Managing production lines requires a high amount of control in order to keep things running smoothly and avoid downtimes and bottlenecks. However, there are always things that can go wrong and disrupt the effectiveness of your manufacturing process. Maintaining that high level of control and being able to create better scheduling depends on improving your manufacturing capacity planning.
Capacity planning, like many other production methodologies such as lean manufacturing, requires you to take a step back and look at your production process as a whole. When you can focus on your production planning and create an action plan, you are able to take back production control.
Simply put, capacity planning is a process that manufacturers can take that determines the exact production capacity that needs to be met in order to meet manufacturing demand. In other words, capacity planning allows a manufacturer to ascertain exactly how much available capacity needs to exist in order to accurately meet the output demands and active orders.
Manufacturing capacity planning is a necessary step for any company that wants to improve efficiency, save on costs, and increase profitability. Without an accurate system for managing your capacity and production, you’ll find yourself falling behind on orders, running the wrong product lines and machines, disappointing customers, and failing to manage your ordering and inventory. Successful manufacturing capacity planning allows you to take control of every aspect of supply chain planning from your scheduling to your inventory management.
You might be wondering if manufacturing capacity planning is really a necessity for your business. After all, does knowing the amount you need to produce in the day really matter if you are running at full capacity?
The truth is that manufacturers need to have capacity planning in order to have control of their production lines. It impacts important areas of cost and allows you to have accurate knowledge of how many workers you need each shift, your ability to meet customer demands and the promises you can make to them on delivery and lead times, and what equipment you need.
It’s also important to note that there isn’t a one-size-fits-all solution to manufacturing capacity planning. Each company that uses capacity planning needs to take into consideration variables such as the number of machines they have, the size of the employee base that is needed to operate those machines, the available hours or shifts available, the mix of products to be made on the floor, how equipment is utilized, and the overall efficiency of the company as a whole.
With these considerations in mind, let’s go forward and look into the benefits of capacity planning and why businesses who struggle with capacity planning are missing out on important advantages in their planning processes.
Capacity planning helps manufacturers understand what their strategy for meeting demand is. It also helps them have a clear picture of what the costs and resources needed to meet their current demand will be and puts in place a structured roadmap to supply chain planning. A successful capacity plan will also help control maintenance planning and employee scheduling. Let’s examine a few more specific benefits of capacity planning.
Controlling costs is a big part of running your manufacturing process. While different techniques like implementing lean manufacturing principles can help you reduce waste in the production process, capacity planning can go a step further. It helps you determine exactly what is required to meet, add to, or even decrease your current capacity so you can monitor and reduce costs as needed.
It’s a goal of nearly every company across the globe to grow in scale and become bigger. However, explosive growth can be extremely damaging to a company and have major impacts on cash flow and output. Scaling gradually ensures that you can grow with ease, and having a strong manufacturing capacity planning process can ensure that you grow in cost-effective ways.
Customer service is a huge part of running a successful manufacturing operation. Keeping your customers satisfied with your products and promises helps to maintain their business, gain new customers, and improve your company’s reputation. When you have capacity planning in place, you can deliver customers their orders on time and give accurate lead times, so they never have to wonder where their products are.
A major component of capacity planning is managing labor and attributing employees to different functions on the manufacturing floor. When you have accurate capacity plans, you can help your human resources hire the right number of employees and train them for the specific functions they will be performing on the line. That helps HR improve their intentions and get the best employees for the job.
Companies that don’t have a capacity plan often struggle with gaps in production, demand, and resources. All of that leads to slowdowns, bottlenecks, and even complete shutdowns to address and fix issues. When you aren’t operating efficiently, you lose revenue and profit. Having capacity planning in place boosts profitability and increases revenue.
When manufacturing capacity planning is in place, efficiencies improve and you have a better picture of the capacity you are capable of reaching. That allows you to identify areas in which you can increase capacity and find room for continuous improvement. With the right tools, like software, dashboards, and real-time machine monitoring at your side, you can create new improvements and help the business succeed.
Now that you understand why manufacturing capacity planning is important in your organization, let’s look deeper into how it works and how you can start creating a strategy for capacity planning. Manufacturing capacity planning is automated through software that is directly linked to supply chain planning, allowing decision-makers to observe capacity at different key operational levels.
Capacity planning is closely linked to demand forecasting, which is the process of analyzing past sales patterns to predict future sales. After demand is forecasted using analytics software, capacity planning helps to manage the structure for meeting those forecasts. Together, these techniques help you organize and control your manufacturing process.
Before we dive into the steps needed to implement capacity planning, we first need to understand the cost constraints that you have in your company. In order to accurately plan for capacity, you need to accept that the constraints are going to limit what steps you can take to meet your production goals. Those cost areas that impact capacity planning include:
As mentioned above, there are different variables that you need to keep in mind while developing a manufacturing capacity plan. These variables will determine the steps you need to take to improve your production capacity planning and the factors that play into your strategy. Variables include:
Measuring capacity refers to the measurement of production rates on the manufacturing floor. They help you understand the effectiveness of your production and manufacturing systems and give you a baseline for determining whether capacity is performing efficiently or if there are areas of improvement. Measurement capacities can include:
Now that you know the measurements and calculations for capacity planning, it’s time to start putting together a strategy that can help you meet your demands.
Whichever strategy you choose will need to be accepted by different decision-makers and parties that have an influence on the production line, including your supply chain managers and your manufacturing managers. When all parties buy into the strategy, you know that they are operating with the same methodologies and knowledge bases. Common strategies include:
Once you’ve decided on your strategy and have buy-in from your decision-makers, it's time to look into the different techniques that can be used in manufacturing capacity planning. While some techniques might require less upfront planning, they can all move you forward with capacity planning to different levels of success. Techniques can include:
After you’ve determined all of the preceding information, you can go ahead and proceed with your manufacturing capacity planning. That requires you to take into consideration a few different steps that will help you finalize your plan and allow you to implement your capacity planning initiatives.
While capacity planning is essential to running a functional manufacturing operation, there are some common challenges that businesses will run up against. Each company will have different needs based on their size and geographic region, but some issues that most businesses will face include:
Manufacturing capacity planning is essential for businesses that want to manage and control their production capabilities while reducing costs and meeting demand. Machine monitoring can help you avoid unexpected downtime, which helps you more accurately plan your capacity output and create a better system for capacity planning.
Click on the link above to learn how Amper’s machine monitoring solutions can help your business succeed and give you the tools you need to create your manufacturing capacity planning with accuracy.