A bottleneck is a point of congestion existing in the production system (for example, assembly lines) that occurs when workloads arrive at a quicker pace which cannot be handled by the production process itself. The inefficiencies that occur as a result of production bottlenecks result in delays in order fulfillment, as well as higher production costs.
Therefore, it can be seen that the term bottleneck is mostly used to refer to the congestions that occur during the production process, which causes a hindrance in the smooth execution of the latter part of the production process.
Impact of bottlenecks for an organization
A bottleneck can have a significant impact on the manufacturing process of the company. In the same manner, since they result in a delayed production process, it implies that there is an added cost, as well as time associated with the production process. Companies tend to be at a higher risk when there are bottlenecks because it eventually results in customers shifting to companies that have higher turnaround times. The repercussions of bottlenecks in the production process are as follows:
- Production delays: This is the most obvious and catastrophic impact of production bottlenecks from an organizations perspective. It can be seen that production delays imply that the entire cycle of the business is impacted, since next processes cannot be completed until the previous ones have been finalized. Therefore, it impacts the entire production cycle in an adverse manner.
- Cost increments: Production delays owing to bottlenecks in the process lead to cost increments in the form of opportunity cost for the organization, as well as other costs that are incurred as a result of idle time of the machinery. Human capital in an organization also suffers a utilization loss, since the human capital is left idle during that particular time frame.
- Higher risk: In case of any bottlenecks, there are delays in the production process, which might not always be well received by the customers. If the issue of production bottlenecks persists, it might lead to customers switching to other competitors that have better and faster order fulfillment rates. Hence, this tends to be a very significant loss, since it greatly impacts the production process of the company.
Example of a bottleneck in production
The concept of bottlenecks in production is illustrated via the following example:
Décor Co. manufactures household furniture on customized orders and sells it to different customers across the country. They are well known for their knitted recliners. They can produce around 50 knitted recliners every day. However, due to an issue with the knitting machine, their current capacity has come down to 35 knitted recliners a day. Since fabric knitting is an initial part of the production process, it adversely impacts the latter part of the production cycle, and hence the labor and other machine is left idle during the process.
In the example mentioned above, it can be seen that the knitting machine lags tend to be a very major production bottleneck for the company. Since this machinery is not properly functional, it is adversely impacting other parts of the production process, and hence, this results in a lower manufacturing output per day. The 15 knitted recliners that Décor Co. is no longer producing is an opportunity cost for the company in terms of lost revenue and in terms of idle labor and machinery that waits while the knitting is completed. This production bottleneck tends to have catastrophic repercussions on the overall production process of the company.
How can production bottlenecks be reduced?
Production bottlenecks severely impact the operational efficiency of the company. Hence, this issue needs to be resolved on a high-priority basis in order to ensure that the impact associated with the production bottleneck is minimized to a maximum level. It can be seen that the first step in the identification of production bottlenecks is to determine the bottleneck in itself. This is called the identification process.
Production bottlenecks can be reduced using the following tips and techniques:
- Identification of an issue: In certain cases, companies are unable to identify the bottleneck in the production process, because it is sometimes a very small part of the overall production process. Therefore, it is important for production managers to properly try and identify the reason behind the production delay, so that the issue can be dealt with thereon. A bottleneck can be identified using three steps:
- Visualization of the production process
- Mapping queues and activities
- Measuring cycle time per stage
Once the identification part is completed, it is important to take the next steps to solve the bottleneck issue.
- Planning ahead: Planning is an integral key for any business. For production related businesses, planning holds and even higher value, because poor planning leads to catastrophic outcomes for the company. Any production bottlenecks can simply be reduced using proper planning and strategy related tools, which can help companies to avoid issues before they even occur.
- Never ignore the bottleneck: It is a deadly mistake to ignore the production bottleneck. It is important to tackle with the bottleneck upfront, so that it can be resolved as soon as possible.
- Managing Work in Progress Limits: It is important to set a Work in Progress limit so that these limits can be used in order to curtail production processes at the earliest.
- Batch Production: This might also be effective in terms of reducing the load times, and the production lags cause. If organizations work in batches, it is helpful in reducing the pressure on the operations, thereby reducing the bottleneck.
- Adding more resources: This is perhaps the most integral and critical part of solving production related bottlenecks. Factually, bottlenecks occur as a result of scarce resources. There is either a lag in machinery, or in human capital. Adding verticals in machineries, or human capitals can expedite the production process, and reduce the production bottlenecks.