When it comes to production capacity planning, it can sure feel like a guessing game. Sometimes it feels like your team can’t update data fast enough to get an effective capacity planning strategy in place.
In this article, we’ll explain what production capacity planning is, how it works for manufacturers, and how modern tools like enterprise resource planning (ERP) software make it easy.
What Is Production Capacity Planning?
Production capacity planning means creating and implementing strategies to ensure the goods or services your business produces meet current and future demand. The process involves assessing current capacity, forecasting demand, identifying constraints, locating capacity gaps, and continuously monitoring and adjusting your strategies.
3 Types of Capacity Planning for Manufacturers
Here are three types of capacity planning you want to stay on top of if you’re planning on aligning your output with your goals. Let’s take a look.
1. Product Capacity Planning
Product capacity planning is a capacity planning strategy revolving around your actual products. This strategy involved making sure your businesses is equipped with the all the production resources you need to fulfill your goals.
For manufacturers, this means having the right amount of materials needed to reach your production goals. No more, no less. Your supply team can use historical data and production information to determine how many materials you’ll need to hit your target.
2. Workforce Capacity Planning
When doing capacity planning, you also want to ensure you have the right amount of labor required to produce goods. You need to make sure that you have the best number of works and hours available to get the job done right.
You may find that as you grow, you need to scale up your workforce. Capacity planning will give you a good idea of how many more employees and hours you need to grow your business in a lean way.
3. Tool Capacity Planning
Lastly, you want to ensure you have all the tools your production team needs to meet demand. For manufacturers, you’ll need to consider machinery, parts, assembly line capabilities, vehicles, and safety equipment. Make sure your tools are operable and maintained to reduce the chance of unexpected downtime.
5 Production Capacity Planning Best Practices
Production capacity planning isn’t a one-and-done type of deal. Your team will always be looking at it from various angles, finding more opportunities to save costs and streamline growth. Here are some best practices to keep in mind.
1. Monitoring and Analysis Doesn’t Stop
To keep finding opportunities for improvement, you need to be continuously monitoring and analyzing production performance. Then, you’ll want to consider demand trends and capacity utilization to find gaps or bottlenecks.
Have your leadership team create weekly, monthly, quarterly and annual reports based on historical data and market forecasts and adjust accordingly. If your team is already using an ERP system, they can automate these reports and present them in a timely fashion.
2. Keep Flexibility in Mind
Another reason why production capacity planning isn’t a one-off solution is that your business is (hopefully) growing and scaling up. As a result of your business growing, you will have increased demand for your products.
Essentially, you need to design production processes that are flexible and scalable to accommodate changes in demand and future growth. This means investing in smart devices, modular equipment, cross-trained workers, and flexible processes.
3. Mitigate Risks in Real Time
All manufacturers face risks that impact production capacity, whether they be supply chain disruptions, equipment failures, or labor shortages. Part of production capacity planning is developing contingency plans and alternative sourcing strategies to minimize any impact on production these disruptions can have. Your ERP system will likely have a module to assist in sourcing when supply chain disruptions happen.
4. Communication is Key
In just about every aspect of life, communication is the key to smooth operations. Production is the heart and soul of your business; without it, you’d have nothing to sell! So it’s crucial that collaboration and communication are key values in your business.
ERP systems are an easy way to foster communication among team members and departments. They centralize data so it’s easily accessible by need-to-know employees, and ensures that everyone is working off the same data – all on the same page.
For example, if there is a disruption in the supply chain, you don’t want your sales team promising deliverables to clients in a timeframe that your production team already knows is impossible to meet. Both departments can access and update this kind of information in real-time for improved service.
5. Invest in Technology
When it comes to Industry 4.0, companies that aren’t actively invested in smart tech are doomed to fall behind.
Leverage advanced technologies like predictive analytics, digital twims, and simulation modeling to improve production capacity planning accuracy and efficiency. This means implementing smart devices, using centralized databases like ERP systems, and integrating third-party software.
How ERP Software Streamlines Production Capacity Planning
ERP software can increase the efficiency and accuracy of your production capacity planning strategies in many ways.
ERP software provides a centralized platform for integrating and managing various aspect of production, from demand forecasting to resource allocation; from scheduling to inventory management. In all aspects, ERP systems offer real-time data visibility and analytics capabilities. These tools enable your business to accurately assess current production capacity. Identify potential constraints or bottlenecks, and optimize resource utilization.
A huge perk of ERP software is its ability to automate routine tasks, saving you money on labor and reducing the risk of human error. Tasks that can be automated to improve production capacity planning include material procurement, order processing, and production scheduling.
With ERP software, you can expect reduce lead times and better responsiveness to changing demand and market conditions.
And of course, ERP software makes communication among teams and departments a breeze. Your production-dependent teams, like sales, procurement, and logistics, will be better coordinated, leading to a more effective production capacity plan overall.
Let’s Talk Production Capacity Planning
If you’re unsure how to take your production capacity planning strategy to the next level, we’d love to hear from you. Our ERP experts have over 35 years of experience helping businesses optimize their workflows, lower costs, and increase efficiency. Contact Godlan today for insights into your business’s potential.
