Capacity planning is fundamental to every manufacturing organization. It is defined as "the process of determining the production capacity required b an organization to meet changing demands for its products." In other words, this process looks at product demand to determine how much resource capacity needs to be available for production.
Finding a balance that meets requirements but creates little to no waste can be tricky. Insufficient planning can lead to missed delivery dates, increased work-in-process costs, and dissatisfied customers. On the other hand, excess manufacturing means too much investment in unused assets, lost opportunities, and wasted personnel costs.
This is where capacity planning techniques come into play to allow manufacturing operations to find the right balance for their company.
Capacity Planning Techniques
There are four major techniques used in capacity planning - 1) capacity planning using overall factors, 2) capacity bills, 3) resource profiles, and 4) capacity requirements planning (CRP). The latter is used in conjunction with material requirements planning (MRP) systems. The techniques used for capacity planning can be different based on the type of production mode. Let's look at each one of these techniques.
1) Capacity Planning Using Overall Factors
The first three capacity planning techniques presented here are considered "rough-cut" approaches to identify potential capacity bottlenecks within the manufacturing operation.
Although its title seems complicated, CPOF (capacity planning using overall factors) is a simple approach to capacity planning that applies historical ratios. These ratios are based on the master production schedule along with established production standards. The data obtained from work centers and volumes of finished in specific time periods are used to predict capacity needed for future work.
2) Capacity Bills
This capacity planning technique required more detailed product information such as its bill or material (BOM), routing information, and capacity requirements at each work center. This technique uses the bill of materials used and parts produces along with the work center setup and actual run times to compute capacity. Here, capacity is calculated by multiplying the number of units required (demand) by the time required to produce each item/unit.
While this technique accounts for more details than capacity planning using overall factors by considering shifts in the product mix, it does not take into account lead times for production or the specific timing of each operation at each work center/resource.
3) Resource Profiles
The resource profile includes the hours required to complete each operation while integrating lead time information to indicate when jobs should begin if they are to be completed on time. In addition, this technique takes into account that different resources and different products will have different production rates.
This technique is said to be a more accurate representation of capacity requirement as it considers the specific timing of the workload s well as the lead times for each component. Resource profiles acknowledge the lead times needed by available resources so that workloads are allocated to the appropriate shifts.
4) Capacity Requirements Planning
Capacity Requirements Planning (CRP) is the process of determining whether the company has enough capacity to meet the production goals. CRP (and other capacity planning techniques) starts by determining the overall workload from the demand and then analyzing the current available capacity to see if the demand can be met.
The analysis component includes identifying which resources have the most and least available capacity, as well as identifying which products take up more resource capacity than others.
CRP combines information such as required materials, machine production time, varying run rates, labor requirements, sequence-dependent changeover time, and more to create the capacity requirements plan. Each work center will have a capacity plan prepared that can be used in planning and production.
Enhancing Capacity Planning
Capacity planning is an important aspect of production planning as it tells you if your production plan is realistic and feasible. If the planned production is greater than the available capacity, your production plan will not be completed and you will likely have late orders.
While the right capacity planning and optimization rules are important, there are techniques that can help maximize the available capacity you already possess.
An OEE (overall equipment effectiveness) measure can add value to this information by noting the optimum cycle time needed to produce one part and comparing it to the amount of time that was actually used. Thus, unrealistic expectations can be excluded from calculating capacity. In addition, OEE can help identify areas and resources that are underperforming, which inadvertently reduces the available capacity of the resource.
While these concepts seem relatively simple to understand, calculating resource capacity requirements for hundreds or thousands of jobs can be extremely time-consuming. That is why many planners choose to use technology to gather data from various sources to quickly calculate how much capacity is required to complete all jobs in time.
Another PlanetTogether benefit is the ability to integrate preventative maintenance schedules with manufacturing schedules. Commitments cannot be met without maximizing overall equipment effectiveness (OEE) and the freedom to block out time for preventative maintenance before the schedule is filled with orders increases our uptime and capacity.
All these techniques use past information to inform future planning—whether it is numbers of machines available, human resources available, parts inventory on hand, or the time it has taken to produce a particular product on a particular piece of equipment. Advanced planning techniques, however, can add another level of knowledge to this base by allowing “what-if” simulations. "What-if" scenario simulations allow your planners to change any value within the factory model to determine the best way to plan and schedule operations to maximize resource utilization without affecting the current production schedule.
PlanetTogether’s Advanced Planning and Scheduling (APS) software is used by many manufacturers that want to optimize their production facility’s available resources to increase their production output and revenue.
Advanced Planning and Scheduling (APS) Software
Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent. These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans. APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.
With PlanetTogether APS you can:
- Create optimized schedules that balance production efficiency and delivery performance
- Maximize throughput on bottleneck resources to increase revenue
- Synchronize supply with demand to reduce inventories
- Provide company-wide visibility to resource capacity
- Enable scenario data-driven decision making
The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system. APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!
Related Capacity Planning Video
APS Resources
Topics: capacity planning
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