You have probably heard something about bottlenecks, but what exactly are they? There may be one or more of them in your company right now. In this article we will talk about them and how to understand, identify and minimize them.
Introduction to bottlenecks
A bottleneck is that point or piece of our supply chain, or within our process flow, where for one reason or another there is one or more blockages. Depending on their origin, size and specific circumstances, these blockages can have different types of impact, and it is important to identify and work with them before the water gets to your neck.
A bottleneck is sometimes difficult to identify and sometimes even difficult to understand the causes of the bottleneck. A bottleneck may be due to equipment or system failures, insufficient or poorly planned capacity, processes that require improvement, and many other causes that need to be understood and analyzed in detail, initiating a process of continuous improvement, where there will always be more opportunities for improvement.
Impact of bottlenecks in production
Depending on its origin and causes, a bottleneck can have all kinds of impacts, sometimes mild and easy to solve and other times complicated or even complex and abstract, and for which we will need to make use of different tools, depending on the case.
Let’s look at an example:
I run a burger restaurant, and my bun supplier has his own bottlenecks. One day he tells me that he will not be able to deliver the 100 pieces a day I need that morning, so I am faced with an unforeseen problem.
In this case, although it is a bottleneck that will cause me problems, it is relatively possible to solve it the same day with quick and simple actions such as buying bread somewhere else for this occasion. This may affect the quality of my product, as my burgers may taste different, or some customers may not like the change, but it is the solution I can have at that moment, and either way, I managed to have bread, and I will not have to close that day.
But let’s imagine another example. I have a factory where I produce a very specialized shampoo with a very specific formula for certain hair types and situations. This shampoo contains in its formula the ingredient XXZ. The supplier of this ingredient fails me one day. Now I will have a complex problem to solve, as there are no quick actions I can take. And I cannot change my shampoo formula at this time, as a change requires testing and reformulation. Not only will I have a decrease in production that will affect my deliveries to the customer, but I will have extra costs derived from many factors, such as plant utilization, personnel that I will pay even if there is no production, and many others.
Identification of bottlenecks in the production chain
Thinking about the shampoo example, it is evident the need to prevent these situations, and to have a planning where we can consider the different types of bottlenecks we could have, their impact and how to react in case they occur.
There are even times when our process is already full of bottlenecks with strong potential risks and we have not even realized it.
How can we identify them?
First of all, we must map our process, our workflow. Understanding the phases of our production cycles, and the inputs and roles involved in each one, will help us both to detect current bottlenecks and to realize the likelihood of new ones.
When analyzing flows, special attention must be paid to process times and sequencing of activities. All this analysis, although time consuming, will really bring us many benefits. Which part of our flow represents a critical risk, or a potential bottleneck? What impacts will each type of bottleneck cause me? And which ones should you solve first? And how?
In our shampoo example, it may be that when analyzing the production flow we see that a certain ingredient XXZ is produced by only three manufacturers in our country. We only buy it from one of them, and the use of this ingredient is a critical step in our process, because it is only after we integrate it into the formula that we can integrate everything else. All phases of the process depend on the integration of XXZ in the formula. By doing this analysis, we might see the need to evaluate the other two suppliers, in order to be able to solve any contingency.
And this involves an analysis of cycle times, routes, delivery times, prices and other variables to be taken into account.
Of course, to reach this conclusion, a thorough analysis and the use of different tools is necessary, but identifying it is the first step. Be aware of the existence of these bottlenecks and come up with real data-driven scenarios to mitigate them.
Main causes of production bottlenecks
There are many reasons why we may have bottlenecks in our flow. There is really no single recipe for finding them, however, there are a few categories of them that we can mention:
-Human Factor: whether we need more people involved in our process, different roles, more training, etc.
-Systems: are we using the right systems, are there better options, do we have recurring errors in them?
-Inefficiencies in our flow, where are the opportunities for improvement, what is going wrong, how can we improve, is there a framework that could help us?
Workflow and logistics inefficiencies
Let’s talk about the last cause, which has to do with failures in our supply chain. Our supply chain is the flow of movement of our goods and services from their creation to the moment they are with the end customer. These are all the steps or links necessary for our product or service to be in the hands of our customer.
Several things can go wrong in our supply chain that also require a deep analysis to identify and solve them, but we have some frequent causes: information mismanagement, human factor, rework, inefficient routes (either physical or virtual), prioritization and storage and communication problems. And many times everything comes from the lack of metrics or indicators that, although they would be helpful, we do not currently have.
Returning to our example of hamburgers. Let’s imagine that I don’t have an estimate of how many hamburgers I normally sell each day, I am being spontaneous and I have approximate calculations in my mind only because I run my business in a very spontaneous way. In this case, my business is very vulnerable to unexpected situations and I can suddenly find myself in the middle of many bottlenecks.
It is true that in life there are many changes, and plans change, but plans are important, flexible and adaptable plans that cushion bottlenecks.
Lack of synchronization in the supply chain
Flows are not always simple, and we need to see how to coordinate and organize our chain to avoid major impacts.
There is an effect on the lack of supply chain synchronization called the Bullwhip Effect. In this effect we see that any small change in the chain can exponentiate along the chain and create major chaos.
Let’s return to the hamburger example by going back a few steps.
Suppose the following string:
Link 1: Wheat harvest in the field.
Link 2: Wheat milling and creation of flour in the flour mill.
Link 3: Bread factory gathers the flour ingredients, including those from link 2, and sends them to production to produce bread.
Parallel link 3: all the supply chains of the other ingredients of my hamburger: cheese, bun, vegetables, sauces, plates).
Link 4: My restaurant receives the bread and other ingredients and I make the burgers.
What the Bullwhip effect tells us is that if there is a problem in the wheat harvest, even a small one, that prevents me from meeting the demand, the effect that I can have on my restaurant will be much greater, since the effect will be exponentiated.
And that’s assuming that the only problem is with the wheat, if there are problems with the other ingredients I can get into chaos.
Effective strategies for managing and eliminating bottlenecks
So thinking about everything that can go wrong, both the bottlenecks that depend on us and those that depend on others, what can we do?
- Understand your company’s current situation. What bottlenecks do you have? Which ones are you likely to have? An early diagnosis of your process will save you a lot of headaches in the future. It is important to have the current picture and to understand as thoroughly and thoroughly as possible all aspects of your processes and the problems that could arise. It is better to anticipate.
- Map your process and detect your opportunities for improvement. Detect all those points where it is possible to have improvements that mitigate your risks. Map your suppliers’ processes as much as possible, and even anticipate your customers’ possible changes.
- Prioritize your actions. Start with what will help you the most and what gives you the most value.
- Measure and have a plan. But remember plans change and it is important to leave room for change. You have to be adaptable.
- Be clear about the objectives you seek, and how you will measure them.
And if you need help to detect and manage all this, don’t worry, we can help you.
we can help you!
