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Production Planning & Control: The Management of

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Bottleneck management: theory and practice

a b
S. S. Chakravorty & J. Brian Atwater
a
Department of Management and Entrepreneurship, Michael J. Coles College of Business ,
Kennesaw State University , 1000 Chastain Road, Kennesaw GA 30144-5591, USA
b
Business Administration Department, College of Business , Utah State University , Logan
UT 84322-3510, USA
Published online: 21 Feb 2007.

To cite this article: S. S. Chakravorty & J. Brian Atwater (2006) Bottleneck management: theory and practice, Production
Planning & Control: The Management of Operations, 17:5, 441-447, DOI: 10.1080/09537280600682752

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 Production Planning & Control,
Vol. 17, No. 5, July 2006, 441–447

Bottleneck management: theory and practice

S. S. CHAKRAVORTY*y and J. BRIAN ATWATERzx
yDepartment of Management and Entrepreneurship, Michael J. Coles College of Business, Kennesaw State
University, 1000 Chastain Road, Kennesaw GA 30144-5591, USA
zBusiness Administration Department, College of Business, Utah State University,
Logan UT 84322-3510, USA
Downloaded by [University of Chicago Library] at 10:41 20 November 2014

Advocates of TOC believe that bottleneck resource restricts an operation’s ability to make
money, and the best way to maximise income is to fully exploit the bottleneck resource.
Almost all TOC literature focuses on situations where 100% bottleneck utilisation is applied.
Based on the implementation experience, the finding is that the optimal level of bottleneck
utilisation should be less than 100% and any attempt to increase utilisation beyond the
optimal level brings disastrous results for a door manufacturing plant. In order to improve
and maintain the performance of the plant effective bottleneck management is critical.
The experience provides a deeper understanding of how to design such plants, which could be
beneficial for practising managers and academics working with TOC concepts.

Keywords: Bottleneck management; Theory of constraints; Case study

1. Introduction TOC literature focuses on situations where demand for

goods exceeds the available capacity resulting in 100%
According to theory of constraints (TOC), the bottle- utilisation at the bottleneck.
neck is a critical resource, which determines the While the above concepts do have a certain appeal,
throughput rate and therefore an operation’s ability to as described in Factory Physics (Hopp and Spearman
make money. In order to maximise the throughput rate, 1996), Little’s Law clearly states that, when order arrival
Goldratt maintains that the bottleneck should be rates are equal to or greater than the processing times,
scheduled at 100% utilisation. The five-step process work-in-process inventory and lead-times will continu-
developed to help managers implement TOC principles ally increase. In a simulation study of a manufacturing
requires subordination of all operational decisions focus operation applying TOC principles, Atwater and
to ensure that the bottleneck is utilised 100% (Goldratt Chakravorty (2002) found that when bottleneck resource
1990). Simulation games developed to illustrate the utilisation approaches 100% for a long period of time,
application of TOC principles in manufacturing opera- the system performance deteriorates. If 100% utilisation
tions also reinforce the need to achieve 100% utilisation of the bottleneck cannot be realistically achieved over
at the bottleneck (Chakravorty and Verhoeven 1996). a long period of time the question becomes: What is
In addition, this notion is popularised in his book the optimal long-term level of bottleneck utilisation?
The Goal (Goldratt and Cox 1992), has been discussed in The purpose of this case study is to describe how this
theory of constraints journals, and has been promoted question was addressed to improve and maintain the
in Avraham Y. Goldratt Institute’s Jonah classes. performance a door manufacturing plant. This study
Because of these beliefs and teachings, virtually all is an implementation of Little’s Law and suggests
effective bottleneck management is critical. This study
*Corresponding author. Email: Satya_Chakravorty@ also provides insights on the design of such plants,
kennesaw.edu which should be beneficial for academics and practising
xEmail: batwater@b202.usu.edu managers working with TOC concepts.
Production Planning & Control
ISSN 0953–7287 print/ISSN 1366–5871 online ß 2006 Taylor & Francis
http://www.tandf.co.uk/journals
DOI: 10.1080/09537280600682752
 442 S. S. Chakravorty and J. B. Atwater

