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Manufacturing a product has no meaning if it lacks sales potential. Your products must be sold at a profitable price. For this, as a discrete manufacturer, you must be capable of forecasting the future demand and determine the ideal time to start production – vital for business growth and sustainability. And, this all needs you to implement capacity planning into your manufacturing business – it involves both tangible and intangible resources.
It’s necessary to plan for your manufacturing scale of output based on the labor and equipment capacities within the production plant. It could be easily done with the help of a manufacturing ERP.
Normally, capacity of the plant is controlled by the level current demand that’s quite stable to make your capacity and sales planning effective. However, future demands or fluctuations in the current demand such as urgent mid-order changes by the customer create problems. The acquisition of resources to meet the demand levels turns into a grave challenge. Therefore, demand forecasting is the first consideration in capacity planning. After that you need to adjust the capacity levels to execute production plans and shop floor schedules in the best way possible.
Set the Most Realistic Approach
You cannot run a business on guesswork or assumptions. You always need a well-built strategy and robust planning, a thoughtfully developed business model that’s going to help you manage and control your manufacturing processes more realistically.
Capacity planning will help you determine a realistic approach to effective production and sales planning.
What is a Resource Capacity Plan?
It’s a balancing act of available labor and equipment capacities that will help you meet your forecasted production demand.
In this process, the realistic capacity of your shop floor and production lines (how much you can produce in a particular time frame) is calculated besides adjusting the levels of capacity to keep up with the future demands. These forecasted manufacturing demands could be set to achieve short and long-term business goals. An ERP system will greatly help you in this regard.
The primary objective of resource capacity planning is to;
- Increase your profits; and
- Minimize the overheads.
Factors to consider while developing your capacity plan:
One of the most vital decisions in any production system is properly defined capacity planning. Here’s a few considerations you should keep in view while developing your manufacturing capacity plan.
- All projects, currently ongoing and upcoming, that need to be completed.
- Forecasted resource demands for all projects within a set time frame.
- Working time available for all resources – labor and machine hours.
- Any work that’s not directly related to the production line but needs to be completed timely.
Remember, capacity planning and resource planning being important elements of production management seems identical but are different. The two provide different outputs.
Resource planning is actually resource management in which you need to determine your workforce potential to complete a project. Do you have enough employees who can take up a project and deliver it in the specified time? How you can allocate the workers for maximum utilization without affecting their efficiency.
On the contrary, capacity planning gives you a complete overview of your manufacturing processes. The type of capacity you are looking for and how much and when you need this capacity at any given point are all related to capacity plans. However, it does involve workforce capacity planning.
Types of Capacity Planning:
Before any sort of planning, you must know what types of capacities your manufacturing plant needs to produce and provide the products.
Capacity planning has three types and for having a plan in place you must comprehend all of them so that you can produce as per consumer demand to grow your business. The most amazing thing is that all these categories are self-explanatory.
- Workforce capacity planning – having enough workers to complete an order and it depends on your shop floor operations.
- Equipment capacity planning – having the right machinery to complete an order and it depends on what you are manufacturing.
- Product capacity planning – having sufficient raw materials to complete an order and it depends on raw materials management.
Capacity planning will become a lot easier if you have the right tool for production management. Yes, it’s worth investing in ERP software implementation across your organization.
What an accurately devised capacity plan can bring for you?
It’s important to have a manufacturing capacity plan in place
- Helps in creating a healthy workplace
- Benefits in meeting future demands
- Influences operating costs and overheads
- Impacts the initially made fixed investment
- Ensures long-term commitment of funds
- Proper allocation and utilization of workers
- Good quality of work and finished goods
- Decreased manufacturing lead times
- Minimized risk of equipment damage/burnout
Best industry-led practices for capacity planning:
The availability of your resources is the best way to develop a capacity plan, and if you fail in strategizing all these elements then you are going to encounter serious manufacturing issues. Let’s take a look at what best industry practices are out there helping you develop a result-oriented capacity plan.
Identification of production line bottlenecks:
It will help you prevent the workstation from being overloaded and hence, avoid the chances of halting the production operations.
Time tracking with better forecasts on task completion:
A task of 30 minutes may take hours and even more in reality. This needs you to figure out the time discrepancies beforehand. Capacity planning will save you from this.
Calculating the accurate time an employee spends on work:
The true availability of your employees and their accurate utilization could be best determined through capacity planning. You can figure out what time is spent on the right job and what’s wasted in useless activities.
Prioritizing your projects for accurate allocation of resources:
Now, this is the most significant element while developing your capacity plan. You should prioritize your manufacturing orders on following parameters.
- Great business opportunity
- Time sensitive projects
Finding the right tool is mandatory for capacity planning and coping with the challenges associated with it. MIE Trak Pro – an ERP software for manufacturing will help you develop and make your capacity plans a success, and thereby improves business sustainability.