Home - Blog - Manufacturing Capacity Planning: Defined & Explained


Manufacturing Capacity Planning: Defined & Explained

10.23.2017 | By Justin Turner | 3 min. read

Manufacturers rely on buyer demand trend data to plan their production. When market demand is low, manufacturing slows; and when it’s high, manufacturing soars. Seems simple, right? Not so fast. There’s a lot of monitoring and analysis that goes into effective manufacturing capacity planning. Let’s take a look at what’s involved.

What Is Manufacturing Capacity Planning?

Successful capacity planning requires warehouse managers to evaluate the capacity of their processes. The goal is to figure out how much your system can produce at a given time. To do this efficiently, you have to gather data from every entity involved in your supply chain, along with inventory and fleet transportation operations data.

With these numbers in hand, you can compare your operations to present market demand trends and see if your company can keep up. If you can’t, you need to identify how you can improve, increase efficiency, and streamline processes.

Also, when market demand changes, you need to figure out how to adapt your manufacturing capacity to that change. Failure to do so can lead to costly issues. For example, if product demand is high, but your capacity is low, operations will struggle. In contrast, if product demand is low, but capacity is high, you end up with excess inventory and resource waste. Your goal should be to get it just right, as often as possible, to maximize your resources.

What happens if you don’t plan based on capacity? You can end up with way too much inventory, orders can go unfulfilled, and you can throw production schedules out of whack. You can also reduce your ability to get the right number of products to your end-users. Essentially, neglecting to consider capacity and its effect on your operation can throw your whole manufacturing business out of alignment.

How to Make Manufacturing Capacity Planning More Efficient

First, you need to have a transparent and comprehensive understanding of every process in your supply chain. For example, you need to evaluate whether or not your machinery works at desired capacity levels, and need to determine if there are ways to free up resources when product demand increases. You also have to take labor optimization into account. Your goal should be to make sure workers can maintain production run levels without being hampered by production schedules or downtimes.

Well-Executed Quality Control Improves Capacity Planning

Capacity planning can be ruined instantly when product defects occur. You may have to pull inventory from shelves to assess quality, recall shipments, and stop production runs until you fully address the issue.

The best way to combat quality issues is to eliminate them all together, but how do you do that? In all honesty, you don’t. But you can dramatically reduce how often they occur by implementing enhanced monitoring of your production operations. This will not only help you decrease quality issues, it will also allow you to incorporate more scalable and predictable scheduling practices – which will give you more control over material and labor costs.

Preventing Additional Operational Disruptions Helps with Efficiency

Unexpected downtimes, unscheduled breaks, and surprise maintenance issues can all affect manufacturing capacity. Review maintenance schedules to ensure that planned repairs and evaluations fall within time slots where there will be lower production runs to prevent operation lags. You can also reschedule breaks for workers so that you have a full production team on the floor at all times while providing adequate rest periods for employees.

Effective Supply Chain Management

Any problem — from a forklift accident to a mischeduld LTL pickup — can hamper your manufacturing capacity. That’s why it’s important to use intelligent systems that make it easy to keep your eyes on what’s happening from end-to-end. Invest in the right tools and technologies to gain better control of your supply chain and minimize disruptions.

Understanding manufacturing capacity planning can have a major impact on whether or not your business is able to meet company objectives. For the best results, seek out smart systems that can help you track capacity requirements, identify areas of improvement, and optimize operations.

Meet all your company objectives by working with Flock Freight today.