Are you Capacity Ready?
Capacity Planning is one of the powerful methodology which lets you peep through the future and brace up for the uncertainties. Major concern of any organization is the question, Are we Capacity ready? and yes not a certain answer but a prospective answer to this is “Capacity Planning”.
Medium Term Capacity Planning(RCCP) and Long Term Capacity Planning(LTCP) help planners and organization have an idea, though they can not give you a clear picture but will surely make you aware of the situations and the capacity conditions. The problem is that most of the organizations use this methodology but they don’t utilize the methodologies to its full potential. The use of RCCP and LTCP is not just restricted to viewing the Capacity Utilization percentages, its just one of the view that this methodology depicts. But it also opens up the arena for the Cost Saving and Process improvement initiatives.
While carrying out the RCCP and LTCP, planners should have the foresight. Being myopic always presents inappropriate results or the results which might look fancy but is nothing more that the building blocks of bizarre mistakes which may cost the organization dear.
There are a few pointers which should be first defined before initiating any discussion of the capacity planning viz.
- Are the processes aligned?
- Is the bottleneck process identified in a process involving series of processes?
- Is the interlinking of the process taken into consideration?
- Which forecast are we actually looking upon?
- There are intermediaries and buffers in-between processes. Has the same been considered?
- Are we utilizing the full capacity or, is it that we are determining the utilization percentages with already constrained resources?
Whats the biggest fear for any FMCG company?
FMCG products have a very wide market coverage and so is the case with their competitors.This makes them too prone to substitution. Unmet demand thus remains the biggest fear for any FMCG company.
Pre-build empowers the organization to reduce the unmet demand. This gives them an opportunity to utilize the lines to their capacity. Pre-build decisions combined with the performance improvement initiatives can do wonders.
But, the question still remains, When to Pre-build?
Pre-build is a much important weapon to tackle the unmet demand in the armory of the operations department. Other than pre-build the options to consider are viz.
- Over-time
- Line Performance improvement
- Outsourcing
Pre-build decisions are widely influenced by three factors viz.
- Power of Brand
- Shelf Life of product
- Storage cost
If these three factors bring forth a positive feedback then the companies look forward to pre-build. Now there comes the second challenge
- How to Prebuild?
- What to Pre-build?
The Capacity Planning provides a very adequate reflection the situation on ground. And this helps in triggering the pre-build discussions.
The myopic view of the capacity planning is a concern. To have a systemic chain of inventory and organized flow through the veins we need to have a far-sight. Capacity Planning outputs have a lot to churn in from that. Apart from investment and performance related discussions we can also look into the picture and spread of the inventory and the utilization of the assets.
This would help in determining the dept of the inventory. From the reports of capacity planning we can infer about
- The Utilization of the production lines
- Any balancing or loading methodology changes required
- Drivers of the maintenance cost
- Process Improvement nodes
- Financial Implications and Capital Investment suggestions
- Contained Pre-Build decisions and probable stock-out picture
Its high time for planners to start utilizing the Capacity Planning reports for the better and far-sighted view of the inventory and capacity.
