Examples of Company Bottlenecks

Just as the neck of a wine bottle impedes the free flow of the liquid when you pour it, a company bottleneck impedes the free flow of your work processes. That is a good thing with wine, because you want the wine to slowly fill the glass instead of splashing all over the floor. However, a company bottleneck can bring work to a halt, causing delays in filling orders, idling of the workforce, potential loss of customers and ultimately damage to your business’s bottom line. While the process of finding and eliminating company bottlenecks is ongoing, knowing which bottlenecks are likely to occur will boost your ability to keep your company’s workflow moving smoothly.

The idea of the company bottleneck arose in the production line of manufacturing processes. For example, take a candy maker that produces artisan chocolates. There might be a conveyor line set up where the centers are formed, then hand-dipped in chocolate at the next station, hand-wrapped at the next and packed in gift boxes at the final station before going on to the fulfillment and shipping sections. In this example, the step that requires the most time and skill is hand wrapping. If there is a slowdown at the wrapping station, some chocolates may pass through unwrapped to the packing station, where the pieces would have to be discarded, creating inefficiency and waste. If the wrapping station’s bottleneck is severe, the line comes to a halt, and the workers at the packing and fulfillment stations sit idle until the bottleneck is cleared. The obvious solution would be to hire additional workers at the wrapping station, but the company needs to balance the increased cost against the benefits of reducing waste and idleness. Another solution might be to improve the workers’ skills at the wrapping station and to ensure that their supplies are sufficient and in easy reach. A third solution could be to slow down the production ahead of the wrapping station. This may not be palatable to the company, but compared to the loss from waste and idleness, it may become feasible.

The old saying, “To err is human but to really foul things up, you need a computer” applies here. Although computer outages and software glitches can occur anywhere, a typical example is frequently seen in checkout lines at retail stores. We’re all familiar with having the card reader reject our credit card, when it worked perfectly well 15 minutes earlier at a previous store. Or the machine accepts your card but seems to take forever to approve the transaction. Even worse, the system can go down completely due to a power outage at the site, or from causes at the server location. Such slowdowns result in impatient, dissatisfied customers and loss of business. It’s important to use robust computerized systems that are thoroughly tested and monitored to stand up to periods of heavy use, virus attacks and other anticipated problems. It’s equally important to have a backup plan for when outages and slowdowns occur despite the best efforts to prevent them.

Any time the staff of one department must check with or seek approval from the staff of another department, such as accounting, IT or human resources, a bottleneck can occur. For example, a sales associate might be required to get the accounting department's approval on a potential customer’s credit line before writing up an order. Or a purchasing agent must check with accounting for the proper code before issuing payment to the vendor. If the accounting department is understaffed or the necessary personnel are out on vacation, these pending orders and purchases could be held up for days. This results in dissatisfied customers and loss of business, or unpaid vendors who might think twice about continuing their relationship with the company. One solution might include authorizing nonaccounting employees to complete their own transactions that fall under a certain dollar amount.

While many business bottlenecks arise from process problems, such as production issues, others can result from what is termed “people” problems. This includes inadequate employee training, sales and other teams that don’t gel, or leadership styles that worked in the past but aren’t up to speed for future growth. Even the company’s owner can be a roadblock, although perhaps inadvertently. For example, owners who hang onto their preferred “hands-on” style of management when the company has grown beyond that may be unknowingly stifling the corporation’s potential for growth. In that case, it may be time to develop a management team that handles day-to-day operations, leaving the owner free to focus on innovation and visions for the future.