In section 2, a review of relevant literature is investigating the optimal level of bottleneck utilisation.
presented followed, in section 3, by a discussion This case study examines the best level of bottleneck
of methodology of the study is provided. In section 4, utilisation in a door manufacturing operation.
the implementation experience in improving the perfor-
mance of a door manufacturing plant is delineated.
Lastly, conclusions from this study, including directions 3. Methodology
for future research, are presented in section 5.
3.1 Case study
A case study approach was used to document the
2. Literature review
application of bottleneck management in improving
a door manufacturing plant. According to Yin (1994)
Recognition that manufacturing operations should
there are three reasons why a case study is appropriate
allow a certain percentage of capacity slack is not new.
for our objectives. First, when ‘how’ and ‘why’ questions
Monden (1984) claimed that 10% extra capacity is
are investigated, the case study approach is preferred
necessary in the production lines to accommodate
Downloaded by [University of Chicago Library] at 10:41 20 November 2014

because such questions provide explanation of linkages

fluctuations in manufacturing operations. Krajweski
among events rather than their frequencies or occur-
et al. (1987) found that Japanese managers allow
rences. Our study is an exploratory investigation of how
between 12% and 18% capacity slack in their opera-
protective capacity is implemented in a real world
tions. Nakajima (1991) studied many Japanese manu-
setting. Second, the case study is appropriate when
facturing operations using a concept he refers to as
a real world event is examined. Testing the principles in
overall equipment effectiveness (OEE). Based on the
a real-world environment was a natural way to further
study, Nakajima claims that in most operations an OEE
examine Spearman’s concerns and extend the Atwater
of 50% or less is common when allowing for downtime,
and Chakravorty (2002) study. Furthermore, several
scrap/rework loss and inefficient use of equipment; and
authors have pointed out a need for more real-
sites 85% OEE as ideal for manufacturing operations.
world-based business study (Christenson and Clayton
Chakravorty (2000: 42) provides another explanation of
2003). Third, the case study is preferred because of
planned capacity slack:
its ability to deal with a variety of evidence, including
Very few companies, if any, can have a long-term documents, archival records, interviews, and direct
internal constraint [or bottleneck resource] observation. According to Meredith (1998: 443)
because this implies that routinely some
. . . the importance of direct observation [first
customers’ demands are not satisfied and these
source (seeing it oneself ) rather than second
customers have to have their requirements fulfilled
(speaking or writing to someone who saw or
by competitors. Assuming free market economy,
experienced it) or third, or sometimes no source
competitors would soon claim a larger share of
at all], the role of the context in which the
the market and the company’s situation of more
phenomenon is occurring, and the dynamics of
customers demand than available capacity would
the temporal dimension through which the events
quickly disappear along with the internal
of the phenomenon unfold (thereby helping to
constraint.
understand the how and why elements of the
The utilisation of a bottleneck resource may be 100% phenomenon).
for a short period of time (e.g. during a brief high
demand period), but it cannot be maintained over a long
period of time. While raising this question, Spearman 3.2 Data collection
(1997) expressed his concern with the TOC approach
Multiple sources of evidence were used to collect data.
that seemed to involve tight bottleneck. His question
According to Yin (1994), multiple sources of evidence
was: If 100% bottleneck utilisation is not possible then
can be used to facilitate the process of triangulation,
what is a proper utilisation for a bottleneck? He then
which improves both the reliability, and validity of case
pointed out that TOC advocates are not addressing this
study findings. As suggested by Yin (1994), six major
question. In order to do so Atwater and Chakravorty
sources of evidence were used to collect data.
(2002) conducted a simulation study and found that
Spearman was justified in his concern. The results of 1. Qualitative data was collected through documen-
their study indicated that the system performed best tation obtained in the form of letters, memo-
when the utilisation percentage of the bottleneck was in randa, minutes of meetings, progress reports,
the low 90s. To date there have been no other studies and strategic planning reports, etc.
 Bottleneck management: theory and practice
2. Quantitative data was collected in the form of
archival records of financial data, customer
complaint reports, ordering processing, manufac-
turing and quality reports, and shipping reports,
purchase orders, operational data (such as
machine and labour utilisation), routing informa-
tion, performance measurements (such as annual
sales and lead-time).
3. Additional qualitative data was collected through
extensive interviews with senior managers, super-
visors, and employees. Based on the recommen-
dations of Fontana and Frey (2000) the interviews
