In operations management, the bottleneck theory is an explanation of what happens when a certain part of the production system performs at a lower rate than the rest of the system. Understanding the bottleneck theory is important for anyone involved in operations management, as it allows an individual to optimize the efficiency of the business.
Bottleneck Theory Overview
A bottleneck in operations management occurs in sequential manufacturing when a backup happens in one step of the sequence. For example, if there are three machines on an assembly line and the first and last machines can produce 100 units per hour, but the second machine can produce only 50 units per hour, it will cause a bottleneck to occur. This is because the second machine cannot produce enough units to keep pace with the other machines.
Effects on Production Efficiency
A bottleneck has a terrible effect on the efficiency of production. The stages following the bottleneck must function below their capacity because they do not receive enough input to operate at full capacity. The stages before the bottleneck need to slow down production because the subsequent stages cannot handle the capacity. As a result, the overall efficiency of the system is significantly reduced.
A bottleneck in the manufacturing process can be difficult to identify in a complex system. The bottleneck can be found by looking at each sequence of the process individually and measuring the production level at each step. If a particular sequence has a low production level, then it is the source of the bottleneck. It should be noted that there can be multiple bottlenecks within a complex system.
Solving Bottleneck Problems
A bottleneck can be solved by adjusting the production level in the sequence where the bottleneck is happening. This might be achieved by installing more efficient equipment or, sometimes, by increasing labor. In some situations, it may not be possible to increase production in that area and it may be more efficient to reduce production capabilities in the other areas in order to create efficiency.