Why You Can’t Compete Without Optimized Capacity Planning

By , Published January 4, 2014, Bussiness2community.com

Capacity is your ability to get something done. In the manufacturing world, this usually relates to the maximum output that can be expected from a machine or process over a given period. This is obviously important information for any manufacturer, but how easily can you access it, and how effectively can you use it to steer management decisions?

Think about the number of components a cutting machine can run out in 24 hours, or the number of items that two employees pack in an hour at their workstation. The aligning of potentially available capacity with that required to meet production orders is referred to as capacity planning, and doing it effectively offers real benefit.

Despite the importance of managing this information effectively, many manufacturers still haven’t embedded it in their IT systems. The receipt of a production order will be routinely followed up with inquiries on the shop floor. Can we meet this order? How long will it take? Who will need to work on it? The key information is garnered from the people involved, and heavily reliant on individual expertise, experience and awareness of what’s going on around them.

Unfortunately, this approach can present problems. Even the most experienced engineers’ best estimates can be wrong. Let’s say an order comes in for 500 component parts. The operations manager asks his most experienced machinist whether the order can be met in the next two weeks. Maybe he gets the answer spot on. Or maybe he doesn’t.

He could underestimate how efficiently a machine can run and say delivery is possible when it’s not. Or perhaps he misses the necessary overview of the entire shop floor. Unaware of the possibility to slightly reschedule another activity, he might say it’s not possible when it actually is. Neither are good. You either end up with a frustrated customer who may need a discount and will be reluctant to pay, or you miss a new revenue stream altogether. As such, it’s very important that businesses have a clear, condensed overview of the total capacity available to them – both in terms of machine and employee hours.

Having this information to hand can deliver real improvements in operational efficiency. By forming a clear picture of all the possibilities, work can be planned in to ensure optimum use of all resources. Routing on the production floor can be adjusted to improve flow, and certain tasks can be expanded or outsourced if they’re a genuine bottleneck. Lead times can be decreased, and costs reduced by having more of your machines working more of the time.

With the system continually updated in real time, decision making is always based on the best possible information. Greater predictability and accuracy result, leading to happier customers and more repeat business. And in terms of your order inflow, you’ll ensure you always say yes when it’s possible, and no when it isn’t.

Production planning with software
To create the necessary breadth and detail in the capacity planning overview, a dedicated software tool integrated with your ERP system is essential. By combining all capacity information with ERP order information, you’ll be empowered to quickly and easily make the most effective plans possible – working with the most efficient combination of machines to get the job done quickly. The planning can also be easily adjusted based on the results of simulated scenarios, giving you real confidence that an order can be completed by the date you have in mind.

With advanced planning and scheduling systems, an ERP integration makes it also possible to work with a check on the available materials on stock. This enables the production team to be continually certain that the warehouse can supply the materials for the orders that reach them. They can even work with automated specific restrictions in the schedule. It could be possible, for example, to schedule a painting machine to begin with a lighter color, then move to a darker one – making cleaning between jobs quicker and easier.

If you’re not currently working with IT support for your capacity planning, there are significant wins waiting for your business. You can save time when planning in production orders, reduce lead times, lower costs, create more accurate customer promises and ensure the flexibility to adjust operations as necessary. In challenging times, these are benefits you can’t afford to ignore.