What is a bottleneck in business? The ultimate guide to detect and fix them every time

In 2021, the Ever Given shipping container held up nearly $60 billion worth of trade when it got wedged in the Suez canal.

Sometimes it only takes one issue in a process for everything to grind to a halt. Bottlenecks in your business may not be as obvious as a giant ship, but you can take steps to fix holdups before they spin out of control.

In this article, we’ll answer “what is a bottleneck in business?” with real-world examples and explain how to prevent them to boost efficiency, reduce costly errors and ensure consistency. If you’re already dealing with one, we’ll give you the tools to get up and running again.

What is a bottleneck in business?

A bottleneck is a point of congestion in a workflow or process that creates a backlog. When part of your system is at maximum capacity, this can impact productivity, costs and relationships with customers and suppliers.

The type of bottleneck in business depends on the cause. Usually, we can break these down into three sources:

• The production line

• The supply chain

• People

One of the most likely times for a bottleneck to occur is when launching a new product or service. In these cases, your team is working on assumptions and is unaware of actual inefficiencies. However, bottlenecks can form at any time if you don’t consistently track your business processes.

Long-term vs. short-term bottlenecks: what’s the difference?

Bottlenecks in business can be split into two lengths of time:

• Short-term bottlenecks. These are caused by temporary factors. Usually, they don’t pose a significant problem but they’re unpredictable and their impact can vary.

• Long-term bottlenecks. These are nearly always related to bigger problems in the system or process and cause persistent delays.

For example, Tesla promised customers 1,500 Model-3 vehicles in 2017 yet only managed to produce 260 (17.3%). This wasn’t because of a temporary supply issue, which would be considered a short-term bottleneck. It was due to the process itself: relying too much on automation systems where human engineers were needed.

Tesla’s Model-3 issue is an example of a system problem that could lead to ongoing issues, rather than a temporary issue.

Here are some more examples of long- and short-term bottlenecks:

Why you should identify bottlenecks in business

Identifying and fixing bottlenecks in your business can prevent operational and financial issues from starting – or getting worse. Doing so often allows you to focus on ways to grow your business and improve business processes.

Some of the main benefits of finding and fixing bottlenecks are that you can:

• Have better relationships with suppliers and customers

• Reduce costly errors

• Increase efficiency with automation

Have better relationships with suppliers and customers

Avoiding bottlenecks in your business can help you have better relationships with your suppliers. By respecting deadlines and payments, suppliers will trust you more as a customer. By being a reliable client, you may also be offered extra benefits or discounts. This will likely mean fewer issues on your end because your stock levels will always be accurate.

You can also leverage the information you have about your stock levels to share low item availability information. This can increase customer trust and engagement with your business in the long term.

Reduce costly errors and increase profits

If you’re dealing with a people bottleneck, other team members may need to work harder as a result. Burnt-out staff with no downtime can make more mistakes. If this happens regularly, it could result in a large number of workers leaving your company over time.

Voluntary turnover for US employees is expected to jump nearly 20% to 37.4 million (from a pre-pandemic average of 31.9 million per year). When this happens, you’re looking at the additional cost of hiring someone new and training them.

Bottlenecks can also result in customers becoming unhappy with long wait times or stock issues. If you’re not providing speedy service, they may choose to purchase from competitors instead. Your goal is to figure out how to strike the balance between productivity and profit.

Increase efficiency with automation and reduce human error

Removing outdated systems ensures consistency, saves time wasted on repetitive tasks and reduces the chances of human error.

Activities like data entry are suitable for automation, freeing up time for activities that require deeper work. Our State of Sales and Marketing report revealed that respondents who automated sales and marketing tasks were 16% more likely to hit their targets.

The business process automation market is predicted to reach $19.6 billion by 2026. If you’re a small team, this means being able to focus on bigger tasks that need to be completed manually.

For example, Pipedrive’s Automation features, like workflow automation, help to remove manual work in your sales process and boost your productivity. Automate some of your tasks so they are completed without you or a team member having to lift a finger.

With Pipedrive’s easy-to-use automation builder, you can simplify your workflows in minutes:

Different types of bottleneck examples in business

Many businesses still rely on paper-based and offline tools such as spreadsheets, that can only be accessed by one person at a time.

Covid-19 had a huge effect on most industries because many older systems weren't designed for working from home. In other cases, cloud-based software thrived.

These kinds of delays can happen even under normal circumstances and in every industry. Let’s explore some more examples of bottlenecks in business.

System bottlenecks: outdated machinery and workflows in manufacturing

Nearly 40% of industrial output is wasted before it reaches customers. Bottlenecks cost the manufacturing industry $12 trillion in the global production market due to things like poor factory layouts or a lack of storage solutions.

Older machines working at full capacity in the manufacturing process can also fail to work as fast as the newer versions. These long-term inefficiencies then affect the entire assembly line.

Process bottlenecks: app development doesn’t meet business demands

In software development, process bottlenecks can happen due to miscommunication or misunderstandings on project management goals. If there isn’t collaboration and conversation throughout, stakeholders may not be happy with the final product.

People bottlenecks: a small business owner holding up decision-making

If you’re a business owner or team leader, you may be a bottleneck. Leaders who are too busy may struggle to prioritize requests, which affects those who need a sign-off to proceed with the next stage of work (this happens a lot in teams who use a waterfall methodology). If all project tasks have to run through you, it could be time to delegate.

Production bottlenecks: lack of raw materials for food and beverage producers

The food and beverage industry is susceptible to production bottlenecks. Raw ingredients can perish before expiry, while excess inventory (due to problems in the supply chain) may not get used in time.

