Business Process Bottlenecks – causes | identification | purpose
Business Process Bottlenecks
Business process bottlenecks appear as demand outpaces supply due to limited production capacity for any number of reasons. Learn how to manage bottlenecks through balancing overproduction and increasing process capacity.
Business Process Bottlenecks
Most of us chew a piece of gum now and then. Do you ever think about how it was produced? Well, chewing gum is created on a production line. It’s melted, mixed, rolled, scored, conditioned, wrapped, and packaged. What if scoring takes longer than the processes that come before it? Well, much like the narrow top of a wine bottle, this is called a bottleneck.
Business process bottlenecks occur when demand outweighs production capacity. Bottlenecks exist at a place where the process is slowed due to an impediment. This could be from out-of-date equipment, inefficient labor, or scarce resources. Maximum capacity is limited to the capacity of the bottleneck.
To find and eliminate a bottleneck, we use process analysis. Process analysis looks at the entire business process. Most often, this analysis begins with an identification of all of the business process steps. Then, a flow chart is developed to show these steps. Once we have the steps, we can determine the capacity of each step. Then, when we find the step with the lowest capacity in the process, we have located the bottleneck.
Reducing or even eliminating bottlenecks is important to increasing profitability. Boosting efficiency of the business process will improve productivity and expand profitability. After identifying a bottleneck, we can find ways to effectively manage it. Two pivotal ways of doing this are balancing overproduction and increasing process capacity.
Balancing Overproduction
Overproduction occurs when production is maximized at every step of a business process and a bottleneck exists at one of the steps. Inventory accumulates and sits because this part of the process takes much longer to complete than the steps that come before it.
Let’s look at our chewing gum process. If melting, mixing, and rolling are maximized at 5,000 pieces per minute, scoring would need to match this for the process to be efficient. However, if scoring can only complete 4,000 pieces per minute, inventory will continue to amass at this step.
Because of overproduction, inventory can sit around and become old. It can pile up and be a hazard. Or, the overproduction can be addressed in one of two ways. The first way to address overproduction is to slow down the faster processes to match the capacity of the bottleneck. The second way is to correct the bottleneck, which is usually cost or time-prohibitive.
Increasing Process Capacity
Managing a bottleneck increasing process capacity can be an effective option. This means we are looking for ways to force more production through the bottleneck. It’s not as simple as always playing catch up or reducing waste. Let’s look at some options.
The first option is eliminating inventory during process downtime. For example, assigning scoring duties during holidays, weekend, and off-shifts can help reduce the backlog that accumulated from our chewing gum process. This may involve paying overtime or hiring part-time workers.
A second option is placing quality control checks prior to the bottleneck. Making sure that the bottleneck isn’t working on inadequate goods can eliminate the stress on the bottleneck. If our chewing gum isn’t mixed correctly, then removing the product from the business process should be done before the bottleneck, so that faulty products are not tying down the process at the bottleneck.
And a third option is subcontracting out some of the inventory from the bottleneck operation. If the bottleneck in our gum process was in packaging, it might be wise to contract out some of this process to reduce the problems with our bottleneck.
Lesson Summary
When demand exceeds process capability, a business process bottleneck, where demand outweighs production capacity. Process analysis can be used to identify where bottlenecks exist. Once they are identified, the bottlenecks can be addressed in a number of ways.
One option is balancing overproduction, which occurs when production is maximized at every step of a business process and a bottleneck exists at one of the steps. A bottleneck can be corrected, which isn’t always practical, or overproduction can be
eliminated. This is where the rest of production can be reduced to match the bottleneck. Another option is increasing process capacity, which can be done by finding ways to eliminate inventory from the bottleneck. We can do this by producing during downtime, strategically placing quality control checks, and using a subcontractor to handle some of the excess inventory.