Find what's really holding growth back

Situation: Sales have been flat for twelve months, even after Sam added three trucks.

Example conversation with a made-up company.

Find my bottleneck. We're a food and household goods distributor, about 80 staff, 300 customers. We added three trucks last year and sales have been flat for twelve months anyway.

TigerTiger › think

Loaded skill: Bottleneck

… The bottleneck is whatever limits how fast money flows through the business right now. There is only ever one.

Your three new trucks and flat sales already tell me something. Either trucks weren't the constraint, or something else now caps you. Let's find out which.

Question 1. Walk me through how money actually flows into your business, step by step, from raw input to revenue. Start from where product comes in and end where you get paid.

… Four sales reps under Mei visit shops on weekly routes, and shops also message their orders to the reps. At the end of the day each rep sends in a list, and two office staff type the orders into the system the next morning, from 8 until about 11:30. Then six pickers pick them, and the trucks load and go out. … About 120 orders a day, roughly 25 lines each.

…
Typing runs at about 430 lines an hour. Six pickers at 150 lines an hour can do 900, which is double. So the pickers can never be busier than the typists feed them. They stand idle from 8 to 11, then the day's work lands on them at once. …
Question 2. In that chain, where does work back up, sit half-finished, or get delayed? And where does the next step downstream sit idle waiting on the one before it? From what you've told me, orders pile up in front of the typing and everything behind it starves. Theory of Constraints only works if we commit to one step. If you had to pick the single step where things back up worst, which is it?

Honestly I'd have said picking, because that's where it looks chaotic around lunchtime. But you're right, the pickers are waiting most of the morning. It's the order entry. Yesterday's orders sit in the reps' lists overnight and then wait for two people to type them.

…
That passes the test, with numbers. Half of Mei's estimate is 30 to 50k a month, about 2.5 to 4% of sales, from one step that costs almost nothing to change.
…
THE BOTTLENECK
Getting orders into the system. Orders wait overnight in the reps' lists, then wait again for two people to type them from 8 to 11:30, and nothing downstream can start until they do.
…
THE FALSE BOTTLENECK YOU ALMOST NAMED
Picking. It looks chaotic at lunchtime, but it is the step that absorbs the delay. …
…

EXPLOIT (this week)
Get orders typed the day they are taken. Reps send their list by 4:30pm instead of "end of day". …

What changed: Sam names the limit: orders wait overnight to be typed, and everything after that waits too. A one-week test will show whether he's right.

Try it: Sam typed "Find my bottleneck." (skill: bottleneck)

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