In the UK, KFC developed a huge bottleneck in 2018 when it chose to switch its delivery contract from Bidvest Logistics (now Best Food Logistics) to DHL, which at the time was dealing with operational issues and was unable to fulfill chicken deliveries on time. As a result, KFC had to close half of its UK stores because they ran out of chicken.

Bottleneck analysis: how to identify a bottleneck in your process

You may have heard of kanban systems, the Japanese word for “signboard”. This type of Lean manufacturing works to maximize productivity and minimize waste within production systems.

A kanban system is a visual overview of a project where teams can see what needs to be done and what stage projects are in. The system is now used in many different industries because it helps teams visualize work, maximize efficiency and reduce lead times.

Finding and fixing bottlenecks before they get out of control isn’t difficult. You can break it down into a three-step process:

• Go over your data and metrics

• Speak to your team

• Map your process with visual workflows

Analyze your data and metrics to find trends and patterns

Go through each of your process steps and look for any trends and patterns to uncover what is normal and what might be a bottleneck. Look out for trends like:

• Wait times. Are they longer than usual?

• Backlog volume. Is there a higher number than there should be?

• Throughput. Are workloads exceeding processing capacity?

A fishbone diagram, like the one by Asana below, can help you figure out where to start looking. The head of the fish represents the problem you’re trying to solve, while the ribs represent different categories and causes of the problem.

A lack of data can result in poor decision-making. Leaders must understand what’s happening in their company at all times, so they know what to prioritize and fix first.

Speak to your team to find out what the data missed

Once you have data, get your team to add to the findings and any other areas that have been missed. For example, your IT system won’t know if there are high levels of stress among employees but your team members will.

Get different departments or siloes together and start making communication between them easier. This alone can help prevent bottlenecks. Similar to a fishbone diagram, you can use the “Five Whys Method” to help team members reveal the root cause of a problem.

Here’s how to find the root cause of problems using the five whys:

• Write down the problem or solution to be explored

• Ask “why?” or “how?" and write the answer directly below

• Ask “why?” or “how?” again of your most recent answer

• Repeat five times

• Determine your root cause

Here’s an example:

Take your data and team input and map your process with visual workflows

With your team, use the data you’ve gathered (including their input) to draw out your process. Measure the cycle time of each stage and create flowcharts that allow you to see where the problems are.

Find out the answers to these questions and come up with creative solutions:

• Does the current process produce what we want?

• What are the problems?

• How can we solve these problems?

• What tools do we need?

The kanban system works so well because you can keep track of your products or services at every stage. Simplifying your operations management can help you avoid bottlenecks and waste in your production process too.

Your business needs an analysis tool or process integration to allow you to use the data to make better decisions. For sales and marketing teams, Pipedrive’s Insights feature gives you a clear visual overview of your performance and reveals winning patterns. This can help you decide the stages that need help from automation or delegation to run more smoothly.

4 steps to deal with and prevent business bottlenecks

Dealing with bottlenecks is frustrating but finding where they are puts the power back in your hands. Now you need to get things moving again. These four steps apply to all industries:

• Don’t be slow to act

• Decrease what you’re putting into the bottleneck

• Increase the number of people and tools in your production process

• Add measures to prevent them in future

Act quickly to figure out the constraint on the system

In a complex production process, it can be difficult to identify the biggest blockers holding up your system. The Theory of Constraints, conceived by Dr. Eliyahu Goldratt, is a scientific way of finding the biggest restriction in the way of achieving a goal.

He suggests that every complex system contains linked activities and one of these slows down or halts the entire system. In a business sense, could a new product be putting too much strain on things? Is there a backlog because an employee is ill? Total process throughput can only be improved when the constraint is handled.

For example, when Dollar Shave Club’s ad went viral their site server crashed for 24 hours from heavy traffic. Getting it back up and running quickly minimized loss and gained them 12K new subscribers. The company is now seen as a case study in how to fix issues and bounce back quickly.

Decrease input to the bottleneck to reduce the pressure

While you figure out the cause, take the pressure off bottlenecks by moving team members from the input side to other tasks. Also, make sure there are no duplicate work or overlaps happening.

Look at where you can improve the processes leading up to the bottleneck without compromising overall quality of your production line. Speed up process automation (if you can) and ensure the product arrives in its best form.

Assign more people or resources temporarily to get things moving

When production slows down or stops altogether, getting things moving again should be your priority, so add more tools, deploy your best team members, or hire temporary staff for the task if your budget allows.

The additions you make will depend on the type of bottleneck. It could be physical, such as a material shortage where you can look for other suppliers. Otherwise, it could be a company policy you can change. Whichever it is, make sure safety is prioritized and keep an eye on bottlenecks forming in other areas.

Add measures to prevent bottlenecks in future

Prevention is the best way to deal with any business bottleneck. The visual workflow you create and track should allow you to see them forming before they cause a delay. For example, Pipedrive has a customizable sales pipeline that outlines a simple sales flow. As deals move through these stages, you can see exactly where your leads are in the sales process.

If you’re dealing with a people bottleneck, you may need to expand your team full-time and foster a culture of open communication so different departments speak to one another. If it’s down to clients or customers responding too slowly, arrange meetings to find out the best way to reach them when you need feedback.

Just as you’d have a CRM (customer relationship management tool) for your front-end sales team, you can use ERP (enterprise resource planning) platforms that focus on reducing production costs internally.

Final thoughts

Bottlenecks can disrupt many different avenues of your business so it’s critical to find out which processes are hindering productivity and profit. Ensure you have a complete understanding of all your company’s components and work towards continuous improvement.

Create a visual workflow for all your business processes. In doing so, you’ll be able to forecast and spot potential constraints and bottlenecks before they happen.