Manufacturing capacity planning process

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The current challenges facing manufacturers not only affect rising costs due to inflation and supply chain disruptions, but there is also an ongoing skills crisis. To better prepare for the future and its threats, companies can use the manufacturing capacity planning to better understand the resources they will need to meet anticipated demand. No model is perfect, but an adequate production capacity planning It is a process that helps managers set expectations and ensure that the organisation is prepared to support its future objectives.

What is production capacity planning?

The manufacturing capacity planning is part of the overall production planning that seeks to quantify how much production capacity has a company and how much it needs to complete its order position.

This includes requirements for labour and personnel capacity, product mix, supply chain, and other variables. Capacity is the maximum output that can be achieved with the available resources.

Effective capacity planning can highlight bottlenecks, reduce risk, and enable decision-making. It also helps decision-makers identify when to scale up and when to scale back. It can be done manually, but digital solutions offer much more accurate data and avoid the slowness of manual data collection.

What is the purpose of capacity planning?

The main objective of the process of manufacturing capacity planning is to balance all production operation costs with the necessary resources. It means balancing the manufacturing supply of production assets with the manufacturing demand for resources.

To achieve this goal, several objectives must be met, including:

- Define the scope of the capacity project
- Develop the capacity management plan
- Implement tools to monitor and measure performance
- Resolve capacity bottlenecks as they arise
- Analyse variations to make proactive adjustments and improvements.
- Capacity planning versus resource planning

Although closely related, capacity planning and resource planning are not the same. Capacity planning is the higher level of the two, focusing on production capacity, including equipment, labour, and other manufacturing components.

Capacity planning refers to machine speed, downtime, maintenance, training, and employee skills. It involves understanding how much of each component is needed to produce with maximum efficiency.

Resource planning is more operational. It includes supply chain and inventory management. It also includes logistics and shipping to ensure that the correct components are available for backlogged production in the correct quantity and within the required timeframe.

Resource management software is often used to track demand and supply trends, automatically order materials, and express availability based on material lead times. Production tracking solutions can automatically feed real-time production data into ERP and MES systems to ensure that managers have quality data to make effective decisions.

Types of capacity planning

Good capacity management involves team members and project managers using strategic planning to ensure that all types of capacity are met and that capacity and resource plans are aligned.

Although there are different capacity planning strategies, the three types of capacity planning are:

Tool capacity

Tool capacity means planning to have the right tools for the scheduled product mix. This can refer to assembly line production in discrete manufacturing, such as car production lines. It also includes the number, type, and quality of tools used in CNC machining operations.

Personnel manufacturing capacity planning

Just as you need to have the right type and number of tools, you need to have the right number of team members and the right mix of skills. Workforce capacity planning also takes into account available working hours. This can guide businesses in hiring and training decisions and help them develop recruitment strategies over time.

Production capacity planning

Closely linked to supply chain planning and demand planning, production capacity planning means having enough material, assemblies, or components needed to get the job done. Production capacity planning is also closely linked to supply chain issues such as inventory control and the ability to process and move WIP in the right quantities.

The process of planning manufacturing capacity in an industrial plant

With proper project management, team members can create capacity planning strategies for their organisation. The steps required to develop an effective capacity plan are outlined below:

Determine projects and tasks
Most manufacturers are accustomed to conducting assessment projects to identify areas for improvement. In this case, establishing new projects and tasks will help to outline and organise the work of team members. Each component is a project, and tasks must be organised in a schedule.

Team members should question the time needed to complete plans by functional area, how long (in days or weeks) it will take to acquire the resources to complete it, and, of course, whether the plan adds value for the customer and meets their needs.

Determine metrics and KPIs
Metrics and KPIs are fundamental considerations for developing an effective capacity plan. A practical approach is to conduct a capacity analysis to determine these figures. By benchmarking the current state, a company will understand where it stands and improve its strategic capacity planning.

KPIs and metrics may include:
- Machine speeds
- Categories of downtime
- Downtime
- Quality losses
- Available working hours
- Machine efficiency
Although it is possible to do this manually, the best way to achieve this is through data generated by machines in real-world production. A machine data platform can autonomously collect and standardise machine data so that these key metrics are easily visible and insights can be gained immediately.

Build realistic plans with time estimates
Different strategies for manufacturing capacity planning will produce different results, but the project and task list must have realistic timelines and deadlines. It should include the type of project and the cost. It should also break down the time per task.

Update capacity as the plan progresses
Keeping management and teams up to date throughout the project is crucial to success. By tracking in real time, the capacity plan can be scaled up or down, or additional tasks can be assigned to members to keep everything on track.

It is also essential to consider the capacity of the team and its workload. The project team must keep up to date and not be assigned too many projects or tasks. It should also be a cross-functional team to ensure that all departments and considerations are heard. Tasks should match the skill set, so that teams are not overwhelmed with upcoming projects.

This comprehensive process will likely uncover bottlenecks and other forms of waste, which should enable you to increase overall production capacity with the resources at its disposal.