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Management accounting 2022

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Question:

What is a bottleneck and how do we deal with them?

Author: Hjalmer Pedersen



Answer:

Some operations in the value chain might bottleneck if the capacity cannot keep up with the rest of the production How to deal with bottlenecks Step 1: Recognize – Bottleneck resource determines whole throughput contribution. (See illustration above) Step 2: Find the bottleneck resource: Identify largest quantities of stock waiting to be worked on. (Is the large area to the left on illustration above) Step 3: Keep bottleneck resource busy: Subordinate all other non-bottleneck resources. The bottleneck operation can never be out of something to do! Step 4: Increase bottleneck efficiency and capacity


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Some operations in the value chain might bottleneck if the capacity cannot keep up with the rest of the production

How to deal with bottlenecks
Step 1: Recognize – Bottleneck resource determines whole throughput contribution. (See illustration above)
Step 2: Find the bottleneck resource: Identify largest quantities of stock waiting to be worked on. (Is the large area to the left on illustration above)
Step 3: Keep bottleneck resource busy: Subordinate all other non-bottleneck resources. The bottleneck operation can never be out of something to do!
Step 4: Increase bottleneck efficiency and capacity
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