Operations
Bottleneck
The slowest step, which limits the output of the whole process.
Last reviewedWhat 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 Eliyahu Goldratt's theory of constraints.
Where does it come up in case interview prep?
- Supply chains explainedLesson in How industries work: the toolkit
- How hospitals and insurers make money: costs, unit economics and operationsLesson in Healthcare providers and payers
- Main players, trends 2024 to 2026, regulation and casesLesson in Healthcare providers and payers
- Service delivery, KPIs and public-private partnershipsLesson in Government, public sector and non-profits
- Operations and process improvementLesson
- Restaurant unit economics: turns, delivery, and franchisingLesson in Restaurants and food service
- Capacity, supply chain, and footprintLesson
- Stretch case: operations to cost to organizationLesson in Integrated multi-part cases
- Bottleneck thinkingFramework: how to use it in a case
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.