Solving System Bottlenecks: A Kink in the Garden Hose

Pop Quiz: How many bottlenecks can you have in a process at any given time?  And how much is it costing you?

A bottleneck, in the context of business, is defined as a point (physical or informational) that is constricted such that throughput capacity is constrained, like when a garden hose is kinked. 

The signs and symptoms of a bottleneck in a system include:

  • Inventory builds and becomes a risk
  • Less-than-expected throughput capacity
  • Lost revenue opportunities
  • Inflated costs-per-unit

If you’re not sure about the answer to this pop-quiz question, Waypost Advisors can help.  Consider this real world example:

A privately-owned, $65 million industrial manufacturing Company was experiencing a period of great uncertainty and incredible growth.  They realized that they could sell everything they could make, and for a great profit.  But they had 2 problems:

  • If they wanted to produce more, they would need to increase capacity, but the machinery and labor were expensive.
  • They were not sure how long the increased demand would last and if the pay-back would justify the investment in new equipment.

Their production model consisted of specific operating sub-units that performed a certain step in the process and could be run independently of one another. 

Three empty beer bottles
Bottlenecks: Like A Kink In The Garden Hose

Both machinery and labor were required to operate these sub-units, and some sub-units produced more quickly and reliably than others.

With the help of an Advisor, the company mapped their production process to understand the throughput of the operating sub-units, set-up time, downtime, and reliability (how often the sub-unit produced what was planned).  They were able to pinpoint the places where production was most constrained.  They put Debottlenecking projects in place to address the problems and unleash additional capacity. 

Here’s what happened: They were able to un-kink the first bottleneck with almost no investment.  They realized that the set-up and changeover time for one operating sub-unit was twice as long as the others.  With small and inexpensive adjustments to their set-up process, creating standard procedures and visual instructions, and cross-training labor from another line to assist in the set-up, they were able to reduce the unproductive set-up time by 40%, and saw an initial 10% increase in the production throughput with no additional capital expense.

As they were able to produce more, they began to find that they were running out of holding space for their inventory which would then lead to a line shutdown (the next bottleneck). 

The Advisor helped the Company perform a strategic stock analysis to reduce their slow-moving and obsolete inventory and optimize higher-value inventory positions, which reduced their overall stocks.  They also completed a 5S of their warehouse to allow for more efficient storage.  This allowed an additional 5% capacity to flow through their system.

As a final step, they created a capacity monitoring plan to alert their supply chain team when storage capacity was reaching a critical point.

This allowed the Company to make better, more proactive decisions about where to offer discounts to ship inventory and what (not) to produce.

These efforts increased the overall line capacity by 15% with only a few thousand dollars in investments and took only 3 months.

What is the answer to the Pop Quiz question of how many bottlenecks are in a process at any given time?  The answer is One.  Until you debottleneck it, and then you find the next One.  And so on.