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How to do effective capacity requirements planning?

Learn all about the steps of capacity planning and the factors that could affect it

Why capacity planning is required

Capacity Planning is part of the operational stage and works in conjunction with a manufacturing requirement planning (MRP) system. It’s an essential step to make sure that resources are made available, and goods are routed through to the finished line.

A detailed capacity requirement plan provides an operational level overview for production. It also helps assist the operations manager to identify all the elements that will be required to deliver the finished product.

For the operations manager to accept the capacity plan they will firstly need to consider:

  • Materials
  • Machine production time
  • Machine change over time and tooling, maintenance, and downtime
  • People availability and skill, so that shift work can be assigned, and resources can be used efficiently.

If a capacity requirement plan is not followed in a production process, there are risks. A company may commit to make the goods when, it does not have the resource available to deliver the finished product to the required specification, on time or in full.

 

What are the steps in capacity requirements planning?

Capacity management requires the analysis of two types of capacity:

  • Short and medium-term capacity:
    This is a review of a 2–18-month demand forecast
  • Aggregate capacity:
    This is a complete scan of the capacity of the whole organisation to meet fluctuations in demand

There are three stages in the capacity management process:

The operational team will feedback their ability to meet the planning requirements listed above to the planning team. They’ll then look to ensure materials or components required for the production process are made available in time and in full, via the procurement team. The planning team will then confirm the capacity plan and the materials requirement plan and generate a works order which will then be passed to the production team.

  • Measuring and forecasting aggregate demand
  • Identifying the different capacity plans required to meet forecast demand
  • Identification of the most suitable capacity plan to meet the aggregate demand given the organisations capacity constraints
 

What are the factors affecting capacity planning?

Capacity planning doesn’t always go to plan. Look at some of the factors below that may affect your capacity planning:

  • Workforce availability:
    There may be a shortage of skill, especially if there are multiple organisations competing for the same skilled labour. This can affect output capacity or financial investment if you need to compete for labour. There are also human factors to consider too, which can include sickness and holidays, which you’ll need to account for in your planning.
  • Machine capacity:
    Working with aged machinery that requires repair and maintenance vs investment in new machinery. It’s important to consider whether investing in modern machinery will enable your organisation to see better results.
  • Financial investment:
    Having the machinery or workforce to invest in, in the first instance.
  • Product complexity:
    A very complex item can slow down the production process and require a skilled workforce. Simple products can be passed through the plant in higher volumes or in shorter timescales, but complex items can take longer.
  • Supply Issues:
    Raw materials or components that form part of your manufacturing process can be delayed or may encounter supply chain issues due to STEEPLED factors, this can then impact your own organisations capacity planning schedules.
 

What is operations management?

Operations management is a key area within any organisation. It plays a key role in keeping supply chains operational in today’s challenging environment. Discover the key to success when thinking about operations management. Find out more about Operations Management

Operations management key themes

Operations management Demand forecasting Pareto analysis Bullwhip effect
Demand management Demand management strategy Economic order quantity Material requirements planning

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