Manufacturing companies striving to succeed in present-day changing and uncertain world need to develop a reliable strategy for increasing efficiency, meeting production demand, and minimizing waste of time and materials. This is where manufacturing capacity planning becomes critical.
Our quick guide describes the main concepts of manufacturing capacity planning, its importance for manufacturing organizations, as well as provides best practices and suggests manufacturing capacity planning tools for performing it most effectively.
What Is Manufacturing Capacity Planning?
Manufacturing capacity planning means determining the production capacity required for manufacturing organizations to meet the demand for products. It involves assessing how many products they can produce and determining how to allocate resources (personnel, machinery, materials) to production processes to meet the required demand.
In other words, manufacturing capacity planning involves answering the following questions:
- Can we meet the demand with resources available?
- Do we need to invest in more resources, either human or material?
- Are there any bottlenecks in the production process?
In addition to bridging the demand with available capacity, manufacturing capacity planning provides organizations with other benefits. Read the next section to learn the details.
Why Is Manufacturing Capacity Planning Important?
Without an effective manufacturing capacity planning mechanism in place, manufacturers will face challenges like missed deadlines, overworked employees, improperly utilized machines, and dissatisfied customers. In contrast, properly done manufacturing capacity planning provides manufacturing organizations with the following benefits.
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- Optimized resource utilization.
Capacity planning helps manufacturers ensure that human and material resources are utilized efficiently across all manufacturing processes and projects. It prevents their over- and underutilization, which in turn helps reduce downtime and increase output.
- Timely delivery.
Capacity planning helps manufacturers forecast production needs and allocate resources accordingly. This reduces the risk of delays and resource inefficiency. In addition, it improves a manufacturing company’s reliability and contributes to customer satisfaction.
- Optimizing costs.
Lead time and overproduction can cause significant cost overruns. Capacity planning helps balance the demand with actual capacity and minimize the risk of inefficiencies.
- Greater flexibility.
There can be numerous changes and challenges manufacturing companies need to respond to. For example, shifts in customers’ behavior, seasonal changes, or other disruptions. Capacity planning, especially capacity planning software, provides manufacturers with greater flexibility and adaptability as well as grounds for data-driven decision-making.
- Informed decision-making.
This benefit is mostly provided by capacity planning software; at the same time, these tools have become indispensable for effective capacity planning in complex environments. In particular, capacity planning software makes it possible to test different scenarios and plan the most suitable responses to them.
All these benefits allow manufacturing companies to grow and stay competitive.
Capacity Planning Strategies
There are three common capacity planning strategies in manufacturing.
- Lead strategy involves increasing capacity in response to anticipated increased demand. It can be used by companies that are expecting growth.
- Lag strategy involves increasing capacity only after demand has increased. It reduces the risk of unnecessary investments, but may lead to delays.
- Match strategy means adding capacity step-by-step in response to actual or forecasted increases in demand. It is considered as the most effective strategy for small to mid-sized manufacturing companies.
The choice of capacity planning strategy depends on the size of a company, specifics of the industry it operates in, and organizational goals.
How To Perform Capacity Planning in Manufacturing?
Here’s a step-by-step process of manufacturing capacity planning.
- Assess current capacity: Determine the current production capacity of your employees and machinery; assess maximum and minimum output that can be produced.
- Forecast the demand: Use historical data, market research, and forecasting tools to predict production needs.
- Identify the gap between demand and capacity: Compare the projected demand with available capacity.
- Determine the ways to bridge this gap: Determine what measures will help you align demand with capacity (e.g., delaying orders, investing in more resources, etc.) and create a capacity plan.
Performing capacity planning effectively will be challenging without the right capacity planning tools. Let’s take a closer look at their role in this complex process.
Manufacturing Capacity Planning Tools
Capacity planning solutions help manufacturers forecast the demand, allocate resources, detect bottlenecks, and optimize decision-making. Here are their capabilities in more detail.
- Providing real-time visibility into available resources: Capacity planning tools provide manufacturers with real-time dashboards showing available time, employees, and machines.
- Demand forecasting: Manufacturing capacity planning tools allow manufacturing companies to forecast future workloads based on different parameters – historical data, sales forecasts, market trends, etc.
- Detecting and mitigating bottlenecks: Forecasting capabilities and analytics help identify resource bottlenecks in advance, which helps manufacturers develop measures to resolve them and avoid delays in the production process.
- Scenario planning: AI-powered tools offer scenario planning capabilities which help simulate changes, assess their impact, and make more effective decisions.
Epicflow is an AI-driven tool for managing multi-project environments with a shared resource pool, which is a typical situation for manufacturing companies. In addition to traditional resource and portfolio management features, it offers capabilities that will be useful for manufacturing environments as well: capacity forecasting, prioritization across multiple projects, resource allocation, scenario planning, bottleneck visualization and mitigation, and seamless integration with a variety of tools that can be used by manufacturers.
Conclusion
Manufacturing capacity planning is critical for production success, especially for scaling companies. It ensures that your organization can meet the demand for production, optimize costs, utilize available resources most effectively, and ensure customers’ satisfaction. Capacity planning tools play an essential role in the effectiveness of manufacturing capacity planning.
