Business Bottlenecks: What They Are (+ Tips On How To Identify & Prevent Them)

By
Wuraola Ademola-Shanu
April 23, 2023
min read
Updated
September 19, 2023
Photo credit
Do you find yourself constantly struggling to keep up with the demands of your business? Don’t worry, you aren’t alone. Understanding business bottlenecks can help you get ahead.
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Introduction

Any blockage or setback that delays your business processes is considered a bottleneck. And if you want to address business bottlenecks effectively, it’s important to review your workflows and methodologies to identify and solve the root causes — so your company continues to run efficiently.

In this article, we’ll address “what a bottleneck in business is,” types of business bottlenecks, how to spot and resolve them, plus tips for handling business bottlenecks — amongst other things.

Dig in!

What is a business bottleneck?

A business bottleneck is a term generally applied to manufacturing, logistics and information technology. However, you can use it to describe any business process or workflow where capacity is exceeded by demand.

Bottlenecks, in simple terms, mean the neck of a water bottle, usually the narrow part. When water flows out of the bottle, the volume automatically reduces when it reaches the neck. Companies adopted the term in routine operations of a business where there's a similar backstop.

Consider this workflow bottleneck example: Employee X, a senior employee in charge of client management is sick and has been suddenly scheduled for surgery. Due to this, employees from other departments must pick up from where employee X stopped. 

Unfortunately, they don't know what to do or what client projects to attend to because Employee X didn't document their workflow or step-by-step processes. Here, the bottleneck is the lack of process documentation.

Finally, the type of bottleneck your business experiences is determined by the cause — which is typically broken down into three categories:

  • The production line.
  • The supply chain.
  • The people (Employees).

Types of bottlenecks

Business bottlenecks are usually divided into two main categories:

Short-term bottlenecks

Short-term bottlenecks are created by temporary circumstances and usually last for a few weeks. While they're less dangerous, it's important to keep an eye out for them as they’re unpredictable and their impacts can vary.

Long-term bottlenecks

Long-term bottlenecks may last longer than a few months — as they're related to bigger problems in the system or process and cause persistent delays.

As a result, they can negatively affect a company's production, finances and revenue pipeline. A common long-term bottleneck example is when a company has outdated machinery and various pieces of equipment or tools stop working at once.

Each of the two types of bottlenecks can be further subdivided into performers or systems.

Performers are all the people (including management, staff, vendors, consultants, etc.) involved in a given business process or workflow. These bottlenecks happen in relation to how long it takes to complete a specific task.

For example, if answering a customer complaint or inquiry should take around ten minutes, but the average time required is closer to twenty or thirty, you may have a performer bottleneck on your hands.

Systems refer to software and other technology used in completing tasks related to a specific business process or workflow. While performer bottlenecks are created by a specific person, system bottlenecks are related to application errors, inefficient system processes, or malfunction of some kind that keep processes from reaching their full capacity.

Long wait times, a huge backlog of incomplete work or burned-out employees are major indicators of a system bottleneck.

Constraints vs. bottlenecks: What’s the difference?

A constraint is defined as something that limits the output of the entire process. It could be caused by a lack of information or materials, equipment, personnel, or managerial activities such as policies or standard operating procedures.

On the other hand, a business bottleneck is a type of constraint that affects the output of a process and doesn’t allow it to achieve its goals.

However, a constraint can become a bottleneck if it starts to affect the entire output and productivity of a business process.

5 Common causes of process bottlenecks

There are many factors that can cause a bottleneck. Most times, business bottlenecks occur when an employee, tool or activity in the process works beyond their capacity and can’t handle any additional demand (whether long-term or short-term). 

Business bottlenecks also arise when the incoming workload arrives at a certain point more quickly than the point can handle; hence, limiting the overall throughput of the whole process. Consequently, this prevents business processes from running smoothly or efficiently. 

Let's explore some of the common causes of bottlenecks below:

1. Manual data processing

Information gathering has changed over the years — and the benefits of automating data processing aren't something to be handled with "a pinch of salt."

This is why the disadvantages of manually collecting, entering and updating data into systems and databases are more harmful than their benefits; no thanks to issues like duplicated data, missing information, disruption in organizational efficiency or constant errors.

So, what happens? Manually processing your data not only causes mistakes but also creates potential risks like fraud and customer information errors.

Check out our top tips for automating data processing.

2. Legacy software

Even if you hire the most qualified and productive team out there, glitchy and slow legacy software is bound to decrease team productivity and operational efficiency. 

