Multi-plant facilities across the globe engage in capacity planning to tighten the links in their end-to-end supply chain. What lesson can small businesses learn from these manufacturing monoliths? Capacity planning assists companies in determining the production required to meet ever-changing demands for their products. The result: outperforming competitors.
In this era, companies can now manipulate large amounts of data to model, analyze, and optimize their operations. The level of manipulation varies from large-scale network optimization all the way to SKU-level inventory and transportation analysis. Advantages don't stop here. Outlined below are several other ways capacity planning optimizes a company’s supply chain.
Advantage of Scale
Too many companies fall into the trap of focusing solely on production or inventory costs. Such a myopic view prevents them from understanding the “hidden” costs in the entire end-to-end supply chain. These factors include transportation costs between plants, storage of inventory within each plant, and taxes. With capacity planning software, top performing multi-plant facilities identify the tradeoffs of varying cost elements to make optimized decisions across entire supply chains.
Adaptability
Considering capacity planning in relevance to your supply chain becomes especially applicable for facilities that share materials or that work on projects with other plants. Understanding the production “footprint” (the plant that manufactures each product and in what quantities) helps strategic decision manufacturers optimize their supply chain. In line with the business cycle, demand for products shifts over time to new regions or in different quantities. The production footprint needs to adapt to remain profitable and in sync.
Make vs. Buy
Production and manufacturing companies put a significant amount of thought and strategy into deciding how to make and distribute their projects. A key component of supply chain optimization is whether or not at any point a company will need to outsource production. Knowing your capacity enables you to see when outsourcing can help your productivity and profitability.
Companies remain competitive when their supply chain capabilities are directly in line with their enterprise strategy. Modern capacity planning methods and supply chain software make it possible for manufacturers to remain in a strong market position.
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