were conducted in an open-ended nature, which
allowed respondents to provide objective opinions
of the events as well as insights into certain
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occurrences.
4. Qualitative data was collected through direct
observation by one of the authors as well as
observations of workers’ and managers’ meetings.
5. The first author was also involved with decision-
making during the implementation so it was
possible to collect qualitative data in a
participant-observation mode.
6. Quantitative data such as defective door units
provided scrap rate, while defect classification
provided clues to determine where mistakes were
occurring in a production line.
3.3 Strengths and weaknesses
Case study has both strengths and weaknesses. First,
one strength of the method is that it provides a rich
explanation of ‘how’ and ‘why’ a phenomenon occurs—
which cannot be expressed through simulation or
statistical models. Second, the phenomenon is studied
in a natural setting which would be expensive, difficult,
or impossible to replicate in a laboratory experiment.
One weakness is that it fundamentally assumes that an
espoused theory should adequately specify action, which
is rarely the case. Instead, the best models are
parsimonious and do not claim to replicate reality.
A second weakness is that the extent to which the
findings from a single case study can be generalised is
limited. Stake (2000) proposes that real world studies
are valuable for refining theory and suggesting complex-
ities for further investigation. Other researchers are
welcome to test the extent that these findings can be
generalised by conducting further research in other
environments.
3.4 The company
This study was conducted in MCS, a manufacturer and
supplier of residential and light commercial building
443
products with facilities in Georgia, USA at Duluth,
Flowery Branch, and Ball Ground. The plants used in
this study were their manufacturing plants located in
Duluth and Flowery Branch. These plants employed 123
managers and workers who process doors, windows,
and millwork. Their door manufacturing plant consisted
of four separate door lines, which used Norfield, and
other custom equipment. At the time of this implemen-
tation, the company held an estimated 5% of the
southern-eastern residential and light commercial build-
ing product market.
The redesign effort was initiated to reverse the
company’s deteriorating performance. At the time the
study was conducted these plants were experiencing
several problems. For example, in the 3 months
preceding the study customer complaints on door
orders had risen from 2% to 25%. In addition, door
manufacturing was perpetually behind schedule, thereby
creating poor on-time delivery date performance which
was forcing many of the company’s customers to seek
other suppliers in order to meet customer demand.
Given the highly competitive environment of the
company, this was a serious situation.
4. Implementation experience
4.1 Initial initiative
In order to improve declining performance the Vice
President, with approval from the President, formed
a cross-functional group composed of managerial and
non-managerial employees. The group was responsible
for analysing the existing door manufacturing plant,
planning the change with co-operation from door
manufacturing workers and implementing changes.
The group began their analysis by interviewing person-
nel (managers, supervisors, and workers) from the door
manufacturing and by reviewing customer complaint
reports, ordering processing, production reports and
shipping reports. Since the company was determined
to find a long-term solution that would improve their
plant, the group was interested to thoroughly analyse
the existing system to identify sources of problems.
4.2 Process mapping—analysis of the existing system
In order to fully understand the existing systems, the
group performed process mapping on the entire door
manufacturing operation and found that there were
essentially two stages, order processing and order
manufacturing. The ordering processing begins with
orders coming from outside sales or directly from
customers to a production writer, who is ultimately
 444 S. S. Chakravorty and J. B. Atwater
responsible for accepting orders into the manufacturing.
The production writer turns an order into a production
order and delivers the order to the supervisor of the
door manufacturing. The supervisor manages the order
through the manufacturing and is ultimately responsible
for on-time delivery of orders.
The group found serious problems with the order
processing stage of the door manufacturing operation.
An elaborate information system was installed to track
orders (e.g. customer number, jobsite, order due date,
order release time, and order status report, etc.).
No capacity check was performed before orders
were accepted into the door manufacturing. The
prevalent notion was that ‘we cannot influence how
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our customers’ order and we have to do everything to
take care of our customers’. To remain competitive in
the business environment, the company must offer short
lead-times (e.g. rush 4 hours) with a wide variety of
products. This prohibited the door manufacturing from
stocking large amounts of finished goods inventory.
As a result the group found that door manufacturing
