Capacity Analysis in Operations Management

5/25/18, 11:56 AM

For manufacturing and production industries, there is a finite amount of product that can be produced or stored in any given time interval, for that period. It is the like the Goldilocks principle of having a capacity plan that is "just right." Modeling your plant or supply chain's capacity provides keen insight - upfront. 

Capacity Modeling and Planning for Capacity AnalysisDeveloping an operations plan for the amount of resources required is essential. Capacity modeling helps facilities operate to efficiently realize their peak potential. Once operations concludes it’s long-term production planning and demand forecasting, then it's time to develop a plan for total capacity. This is so a production facility knows in advance to commit to taking delivery orders. Capacity planning, in general, promotes a systematic approach of determining resource requirement for an output projection within an established time frame - in advance; capacity modeling is a pre-planning exercise that shapes the capacity plan.  

So many factors contribute and detract from "capacity": quantity and quality of labor, machine availability, waste levels, government regulations, required timed maintenance, etc. With overall efficiency being the goal, creating an optimal and balanced flow between input and output, with minimal waste, allows a facility to approach their total capacity based on all constraints.

Capacity Modeling, SCP and APS

In relation with capacity planning, finding a model that best suits a facility depends upon what facets of production and flow that an operation wants to dial-in on. Each facility has its own attributes that it values and what they would like to push toward, therefore locating a capacity model and capacity modeling system that best suits their operation can be a positive component that a facility might choose to add to their production arsenal.

Capacity Analysis for ManufacturingERP and MRP native modeling systems might fall short in terms of best possible modeling options and some third party add-ons might provide deeper modeling insight. APS (advanced planning and scheduling systems) and SCP (supply chain planning), which are add-ons to ERP and MRP through strategic integration, can tap into feedback data that develops a more realistic capacity model.

Main Models In-Use Pertaining to Capacity:

Key frameworks to model for capacity are rooted in real world thresholds (constraints) of practicality and profitability; most commonly:

  • Price - Equipment/software and other maintenance cost
  • Performance - Locate current status of system, as well as forecast future performance, throughput, reaction time, utilization of data, etc.
  • Workload - Each section of the system is alternated through load and demand

These models set the framework for capacity planning that a facility may need, considering that without a model there really is not a plan. Capacity models reduce the workload of manually entering in data and ultimately create an everlasting plan for capacity.

Advanced Planning and Scheduling and Capacity Modeling

Optimization of today's manufacturing and production facility’s capacity planning capabilities are changing rapidly and drastically. Outdated capacity planning models have relied on guesswork and oversimplifications, which can lead to a decrease in overall efficiency and under-modeled capacity. However, advanced planning and scheduling systems have changed the way capacity planning is handled today. Advanced planning and scheduling (APS) systems utilize models such as the capacity performance model and use real-time data and analysis to conclude what capacity is needed. APS systems are reshaping and augmenting ERPs and MRPs by permitting faster, more efficient, and more accurate performance results that have improved various areas of manufacturing and production - most notably in operations planning for higher capacity.

Related Capacity Planning Video 

 APS Resources

Topics: Reschedule activity, Advanced Planning and Scheduling, Lean Manufacturing, capacity planning, control design, constraint, scheduling, JIT, MRP, theory of constraints, enterprise resource planning, ingredients, multi-plant, Demand Forecasting, Material Requirement Planning, Capacity Modeling, workload

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