What causes bottlenecks

Hello everyone, I am Rakesh final year MBA student at ASB, most of my blog posts were on how to increase the efficiency of the supply chain or about global companies which have built an efficient supply chain. So for my final blog, I am revisiting the basics of the supply chain. Every supply chain becomes more efficient as each bottleneck is eliminated, today we are going to see how these bottlenecks are formed. So if you know what causes it you can prevent it from happening in the future.

Single sourcing

Many companies around the world experienced a raw material shortage during the pandemic. The key to solving such bottlenecks? is understanding their underlying causes. For example, multiple suppliers and other supply chain players are discovering that single-sourcing will raise the likelihood of bottlenecks in the middle of severe supply chain volatility around the world. For example, whether your sole source for a specific component or raw materials is in a country under lockdown, then you have no choice but to wait till the lockdown is lifted and your production will come to a halt. So to avoid such unfortunate events it is better to have multiple sources as a backup.

Lack of communication

Lack of communication between departments can be disastrous and each department may end up doing what they believe is good for the organisation. If you schedule a production run in a job shop dependent on products that you intend to have in your buffer stock at the same time, your inventory planners are working to go lean and remove much of that buffer stock, you are in for a disastrous production run that will waste capacity at best and expensive raw materials at worst. 

Poor technology integration

Let's say you have three suppliers for a main raw material that goes into your manufacturing programmes: you share some IT infrastructure with one of these suppliers, so you can get a window into their supply in real-time, while you're flying blind with the other two. Where do you expect bottlenecks to pop up the most? That's right, with the two of them not boasting any integration at all. So it's better to stay updated and source materials from suppliers who are advanced as well.

Low Visibility

If you have an overview of the processes, it is easy to identify areas where the process slowdowns, without having an overview it is hard to figure out where the bottlenecks are. Given the extreme complexities of the current global supply chain, it is not as easy as counting pots and pans to find out the source of any ongoing disruptions-on the contrary, it also allows you to have insight into any touchpoint on the distribution chain, with a live view of your inventory, your manufacturing processes, your manufacturing bills of materials, and much more. The bottlenecks will increase rapidly if you can't do that and they will dramatically cut into your earnings.

Inefficient planning

How are planners in diverse departments supposed to align with each other without a corporate roadmap to satisfy the demand for the next 12-18 months? That is correct: they probably aren't. As a consequence, every department will have its preparations weighed down by every other department, as they all act for cross-purposes. Not only is it important at the end of the day to provide a solid, data-driven planning workflow that uncovers and proactively tackles possible bottlenecks, It is also important to do so in a manner that is incredibly scalable. Instead of improvising when things go south.