was overloaded with orders and manufacturing was
perpetually behind schedule and was encountering
serious problems with their due date performance.
The order manufacturing stage involves the manu-
facture of door units and basically consists of four steps.
1. An automated operation performed by Norfield
machines that involve loading a stack of door
units, preparing the door units, and applying
hinges to them.
2. A manual operation that consists of pulling the
door unit and placing head and side jambs on it,
then pushing it to a conveyor line.
3. A manual operation that nails a casing on the
door unit, flips it over, and pushes the unit to
the next stage on the conveyor.
4. This is also a manual operation that nails casings
and skid blocks and then places the unit on a cart.
The group carefully studied the operational details
of the door manufacturing and made three major
observations.
1. The group found that the manufacturing typically
operates about 8 hours a day. Considering long-
term demand, the group was unable to provide
cost justification to add a second shift to the
manufacturing.
2. There are four steps in the door manufacturing
process. The average processing time is as follows:
Station 1, 1.5 minutes; station 2, 0.5 minutes;
station 3, 0.5 minutes, station 4, 0.5 minutes. The
bottleneck resource is the first station, which is an
automated operation. Norfield machines perform
the entire operation and they establish the
sequence and the processing time of the opera-
tion. The cycle time reduction of this operation or
parallel processing of some parts of the operation
was restricted by the type of machines.
3. The group initially found that the bottleneck
resource experiences about 40% down time,
which consists of breakdowns, repair, routine
maintenance, and setup times.
Further analysis revealed that breakdowns, repair,
and routine maintenance were typical to Norfield
machines. However, the setup times of the machines
were about 20 minutes. The group applied SMED
(a.k.a. quick change over) techniques (Shingo 1985) to
reduce the setup times to 2 minutes, which reduced
the bottleneck resource downtime to about 30%.
4.3 Determining the appropriate bottleneck
resource utilisation
Although there are four door lines in the entire door
manufacturing operation, in order to protect proprie-
tary information the subsequent analysis is presented as
if there is only one door line. The processing times and
the subsequent analysis are presented in single door
units. Other door units (e.g. single units with transoms
or double units) are converted to equivalent single door
units. Using 8 hours (480 minutes) of working time per
day and 300 units of customer demand rate per day, the
required takt time is 1.6 (480/300) minutes. Considering
30% down time, the group was aware that 1.95
(1.5
1.3) minutes cycle time of bottleneck resource
was not sufficient to meet the takt (the rate at which
each product needs to be completed to meet customer
demand) time. The group had to establish initial level
of bottleneck utilisation in order to continue to do
business.
The group studied customer order and production
reports to establish the initial level of bottleneck
utilisation (see table 1). Without considering variation
at the bottleneck resource, average daily door produc-
tion is 224 {(1  0.3)  (480 minutes/1.5)} door units.
Two observations can be made from the table. First, as
the bottleneck utilisation increased from 71.4% to
80.3%, 20 additional door units were accepted, yielding
a $1280 increase in throughput generation. However,
this increase in throughput was offset by a decrease
in on-time delivery performance from 98% to 89%.
Second, as the bottleneck utilisation increased from
80.3% to 84.8%, the performance of the door manu-
facturing worsened. In this instance, only 10 additional
door units were accepted, yielding only $640 increase
in throughput. However, this increase in throughput
 Bottleneck management: theory and practice
Table 1. Bottleneck resource utilisation and manufacturing performance.
Bottleneck Door units Door units
utilisation accepted rejected
71.4% 160 140
80.3% 180 120
84.8% 190 110
Note: The data is extracted from the months of June, July, and August.
was offset by a huge decrease in on-time delivery
performance from 89% to 70%.
In the highly competitive environment of the
company, the door manufacturing aims for about 90%
on-time delivery performance, yielding an optimal level
Downloaded by [University of Chicago Library] at 10:41 20 November 2014
of bottleneck utilisation of 80.3%. Prior to this analysis,
no one would have believed that by accepting an order
of 10 doors the manufacturing’s on-time delivery
performance would deteriorate so significantly. This
finding implies that the temptation to accept additional
orders beyond the optimal amount should be avoided,
as this is not beneficial for the company’s delivery
reputation, which will hurt future business.
4.4 Managing the bottleneck resource utilisation
Given that there was a large variation (e.g. all door
orders 150 to 450 door units) in door orders from one
day to another, the group knew that managing the
optimal level of bottleneck resource utilisation was
going to be challenging. The group decided to approach
these issues in two ways.
First, the group was interested in studying how
customers placed their door orders. The group
