How to Manage Bottlenecks in Operations Management
If, as an operations manager, you’re lucky enough to be in a situation where demand for your product or service exceeds your ability to make the products or deliver the service, then you want to find ways to increase your production so you can sell more. Effective management of your bottleneck, or constraint — resources that limit a process’s output — is a key to productivity and profitability.
Don’t get tripped up by overproduction
Overproduction occurs when you allow each operation to work as fast as it can without regard to the ability of other operations in the process to keep up. If you’re in a state of overproduction, inventory can build up anywhere in the process before the bottleneck where successive operations have different cycle times.
For example, assume that you’re releasing material into the process at the rate of the first operation. OP1 processes a part every 2 minutes and places it in WIP 1, where it waits for OP2. However, OP2 requires 4 minutes to process each part. Since OP2 only has a capacity of 15 parts per hour and OP1 is processing 30 per hour.
Imagine the scene after an 8-hour shift.
If you think you can easily spot the bottleneck by finding the operation with the most inventory in front of it, then you may be making a big mistake. Here’s why: OP2 feeds parts to OP3 at the rate of 15 units per minute, and OP3 processes them at the same rate.
With no variability in the cycle times of these operations, inventory shouldn’t accumulate in WIP2. The output of OP3 waits in WIP3 for the true bottleneck — the resource(s) at OP4. Because OP4 can process only 12 of the 15 parts it receives per hour, 3 parts per hour accumulate in WIP3 — significantly fewer than the 15 parts per hour that accumulate in WIP1.
This situation applies to services as well. Instead of parts waiting for an operation, customers would be waiting in line.
Overproduction at OP1 can lead a less experienced operations manager to mistakenly conclude that the resource at OP2 is the bottleneck because it appears to be the operation that’s holding up production. In reality, the bottleneck is at OP4 because it’s the slowest operation.
Increase process capacity
Increasing capacity of an overall process relies on increasing the capacity of the bottleneck. The system’s capacity can’t exceed the capacity of the bottleneck, so increasing the capacity of OP4 is the priority. If improvement resources are limited, focus on OP4 first.
As you improve any bottleneck resource, you may move the bottleneck to another resource. It is vital that you continually monitor the effects of your process changes to identify when the bottleneck does indeed change. After it does, you want to change your focus to the new bottleneck.
Here are some ways for you to increase capacity at the bottleneck:
Add resources at the bottleneck operation. You can increase the number of resources that are performing the operation without adding head count if you can assign an employee from another operation to help perform the bottleneck operation during unutilized time.
Always have a part for the bottleneck to process. Be sure to monitor the WIP in front of the bottleneck and that it always has a part to process. This involves managing the resources feeding the bottleneck to ensure that nothing is slowing them down, such as equipment failures. If scheduling overtime, you must also make sure that the bottleneck has enough parts to process during the overtime period.
Assure that the bottleneck works only on quality parts. Don’t waste the bottleneck’s time on bad parts. If you need quality checks in the process, place them before the bottleneck operation. This increases the thruput of the process.
Examine your production schedule. If a process is used to make several different products that use varying amounts of the bottleneck’s time, then an analysis of the production schedule can create a product mix that minimizes overall demand on the bottleneck.
Increase the time the operation is working. Keep the bottleneck resource working. Always have someone assigned to the operation, including during scheduled breaks and lunch periods, and use overtime if necessary. Though doing so won’t technically reduce the cycle time, it will allow the bottleneck to produce when other operations are idle. The more time the bottleneck works, the more parts the system produces.
Minimize downtime. Avoid scheduled and unscheduled downtime. If the bottleneck equipment suffers a breakdown during scheduled operations, dispatch repair personnel immediately to get the bottleneck up and running. This may involve keeping replacement parts on hand and performing preventive maintenance on equipment. In addition, do what you can to reduce changeover times from one product to the next, because this time takes away from actual production time.
Perform process improvement on the bottleneck resource. A good place to start is to document everything the resource does. Then eliminate all non-value-added activities and look for ways to reduce the time it takes to do value-added activities by getting rid of all the waste in the operation. This results in a shorter cycle time. Process improvement is almost always focused on eliminating waste.
Reassign some of the bottleneck’s work. If possible, break the operation down into smaller activities and reassign some to other resources. Doing so results in a shorter cycle time and increased capacity.