3. Repetitive tasks & the insane amount of time devoted to completing them

Imagine spending hours daily, doing the same task every day, every week, until months culminate into years — repetitive tasks that could be avoided, if only they were documented and automated.

4. Outdated workflows

If the workflows that make up a business process aren't functioning properly, you don't need a seer to inform you that your business processes as a whole also won't work.

This can negatively affect efficiency,  overall production and collaboration (both within and across teams). 

5. Teams or individuals working beyond their capacity 

When a business workflow constantly requires approvals or reviews from other stakeholders, the chances of a bottleneck are high — especially when the reviewers are overwhelmed themselves and don’t have the bandwidth to take on extra responsibilities.

5 Effects of bottlenecks on businesses

Whether it occurs in your production process or simply one of your daily business processes, business bottlenecks can cut off the flow of your business’ lifeblood — thereby negatively impacting your business's profits, revenue pipeline, competitive performance and overall team productivity.

Below are some of the ways bottlenecks can impact a business:

1. Employee burnout and high turnover

When a bottleneck causes a sudden increase in demand, chances are high that your company would ask its employees to work long hours outside their regular shifts or take on more tasks during office hours. If this continues to happen for a long time, your employees are bound to experience burnout from the overwhelm.

Additionally, some employees might be forced to look for new jobs — further aggravating the issue.  

 🔥 Scribe Top Tip: You can deal with employee burnout during a bottleneck by offering new employee benefits like extra time off that your employees can enjoy when the business is back to normal.

2. Customer dissatisfaction

Bottlenecks can sometimes lead to delays in meeting client expectations, shipping and even delivery.

In turn, this can cause customer dissatisfaction and propel them to buy from a competitor or different brand the next time.

 🔥 Scribe Top Tip: If the delivery of either goods or services will affect your customers, work with your marketing team to communicate this information respectfully and empathetically. It would help your customers feel valued, understand it's a temporary brand issue and still cement your place in their hearts.

3. Missed deadlines & decreased productivity

A business process is made up of various workflows owned and handled by different people. If one person falls behind or keeps a task from moving forward, it can adversely impact deadlines and tasks owned by others — and ultimately affect the productivity needed to complete a process.

4. Higher resource costs & loss of profits

The cost of production automatically increases if resource costs go up. Therefore, if production output is low or below average, then you can expect the business to run at a loss since the money being generated isn’t being made back.

5. Strained relationships/issues with suppliers or customers 

Sometimes, bottlenecks can affect a critical approval, like in the accounts payable process, leading to missed or delayed payments to suppliers, which could affect your reliability as a customer. 

In turn, suppliers can express their dissatisfaction by withdrawing discounts offered, credits or other perks that come from recurring work with a vendor.

This would also affect your customers, especially if production is slow due to delayed supplies and order processing or slow customer support.

How to identify business bottlenecks

Identifying process bottlenecks can feel like rocket science because it takes time and attention. However, these tips below can help you prevent smaller pains from transforming into bigger problems.

1. Process mapping

Process mapping allows you to evaluate your organization's entire workflow to determine what’s working, what isn’t and whether delays and inefficiencies are related to the entire process, or just one or two performers or systems.

Simply put, mapping your process allows you to observe each process step and identify its resources, interactions, workflow lead time and task backlog. This way, you can easily identify what is obstructing output capacity and performance to uncover existing bottlenecks.

Additionally, there are various tools to help you map your processes — ranging from a flow chart to a business process management software, the 5 Whys method, or even something as simple as a pen and paper.

For example, flowcharts with standard symbols can help you quickly break down even very complex processes to identify the root cause.

Centralized business process management software solutions like Scribe, can help you explore and optimize your processes.

How? By writing your business process documentation for you.

Scribe turns any workflow into a how-to guide, so your teams can quickly build and share effective process docs that serve as a single source of truth for how teams across your company should be doing any process.

Business Bottlenecks

And then, you've got the 5 Whys Method designed to help team members dive deep into a problem to reveal the root causes. The technique was originally developed by Sakichi Toyoda who stated that "by repeating why five times, the nature of the problem as well as its solution becomes clear."

For example, if you recently missed a major client deadline because your client success manager suddenly resigned. Asking “Why?” five times can help you quickly identify the source of the bottleneck.

Problem: The client success manager resigned out of the blue.

  1. Why? The client didn't receive what they paid for on time.
  2. Why? The approval for working on the client's project was delayed. 
  3. Why? The client success manager suddenly resigned and there was no one to ensure continuity.
  4. Why? There was no process documentation in place to ensure continuity in operational efficiency. 
  5. Why? We didn't put contingencies (process documentation tools like Scribe) in place to automatically create process documentation and collaborate on processes.

