Operations Cases: How to Approach Them

Value-Added vs. Non-Value-Added

Classify each step as value-added (customer would pay for it) or non-value-added (waiting, rework, transport, inspection). In most processes, only 5-10% of time is value-added. The rest is waste waiting to be eliminated.

Swim Lane Diagrams

When multiple departments or teams are involved, use swim lanes to show who owns each step. This reveals handoffs - a major source of delays. Every time work crosses a swim lane, there is potential for waiting, miscommunication, or dropped balls.

Why Bottlenecks Matter

Improving non-bottleneck steps has zero impact on total output. If your bottleneck can process 100 units per hour, it does not matter if other steps can handle 200 - you are still capped at 100. Focus all improvement efforts on the bottleneck first.

How to Identify the Bottleneck

Look for the step with the highest utilization (closest to 100%) or the longest queue of work waiting. Ask: where does inventory pile up? Where are people or machines constantly busy while others wait? The bottleneck is often obvious once you map the process.

The 5 Focusing Steps

1. Identify the constraint (bottleneck)
2. Exploit the constraint (maximize its output)
3. Subordinate everything else to the constraint
4. Elevate the constraint (add capacity)
5. Repeat - find the new bottleneck

Throughput vs. Cycle Time

These are related but distinct. Throughput is system-level (how fast the whole process produces). Cycle time is unit-level (how long each unit spends in the system). You can have high throughput with long cycle time if you have many units in process simultaneously - like an assembly line with many stations.

Utilization Sweet Spot

High utilization (90%+) sounds efficient but creates long queues and wait times. Low utilization wastes capacity. The sweet spot is typically 70-85%, leaving buffer for variability. Bottleneck steps should run at maximum utilization; non-bottlenecks should have slack.

Hidden Factory: Yield Impact

Low yield creates a "hidden factory" - capacity consumed by rework or scrap. If yield is 80%, you need to produce 125 units to get 100 good ones. Improving yield directly increases effective capacity without adding resources.

1. Eliminate

Remove non-value-adding steps entirely. Ask: "What would happen if we stopped doing this?" Common targets include unnecessary approvals, duplicate data entry, excessive inspection, and over-processing.

Example: Remove the 3-signature approval process for orders under $1,000.

2. Automate

Use technology to replace manual, repetitive tasks. Automation reduces errors, increases speed, and frees people for higher-value work. Look for rules-based, high-volume activities.

Example: Auto-generate invoices when shipment tracking shows delivery.

3. Parallelize

Run steps simultaneously instead of sequentially. If Step A and Step B have no dependency, do them at the same time. This dramatically reduces total cycle time.

Example: While waiting for credit approval, start warehouse picking.

4. Outsource

Transfer non-core activities to specialized third parties who can do them better, faster, or cheaper. Focus internal resources on what differentiates the business.

Example: Use a 3PL for warehousing instead of running your own facility.

5. Redesign

Fundamentally rethink the process from a blank slate. Ask: "If we were starting fresh, how would we do this?" Redesign is the most powerful lever but also the most difficult and risky.

Example: Shift from batch processing to continuous flow manufacturing.

Reduce Costs

The client wants to do the same thing more cheaply. Focus on eliminating waste, improving yield (reducing scrap/rework), consolidating steps, or substituting cheaper inputs.

Key questions: Where is money being wasted? What steps consume the most resources without adding value? Can we achieve the same quality with less?

For cost analysis, see our profitability guide.

Increase Capacity

The client cannot meet demand with current operations. Focus on bottleneck analysis first - identify what limits output. Then apply levers to increase throughput at the constraint.

Key questions: Where is the bottleneck? Can we add shifts, equipment, or people at the constraint? Can we reduce changeover time? Can we improve yield at the bottleneck?

Improve Quality

The client has too many defects, returns, or customer complaints. Focus on finding where quality issues originate (not just where they are detected). Apply root cause analysis.

Key questions: Where do defects occur in the process? What is the root cause (people, machines, materials, methods, environment)? Can we build in quality checks earlier?

Step 1: Clarify and Map

Ask about the production process: how many steps, what are the key stages? What is the current throughput and how is it measured? What are the operating hours - 1 shift, 2 shifts, 24/7? What is the current yield rate? Are there any known quality issues?

Step 2: Find the Bottleneck

"Before looking at solutions, I need to identify what is constraining output. Could you tell me the utilization of each major stage?" [Interviewer reveals that final testing is at 98% utilization while other stages are at 70-80%.] "So final testing is our bottleneck. Any improvement needs to focus there."

Step 3: Analyze Metrics at the Constraint

"Let me understand the testing step better. What is the cycle time per unit? What is the yield - how many pass on first attempt?" [Interviewer reveals 30-minute test time, 85% first-pass yield.] "So 15% need retesting, which consumes additional capacity. If we improved yield to 95%, we would recover 10% of capacity right there."

Step 4: Apply Improvement Levers

"To get 20% more output, I see several options at the testing bottleneck: First, reduce failures by identifying root causes of the 15% that fail - this is the eliminate lever. Second, could we run two tests in parallel? Third, can we add a second testing station? Finally, are there any non-essential tests we could eliminate or move to sampling?"

Step 5: Recommendation

"I recommend a two-part approach. Short-term: improve first-pass yield from 85% to 95% by implementing upstream quality checks - this gives us ~12% more effective capacity at testing with minimal investment. Medium-term: add a second testing station for the remaining 8% - the payback should be strong given current demand. Together these achieve the 20% increase. I would also investigate whether any tests can be parallelized to further reduce cycle time."