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 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:
3. Wait times
4. Fishbone diagram
Hence, this concludes the definition of Bottleneck along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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