We see many Chinese factories consider investments to increase their capacity – sometimes moving to a different building – without analyzing what actually keeps their capacity down.
However, a factory can often multiply its output by 3 or 4 without moving and without very heavy investments.
How to analyze the actual vs. potential capacity of processes? By identifying bottlenecks and managing them. In this article we’ll explain how to do that...
What is a bottleneck in production?
A bottleneck is something that limits the capacity of a system. Just like the smaller neck of a bottle of wine prevents one from spilling all the bottle’s contents in a few seconds should it be knocked over by accident.
Let’s look at this another way.
You might have 4 steps in a process. In the next example, step 3 is the bottleneck (with a capacity of only 70), as indicated by the continuous red line. It constrains the whole process’ capacity:
If you elevate its capacity to 90, the whole process output can go up to 90, and at that point there are 2 bottlenecks: step 1 and step 3 (see the dashed red line below). In other words, by elevating that step’s capacity by 29%, you elevate the entire process’ capacity by 29%.
How to notice bottlenecks in production
If the bottleneck is not the first operation in a series of operations, a lot of inventory tends to be waiting before the bottleneck. For example, in one study, the value stream map revealed that 30 days of inventory were waiting before CNC machining, and another 45 days were waiting before assembly: these were the 2 bottlenecks in that factory.
A more scientific approach is to make a bar chart as shown in the previous section
It is one of the most common lean methods and tools, and is used for calculating how balanced (or imbalanced) a process is.
Note: Make sure to calculate the capacity per process step, not per person or per machine (since there might be more than one person/machine as part of a process step). And break the process down in steps that make sense. Junior industrial engineers know how to do this, and it is really not complicated.
Now that you see the bottlenecks, what to do?
Bottlenecks are not necessarily evil, as explained by Eli Goldratt in The Goal. And they can’t be avoided (there will always be at least one bottleneck). But one has to plan around the bottleneck(s).
How to reduce the impact of bottlenecks in production
Manufacturers commonly use one of three approaches.
They usually try to elevate the capacity of the current bottleneck(s).
There are several options to achieve this goal:
- Process improvement – for example studying the components of the OEE for a piece of equipment and working on improving the ratios.
- Adding capacity by increasing resources (men, machines…) – this is often done best with inexpensive, low-tech, low-complexity equipment that will be down less often than a complex, high-tech solution.
- Adding capacity by automating the process further – we always advise to carefully assess the benefits of full automation and to go slowly in that direction (let your staff become familiar with automation and with the way to maintain it).
- Subcontract work to other companies when needed – obviously it may pose issues in terms of quality and confidentiality, but the economic benefits to your factory cannot be neglected if your demand is uneven/seasonal.
The second approach is to sell the extra, unused capacity of other (non-bottleneck) process steps.
For example, if you have 20 injection presses but you only use 12 of them, you might want to find other companies that are interested in subcontracting some injection molding work. You will make money as long as you charge more than your variable costs.
Finally, a manufacturer can downsize its unused capacity.
For example, it can sell the 8 injection presses that are not necessary for its own operations, and lay off / displace the operators and technicians that were taking care of those 8 presses.
Using lean methods and tools
The concept of bottleneck was central to the Theory of Constraints. It is actually central to Lean Manufacturing’s Just-In-Time pillar, but is not explicitly mentioned as such. As noted above, a simple bar chart based on a work breakdown sheet is usually the most adapted tool. A value stream map can help too.
And you, have you worked on your operations’ bottlenecks? Have you met success? Maybe you can share some observations to our community in the comments below?