4.9 The Bottleneck Phenomenon and Its Impact on Process Capacity
The bottleneck is defined as the slowest step in a process or the slowest process in a system. The capacity of the bottleneck effectively determines the capacity of the entire process. In the previous example, step 2 was identified as the bottleneck due to its longer cycle time of 10 minutes. Consequently, the entire process, comprising steps 1 to 3, cannot achieve an output rate faster than one unit every 10 minutes, regardless of the capabilities of the other steps.
To illustrate this concept, consider an 8-hour shift per day, which equals 480 minutes. Assuming that step 1 has sufficient input to process during the day, its total output capacity would be 480 ÷ 3 = 160 units per day. Similarly, the capacity for step 2 is 480 ÷ 10 = 48 units, and the capacity for step 3 is 480 ÷ 5 = 96 units.
While step 1 can produce 160 units as input for step 2, the bottleneck step (step 2) can only process a maximum of 48 units per day. Consequently, only 48 units will be available as input for step 3. Despite step 3 having a capacity of 96 units per day, it will only process the 48 units received from step 2. Since step 3 is the final step in the process, its output of 48 units becomes the total output of the entire process per day.
The key observation is that the capacity of the bottleneck step (step 2) ultimately determines the capacity of the entire process. This concept holds significant practical implications. Organizations that fail to recognize and address the bottleneck may invest resources in non-bottleneck areas, resulting in no improvement in the overall process capacity.
Identifying and managing the bottleneck is crucial for optimizing process performance. Strategies such as bottleneck elimination, capacity expansion, or alternative resource allocation can be employed to alleviate the constraints imposed by the bottleneck. By addressing the bottleneck, organizations can unlock the full potential of their processes, enhance throughput, and improve overall operational efficiency.
Video: “5 production line Bottlenecks to anticipate” by Visufact Manufacturing [4:41] is licensed under the Standard YouTube License.Transcript and closed captions available on YouTube.
Example
Caroline has a thriving business selling her tote bags through several popular websites. Her business volume has caused her to hire full-time employees. Her business has four main manufacturing operations:
- Cutting fabric (4 min)
- Stitching fabric (7 min)
- Adding zippers, toggles, and liner (10 min)
- Inspecting, packing, and labelling (5 min)
Step 1
(4 min ÷ unit)
→
Step 2
(7 min ÷ unit)
→
Step 3
(10 min ÷ unit)
→
Step 4
(5 min ÷ unit)
Employees work 7 hours per day. Help Caroline to determine the following:
- Based on her very high demand, is there a bottleneck and what stage is it? What is the capacity of the process per day?
-
Caroline’s employee at step #2 has found a new machine that will enable him to do the stitching faster, at a rate of 5 min per bag instead of 7 min. The machine costs $3500. Would you suggest this is a good investment to help Caroline increase her output? Why or why not?
- If there were another person to be added to the process, where should Caroline add him or her and what would be the new capacity?
Solution
| Operation | Time | Daily Capacity |
|---|---|---|
| Step 1: Cutting fabric | 4 min | 420 ÷ 4 = 105 |
| Step 2: Stitching fabric | 7 min | 420 ÷ 7 = 60 |
| Step 3: Adding zippers, toggles, liners | 10 min | 420 ÷ 10 = 42 |
| Step 4: Inspecting, packing, labeling | 5 min | 420 ÷ 5 = 84 |
(Based on 7×60 = 420 min per day)
- The maximum output is 42 units because that is what the bottleneck can do. The bottleneck is at stage #3, which is the slowest part of the process.
- Caroline should NOT invest any funds into step #2. This may speed up the stitching, but the maximum output of the process will still be 42 units because step #3 has not changed.
- If Caroline added another person, she should add it to step #3. (Install zippers/ toggles/ liner). Because that is where the bottleneck is, the capacity at stage three would now double to 84 units per day. The new capacity for the whole process would now be 60 units per day, as determined by Step 2 (Basic stitching), which is the new bottleneck of the process.
Evaluating Capacity Alternatives
When evaluating capacity alternatives to select the most suitable option, organizations must consider both economic and non-economic factors. This comprehensive approach ensures that the chosen alternative aligns with financial objectives while accounting for broader organizational and societal implications.
Economic Considerations
Economic considerations revolve around assessing the financial viability and potential return on investment for each capacity alternative. The following techniques are commonly employed for economic evaluation:
- Break-Even Analysis: This technique determines the point at which the total revenue from an alternative equals the total costs associated with implementing and operating that alternative. Break-even analysis provides insights into the minimum level of output or utilization required to recover the investment.
- Payback Period: This method calculates the time required for the cumulative cash inflows from an alternative to equal the initial investment. It helps assess the liquidity and risk associated with each alternative.
- Net Present Value (NPV): The NPV technique discounts the future cash flows of an alternative to their present value, accounting for the time value of money. Alternatives with a positive NPV are considered financially viable, as they generate returns exceeding the required rate of return.
While this chapter focuses primarily on break-even analysis, it is essential to recognize that a comprehensive economic evaluation may involve employing multiple techniques to gain a holistic understanding of the financial implications of each capacity alternative.
Non-economic Considerations
In addition to economic factors, organizations must consider non-economic aspects that can significantly impact the success and acceptance of a capacity alternative. These non-economic considerations include:
- Public Opinion: The perception and sentiment of the general public towards a particular capacity alternative can influence its viability and acceptance.
- Employee Reactions: The attitudes and reactions of employees towards a capacity alternative can affect its implementation and long-term success. Employee buy-in and engagement are crucial factors to consider.
- Community Pressure: Local communities may exert pressure on organizations to adopt or reject certain capacity alternatives based on their potential impact on the environment, local economy, or social fabric.
By carefully evaluating both economic and non-economic factors, organizations can make informed decisions that balance financial objectives with broader organizational and societal considerations, ultimately selecting the capacity alternative that best aligns with their strategic goals and stakeholder expectations.
“7 Strategic Capacity Planning” from Introduction to Operations Management Copyright © by Hamid Faramarzi and Mary Drane is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.—Modifications: used section The Sequential Processes and the Bottleneck, used section Evaluating Capacity Alternatives, some paragraphs rewritten; added additional explanations; added video.
