Bottleneck

Posted in Operations and Supply Chain Terms, Total Reads: 963
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Definition: Bottleneck

Bottleneck is a term that means a resource or an entity in a chain that might prove to be the bone of contention in a process. It is actually an important cog in the process and hence, it is vital in the completion of the process.


It is like a constraint that takes the longest time in the process. We can explain the bottleneck with the help of a real life example. A company needs to enter a foreign market but the criteria for entering requires a certain NOC, which is difficult to obtain, and requires certain budget. This creates a bottleneck for that company to enter the foreign market.


Issues arising due to bottlenecks

The major issues arising due to bottlenecks are:

1. Lower throughput

2. Increased waiting times

3. Excessive inventory leading to higher operation cost


Prevention 

Prevention of bottlenecks is essential because they can help in optimizing a process and can ensure that it gets done in the shortest time frame. As we know that time is at premium in a supply-chain process, hence bottlenecks must either be prevented or circumvented.


The flow diagram exhibits how can it be done:


 

There is a theory known as the Theory of Constraints (TOC) that gives the various ways by which one can identify bottlenecks in a supply-chain. Some of the ways are:

1. Accumulation

2. Throughput

3. Wait times

4. Fishbone diagram

 

Hence, this concludes the definition of Bottleneck along with its overview.

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