Any company aims to have their operation run so smoothly and efficiently that they’ll have minimal outlay and make maximum profit. Sadly, many fall short of that goal because of holdups along their internal supply chains. These holdups create bottlenecks, jams in the system that slow the process down at the point they’re happening and have a domino effect on everything that follows.
In this blog, we’re going to look at overarching causes of these bottlenecks and put forward ways to overcome them or, better yet, ways to prevent them from happening in the first place.
Bottlenecks defined and how to spot them
The term literally comes from the shape of a bottle, specifically the way the top of it – the neck – is narrower than the bottom. As this shape restricts, or slows, the flow of liquid when it’s poured out, so, in a manufacturing process, a bottleneck is where there’s an obstruction that holds everything up.
It is, of course, essential for a manager to know where these bottlenecks are occurring, to find these obstructions, and the best way of doing this is to conduct a “bottleneck analysis.” That basically involves taking a close look at every step in the supply chain, from the beginning – receiving raw materials – to the end – the final product, and everything in between.
Common areas where bottlenecks happen
While individual companies will have bottlenecks in their supply chains that only apply to them, there are general areas common to all that can also cause obstructions in the workflow. These areas are:
It’s important to have the right amount of employees to carry out a particular task; too many or not enough and inefficiencies creep in. It’s equally important to assign tasks to those that have the right skill set for them; again the over- or under-qualified will slow operations down.
Typically, workers fall into four categories:
Making the best use of the talent each worker brings isn’t the only consideration for management when it comes to labor. Employee morale is important too. Employees who feel valued and have job satisfaction work better. This includes making sure one department isn’t favored over another. Allowing that to happen could create interdepartmental rivalry and could lead to a bad working environment for all.
Misuse of labor in any of the ways described above will affect the speed of the workflow and be the reason for bottlenecks.
Capital for a business is divided into fixed and working. The former applies to permanent assets like factories, warehouses, and equipment, while the latter refers to liquid assets, those finances needed to run the company day to day like payroll, bills, and inventory.
While having enough capital is, of course, important, it’s also essential to use the money wisely. You should invest the right amount of it in those areas where it’s most needed, and have sufficient funds on hand to keep everything flowing. It goes against your interests to put a large chunk of your capital into a larger-than-you-need, state-of-the-art warehouse when you can’t afford to fill it with inventory, even if you are doing that with future expansion in mind.
While an expert will be able to do a thorough analysis of your use of capital and highlight those areas where you may be investing too much or not enough, it’s important to keep in mind that an imbalance will create bottlenecks. Not being able to afford an extra truck when orders spike, for instance, will result in your deliveries slowing down in a major way.
Here we’re talking about working out precisely what each employee, department, and division is responsible for and letting them know that. For example, if a production department goes directly to a supplier for new stock when they’re running low, bypassing the purchasing department, there could be confusion about who’s responsible for reordering next time. The result could be a stockout that might shut the whole operation down. To avoid a scenario like that, exact planning has to be in place, meaning that everyone has to be clear on their specific area of responsibility, and everyone in the company has to be aware of it.
If there’s any kind of confusion in your company about who’s responsible for what, automation could be a big help. An inventory management system (IMS) gives a clear picture of your entire operation, and that’s information you can use to set up those planning guidelines. Once they’re in place, your operation will run seamlessly, eliminating any bottlenecks you had before in that area.
Miscommunication can lead to all sorts of problems, each of which could be a potential bottleneck. To avoid this, the right information has to be given to the right person at the right time. It’s no good giving your supplier an order if you haven’t listed all the details they need or let them know exactly where they’re supposed to deliver the items to; and you’re not going to get the results you want if one of your departments doesn’t let every other one know when they have a problem that will affect the entire supply chain. Good communication is key to everything.
To ensure good communication, everyone has to know who they report to and when to report to them, and they should be responsible enough to pass on the correct information in an easily digestible way.
While most manufacturing and sales companies are automated now, some try to save money by sticking to old technology thinking that it’s good enough and works for them. But that’s probably not the case.
An older automated system might not integrate all departments, and it probably won’t be able to “speak” to systems used by outside suppliers and contractors. These capabilities are found in newer systems, and they are a great boon to a company’s operation because they help speed everything up and create smooth processes. When you have that, you’ve gone a long way to eliminating supply chain bottlenecks, especially those that are unique to your company.
If you’re in the market to upgrade your software, check to see that it’s compatible with your existing in-house applications; it’s also a good idea to verify that the system will communicate with the software used by the outside contractors you deal with.
Steps to identify and prevent bottlenecks
In addition to the overarching areas that can cause the bottlenecks listed above, there are blockages that are unique to every company. While it’s up to each of these companies to identify their individual holdups and rectify them, there are some preventative steps all managers can take:
Find out where bottlenecks are occurring.
It can be difficult to locate exactly where the bottlenecks are in a large, complex operation. Examining your supply chain from different perspectives in detail may give you answers, though if you’re going to do something as complicated as that it would be easier and quicker to have an expert take a look.
A better idea is to use your supply chain management system, which can highlight those areas that are not working as efficiently as they should – those bottlenecks. If you haven’t already automated your supply chain management, you should seriously consider doing so.
Carry out data analysis.
Your data can be a good friend when identifying and overcoming bottlenecks. While any automated system you use will produce a lot of data, you can sort the data to get pertinent information about what’s happening at every part of your supply chain.
A reliable software like Cin7 Omni, will give you data that can point out trends, which is another way of uncovering bottlenecks. You can discover these trends by comparing data produced over a period of time. For instance, your data may show that a supplier is taking longer and longer to ship your orders, something that may not be a problem right away, but which could be later on. With that information, you can address it.
Map out a detailed plan.
When the company doesn’t have a detailed plan, it is often observed that all the departments follow their own agenda rather than working collectively towards a common goal. This kind of erratic behavior will lead to several bottlenecks in the supply chain. The management must consider all the options before setting out a plan. This plan should be based on historical data and future predictions. Every department should follow this plan to achieve maximum success.
Moreover, the company management must analyze and revise the plan when the circumstances change. Continuously updating the plan can prevent bottlenecks in the process.
Automate the supply chain procedures.
Automating the supply chain procedures can help eliminate the bottlenecks arising from manual management. Cin7 Omni inventory management software can not only help you to manage your inventory but also to regularize the supply chain bottlenecks. In addition, it can also seamlessly integrate with supply chain planning software like StockTrim, Streamline, Health Check, and Toolio, among others.
In a nutshell
Bottlenecks slow down the supply chain and affect your bottom line, so it’s important to find them and put an end to them, or at least mitigate their effects. The best way to do that is by conducting regular analysis of your processes and operations, and the simplest way of doing that is with an automated system like inventory management. More than just being the most reliable way to identify and prevent bottlenecks, automation is a great way to improve your company’s operation all round.
To learn more about Cin7 Omni’s inventory management system and how you can use it to prevent bottlenecks in your supply chain, click on the link to request a demo.