thoroughly analysed the customer order reports and
found that seven customers contributed to about 70%
of the door orders. The group interviewed these
customers to understand what factors significantly
impacted their decision to place a door order at a
particular time. The group found out that frequently
customers batched their orders because the company
gave volume discounts on the building material such
as door units. The group developed a new discount
structure based on how evenly customers placed their
orders. Five out of seven customers adopted this new
discount structure and the remaining two continued to
use the old discount structure. Within a few months,
the group observed that the variation in door orders
significantly reduced (e.g. all door orders 250 to 350
door units). The group realised that since this was
a dynamic environment in which the customer base
changes and so do their needs, the new discount
structure alone would not be sufficient to effectively
manage the incoming door orders.
445
Throughput Throughput On-time
generated lost performance
$10 240 $8,960 98%
$11 520 $7,680 89%
$12 160 $7,040 70%
As a result the group introduced a new position
‘Order Manager for Door Orders’ (note this individual
also handles windows and other millwork as well).
The primary responsibility of this new position was to
evaluate orders and make a decision regarding
whether to process the order at the door manufactur-
ing plant or subcontract the order to another
manufacturer. The number of door orders accepted
for processing at the plant is based on bottleneck
resource utilisation, which is determined by perform-
ing daily capacity check on the bottleneck resource.
Under no circumstances is the optimal utilisation of
the bottleneck resource exceeded. In order to manage
orders subcontracted to other manufacturers, two
actions were taken.
1. A group of small manufacturers with excellent
lead-time and quality performance was identified.
2. Changes to the information system were made
to accommodate the release, follow-up, and if
necessary expediting of orders to meet the
company’s lead-time and quality expectations.
5. Conclusions
There are two major conclusions from this study. First,
consistent with theoretical findings, our implementation
experience finds that optimal bottleneck resource
utilisation is less than 100% (specifically 80.3%) and
any attempt to increase the utilisation brought disas-
trous results for the door manufacturing plant. Based on
this implementation experience, the advocates of TOC
should abandon promoting 100% bottleneck utilisation,
as this activity is wasteful. Of course, the optimal level
of bottleneck utilisation will dependent on the type
of manufacturing operations. Manufacturing plants
experiencing higher (or lower) level fluctuations than
the plant will require lower (or higher) than 80.3%
bottleneck utilisation. In addition, sensitivity around the
optimal level of bottleneck utilisation was observed, and
as the bottleneck utilisation was increased beyond the
optimal level, the door manufacturing on-time delivery
performance deteriorated quickly. Therefore, it is
 446 S. S. Chakravorty and J. B. Atwater
important that the companies determine this optimal
level as accurately as possible. If for some reason this is
difficult or not possible, then it is better to set a lower
level of bottleneck utilisation and then increase the level
over time to reach the optimal level. More research
needs to be done to develop robust methodology to
pinpoint optimal bottleneck utilisation for different
manufacturing operations.
Second, in order to improve and maintain the
performance of the door manufacturing plant, effective
bottleneck management was critical. The plant was
experiencing huge variation of door orders from one day
to another. Further investigation revealed that this
variation, at least in part, was due to the company’s
Downloaded by [University of Chicago Library] at 10:41 20 November 2014
policy of offering discounts based on volume. A new
discount structure based on how evenly the customers
placed their orders was developed. Over time, this
structure dampened the door order variation consider-
ably. This is a significant finding as many companies
experience large variation in their customer orders and
instead of trying to dampen the variations they develop
better operations to deal with this problem. More
research in this area would be very beneficial.
Obviously, business is a dynamic environment and
relying only on new discount structure was not
sufficient. In order to maintain the optimal level of
resource utilisation, procedures to sub-contract the
orders were developed.
Finally, based on our implementation experience,
bottleneck management is an important area of
research. This study shows an optimal level of bottle-
neck resource utilisation is necessary to improve a door
manufacturing plant. This is particularly relevant as
today’s competitive environment demands that compa-
nies respond to the customers’ needs and wants at a
faster rate than ever before. There is increasing pressure
to pursue new ways of thinking as a source of
competitive advantage. More research in this area
should contribute to the science and practice of bottle-
neck management.
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 Bottleneck management: theory and practice 447

