Operations
Bottleneck
The slowest step, which limits the output of the whole process.
Facts checked against sources onWhat does Bottleneck mean?
A bottleneck is the step with the lowest capacity in a process. The whole process cannot produce more than the bottleneck allows, so improving any other step adds nothing until the bottleneck is fixed. After you fix it, another step becomes the limit. This idea is central to the theory of constraints, set out in the 1984 business novel The Goal. In a case, find the slow step by measuring where work waits, not by habit: it is often outside the department that looks slow.
Where does it come up in case interview prep?
- Supply chains explainedLesson in How industries work: the toolkit
- Capacity and bottlenecks: the slowest step sets outputLesson in Making operations better, and planning for what can go wrong
- Productivity and utilization: how much you get from what you haveLesson in Making operations better, and planning for what can go wrong
- Lean basics as economics: waste, flow, and the hidden cost of inventoryLesson in Making operations better, and planning for what can go wrong
- The business case for automation: payback, utilization risk, and peopleLesson in Making operations better, and planning for what can go wrong
- Risk in plain numbers: probability times impact, the risk register, expected valueLesson in Making operations better, and planning for what can go wrong
- Using this in a case: operations and cost casesLesson in Making operations better, and planning for what can go wrong
- How hospitals and insurers make money: costs, unit economics and operationsLesson in Healthcare providers and payers
- Bottleneck thinkingWhy reciting it fails, and what to do instead
Related terms
- Capacity utilizationActual output as a share of the most that could be produced.
- Little's lawItems in a system = arrival rate × time each item spends in it.
- Inventory turnoverHow many times stock is sold and replaced in a year.
- Landed costThe full cost of getting a product to your door, not just its purchase price.
- Cash conversion cycle (CCC)How many days cash is tied up between paying suppliers and collecting from customers.
- Service level (fill rate and OTIF)How reliably a supplier delivers what was ordered, measured by fill rate and on time in full.
- Bullwhip effectSmall changes in shopper demand grow into large swings in orders further up the supply chain.
- Safety stockExtra inventory held to protect against demand spikes or late deliveries.
Learn it in context
See Bottleneck at work in a lesson from How industries work: the toolkit, with checks as you go.
Spotted something wrong or out of date? Report a mistake. We check every report and correct the page.