2. Look at your data

The saying, "Numbers don't lie" holds weight here. While trying to identify what's causing your bottlenecks, ask yourself: "Are tasks usually interrupted when it reaches a certain point?" "Is there a trend or pattern that traces back to a particular person or owner?" 

The idea here is to assess trends, themes or patterns that pinpoint or lead to the origin of the business bottlenecks you're experiencing.

3. Speak with the stakeholders involved

Has your data shown you who might be causing the bottlenecks? Good job! The next step is to speak with the people involved in the process — as it offers extra insights your data cannot provide. It could provide insights such as:

  • Are there any communication glitches you should know about?
  • Is the current workload overwhelming for them?
  • Are teams not adequately staffed and need more hands? 

4. Conduct a workflow analysis

Once you’ve gathered data and spoken to the stakeholders involved, conduct a workflow analysis to examine the order of tasks and activities that produce a specific workflow outcome.

During this process, look out for current bottlenecks, repetitiveness and any other issues that could create bottlenecks in the future.

5 Tips for removing/handling business bottlenecks

Here are some tips you can use to handle or remove bottlenecks from your business:

1. Improve efficiency by automating process documentation

Automation is no longer a “nice to have.” It’s now a "must-have" —  an essential tool for businesses looking to optimize business processes to increase value, reduce operational costs and increase competitive performance.

Irrespective of the size of your company, if you have high-volume, repetitive processes, it's time to consider automation.

Fortunately, you don't have to search the web's nooks and crannies. Whether you want to onboard new hires, draft policies and procedures, create SOPs, build training materials, answer questions, or assist your clients, Scribe allows you to turn any process into a step-by-step guide, instantly! 🚀

Business bottlenecks

Using Scribe is easy! 

All you have to do is:

Sign up for free here.

Turn on your Scribe recorder and automatically document any process. 

Business bottlenecks

Watch the magic happen as your step-by-step guide is automatically generated, complete with screenshots, instructions and clicks.

business bottlenecks

Easily add edits and customization. You can edit your screenshots and images, customize your theme/dashboard to your brand's specifications, redact any sensitive information and add texts and annotations.

business bottlenecks

Enhance your process with other integrations. No more hopping back and forth between platforms or multiple spreadsheets.

You can embed Scribes in 100s of tools you and your customers already use, such as Notion, Confluence, Airtable, ClickUp, HubSpot, Microsoft Teams, etc. — hence, saving time and preventing delays and errors from manually entering data.

business bottlenecks

Share your process guide with one click — with your teams and customers — in various formats! 

business bottlenecks

2. Learn to detect bottlenecks

Detecting bottlenecks isn't rocket science; however, you might have to do some trials and errors before you become a pro at it.  To ensure you have a full understanding of what can affect operational efficiency, keep a visual track of your workflow using business process management tools, including boards and tables.

Use these tools to measure cycle time for each period and compare it to assess whether there are any inconsistencies that might signify a bottleneck.

Furthermore, you can leverage the skills of your employees to resolve process bottlenecks, by using your “A team” to achieve optimal productivity and output.

3. Act quickly

Whenever you suspect a bottleneck, act fast. Underestimating its impact or leaving the situation to resolve itself can cause bigger issues and negatively affect major elements of the company. 

For example, this could turn a short-term bottleneck into a long-term one.

4. Hire more people

The idea here is to increase capacity to increase output. Therefore, if you have a bigger budget, you can hire more people to increase output and eliminate bottlenecks.

For example, if you experience bottlenecks during important holidays, you could hire additional seasonal staff to handle the increase in demand and avoid production inconsistencies.

5. Add measures to prevent bottlenecks in future

Analyzing your workflows, mapping your processes, and investing in tools will help you see bottlenecks forming before they cause a problem.

For example, if you have a communication problem, you may need to implement training guides and processes to ensure smooth transitions within projects. Additionally, you would need tools to improve communication and context-setting, and increase overall team productivity.

Conclusion

Bottlenecks can have enormous consequences: from disrupting a company's efficiency and productivity to increasing lead time and overheads, reducing responsiveness to the market, loss of customers, and reduced revenue. Don't underestimate the impact one backstop can have on your entire organization.

That's why it's so important for business owners and managers to learn how to identify, solve and prevent (including using tools such as Scribe) bottlenecks from happening in the first place.

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