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Definition of 'Bottleneck'
A point of congestion in a system that occurs when workloads arrive at a given point more quickly than that point can handle them. The inefficiencies brought about by the bottleneck often create a queue and a longer overall cycle time.
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Investopedia explains 'Bottleneck'
The term bottleneck refers to the shape of a bottle and the fact that the bottle's neck is the narrowest point, and thus the most likely place for congestion to occur, slowing down the flow of liquid from the bottle. The term is used to describe points of congestion in everything from computer networks to a factory assembly line.
For example, a company whose product is in high demand may see its shipping department receive purchase orders more quickly than the products can be shipped out, thus causing a bottleneck.
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Getting big quickly looks good, but companies can get into trouble when they do it too fast. Find out how to spot this trouble.
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We look at a retailer's inventory turnaround times, its receivables as well as its collection period.
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