of Ongoing Improvement: Chapter 8 Summary & Analysis

The next day, Alex wonders how to get in touch with Jonah if he doesn’t even know where to find him. He goes to the plant and spends most of his day in a conference call discussing numbers and measurements with Peach (who is furious that Alex walked out on his meeting), Lou, and Ethan Frost. After dark, Alex is about to go home when he remembers his old address book at his mother’s house. He calls Julie to tell her he won’t be home until late, and Julie hangs up on him.

Alex drives to his mother’s house, which is right in town. He used to visit her and his brother, Danny, more often, but Julie doesn’t like to, so they stopped. Alex’s mother is surprised to see him and insists that he stay and eat. After several hours of chatting, eating, and searching through the attic and the basement, Alex finds the address book in a drawer of his childhood bedroom, which has the number of an old university friend who lives in Israel. Although it’s one a.m., Alex knows it will be midday in Israel, so he uses his mother’s phone to call the number. After numerous phone calls and transfers, Alex learns that Jonah is now in London, and Alex leaves a message for him at his office.

Alex dozes by the phone for 45 minutes until Jonah calls back. Jonah immediately asks Alex if he’s figured out what the goal of his manufacturing plant should be. Alex answers that their goal must be to make money, but he tells Jonah that he needs better metrics to understand if his plant is meeting that goal.

Jonah congratulates Alex for finding the answer. He offers three new measurements to operate by: throughput, inventory, and operational expense. “Throughput” describes the money generated explicitly through sales. “Inventory” describes the money used to purchase goods which a business might eventually sell. (Alex notes that this is a very different definition of “inventory” than he traditionally hears.) “Operational expense” describes the money a business uses to make inventory into throughput. Jonah cautions Alex that the metrics are very precisely defined, and Alex should not try to change his definitions. However, Alex will have to figure out how to implement these metrics himself, since Jonah must leave. He hangs up. Alex sleeps in his old bed for the remaining few hours of the night.