Assets / Operations
Removing Operational Bottlenecks
Most of us recognize the term “a bottleneck” as referring to a blockage or obstacle to natural flow in some way (which is why bottles are designed with narrowing necks, so as to slow the flow of liquid as we pour it, of course). But in business, a bottleneck is usually a bad thing and from an operational perspective they need to be lessened or eliminated if we want greater throughput or more overall efficiency.
Operationally, a bottleneck (or what we can also call an operating constraint) is usually the resource or asset that takes the longest time. Hence, bottlenecks tend to govern the throughput of an entire supply chain. This means that if the capacity of a bottleneck in a supply chain improves, the throughput will typically increase. In the example shown in the picture at the beginning of this article, long lines of planes waiting to take off may be the greatest constraints in the operational goal of on-time arrivals for example and we would have to look at everything that is leading to this particular bottleneck.
If bottlenecks are not identified or taken seriously enough, the organization may miss the chance to increase throughput (and thereby lift efficiency, effectiveness and overall productivity). This is why a whole body of research has grown up in recent years called the Theory of Constraints (or TOC for short) which seeks to explain why the management of bottlenecks will help to increase the throughput of a supply chain, use machines or equipment efficiently, and ultimate increase profit significantly.
The Theory of Constraints is a philosophy of operational management and improvement that was originally developed by Eliyahu Goldratt and introduced in his popular book, “The Goal”. It is essentially based on the fact that, like a chain with its weakest link, in any complex system at any point in time, there is most often only one aspect of that system that is limiting its ability to achieve more or to be more efficient. For that system to attain any significant improvement, that constraint must be identified and the whole system must be managed with it in mind. In other words, we must balance our operational systems around our greatest constraints or find a way of dealing efficiently with each bottleneck that we discover to be a constraint.
A bottleneck in a process occurs when input comes in faster than the next step can use it to create output. However, it should be remembered that there are two main types of bottlenecks:
- Short-term bottlenecks – These are caused by temporary problems. A good example is when a key employee in a team goes on vacation. It may be here that no other person is qualified or has the experience to take over this person’s work or projects and this causes a delay on a process or even a backlog in the work until the individual returns.
- Long-term or sustaining bottlenecks – These occur frequently. An example would be when a company’s month-end reporting process is delayed or runs later than expected every month, because one individual has to complete a series of time-consuming tasks – and he or she can’t even start until he/she has the final month-end figures.
Identifying and then dealing with Bottlenecks
Identifying and then fixing bottlenecks is clearly very important as a first step to improved overall operational efficiency and at the outset an individual can start with him or herself and the processes in which the person is involved. Here, we can ask the question: “is there a routine or situation that regularly causes stress in your day?” These frustrations can actually be a significant indicator that a bottleneck exists somewhere.
The critical question in trying to better manage operational bottlenecks in general is to ask: how do constraints affect our overall performance? As we said earlier, a constraint is a bottleneck, delay or a barrier to achieving our full potential. The more we can reduce the barriers (constraints) to our performance, the closer we can come to realizing our full potential (maximum efficiency and effectiveness) or in a simple equation: Actual Performance = Full Potential – Constraints
To find the constraints then (and then manage them) we simply need to look for the things that are holding us back and then apply a logical process. This process should be based on the fact that maximum systemic (bottom line) improvement will typically come from addressing the system’s very few current constraints and looking forward to where the next constraint may arise once the current one is dealt with. The basic process is therefore as follows:
- Identify the system’s constraints. Example: look for inventory accumulating before the constraint
- Exploit or maximize the efficiency of the system’s constraint (with the above example speed up the process without losing quality).
- Subordinate everything else to the constraint (this may mean slowing things down at first).
- Elevate the systems constraints [or reduce unnecessary demand on the constraint].
- If within the previous steps, a constraint has been reduced or by-passed, or broken, go back to step 1.