Satya S. Chakravorty is Caraustar Professor of Operations Management and Professor at the

Michael J. Coles School of Business at Kennesaw State University, Kennesaw, GA. He received
his PhD in Production and Operations Management from the University of Georgia. He holds
Bachelors and Masters Degrees in Engineering and Sciences from BITS, Pilani (India). He is
Certified Fellow of Production and Inventory Management (CFPIM), and certified academic
associate (JONAH) from Goldratt Institute. He primarily teaches Managing the Value Chain and
Management of Process Innovation at the MBA level. He is also Director of Advanced
Manufacturing and Distribution Systems with The Facility Group in Atlanta, GA, and is
currently involved in a re-engineering project with Shaw Industries. He has also worked as an
advisor for the US Navy with Bearing Point to improve CH 46/CH 53/AV 8 supply chain
replenishment systems at the Marine Corps Air Station in Cherry Point, NC. In addition, he has
provided consulting services for the manufacturing operations for several companies including
Deloitte Consulting, 3M Corporation, and AT&T.
He has published in Production and Operations Management, Decision Sciences Journal of
Innovative Education, International Journal of Production Research, Omega: International Journal
of Management Science, European Journal of Operational Management, International Journal of
Downloaded by [University of Chicago Library] at 10:41 20 November 2014

Production Economics, Quality Management Journal, International Journal Operations and

Production Management, Production and Inventory Management Journal, Industrial
Management, International Journal of Technology Management, and Simulation & Gaming.
J. Brian Atwater is an associate professor of production/operations management at Utah State
University. In addition to his PhD in Operations Dr. Atwater holds several professional
certifications in the field. He is certified in production and inventory management (CPIM) by the
American Production and Inventory Control Society (APICS). He is also a certified academic
associate (JONAH) of the Goldratt Institute. He has also received lead auditor training in ISO
9000 from The Victoria Group and has worked as an ISO auditor. He has also worked as an
examiner for the Shingo Prize for Excellence in Manufacturing. In addition he has provided
professional consulting services for the manufacturing operations of several companies including
Apple Computers Inc., Carrier Transicold Inc., Schuller/Manville Corporation and 3M
Corporation.
His current interests centre around the teaching of systemic thinking and the integration those
concepts with other problem solving approaches such as lean thinking, six sigma, and TOC. He
has published several articles in a variety of journals including Production & Operations
Management Journal, International Journal of Production Research, International Journal of
Operations & Production Management, Productions Inventory Management Journal, Cost
Management Journal and Industrial Management Journal.