Capacity Planning Essentials

Capacity Planning is the practice of identifying a specific resource capacity so that it is capable of meeting the anticipated demand without any trouble. A robust dynamic environment exists in the case of organizations that have mobile workforces. In such cases, operating the workforces becomes a difficult task. There is a lot of struggle when it comes to resourcing the field teams adequately and cost-effectively. Hence, there is a substantial increase in service delivery costs.

However, Capacity Planning helps identify the amount of work required within a specific period using the demand forecast. This will be followed by an optimization of the demand so that over or undersupply of staff is avoided. Most of the solutions tend to provide service based on two elements ‚Äì identifying a business’ capacity and ability to execute.

Critical Paths and Bottlenecks

Two concepts are crucial in terms of capacity planning – critical paths and bottlenecks.

A bottleneck is all about a process that has less capacity compared with the rest of the options. This has a cascading effect, as capacity in the overall process gets reduced. One should identify if it is a specific person or department. Once the numbers are crunched up, it becomes easy to find out the hold-ups. The reduction of bottlenecks can have a significant impact on the process, as it improves productivity by freeing up staff.

It is possible to free these bottlenecks only by understanding the various processes that go through an organization. This understanding is crucial since processes overlap each other, and there are also instances where they share resources. The critical path happens to be the most extended sequence of activities that need to be completed for the project to finish on time. The project duration can be reduced by understanding and reducing dependencies that are visible on the critical path. The insights gained from the critical path can also be used to make changes.

Capacity Planning Steps and Application

A significant benefit of capacity planning can be seen in a manufacturing facility, which benefits terms of logistical and financial improvements. This improvement can be observed irrespective of a business’s size, as it is mostly about efficiently using resources. Hence, it is applicable to elements like workforce maintenance, storage, computer networks, and even to the manufacturing of products. There are three significant steps when it comes to successfully executing this strategy.

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Identifying Requirements at Service Level

The business has to be broken down into various categories in this step. Even in this first step, there are three stages – setting up workloads, identifying work units, and assigning service levels. The organization of work by businesses is largely performed by the person performing the work, type of job, or even processes involved. This is followed by the creation of satisfactory service for every load. Now, the workload will measure the number of resources required to finish the job, and the work unit calculates the work quantity that needs to be completed.

Studying Existing Capacity

A comprehensive study has to be done on existing production schedules by businesses so that it is possible to evaluate capacity. Some of the steps involved in measuring properties like system and workload are:

  • Items referred in the service level agreement need to have the measurements compared with the different objectives
  • Analyze various resources in a system and their usage
  • Resource utilization of every workload should be analyzed so that workloads that take up a more substantial chunk of the resource can be identified
  • Identify the places where a workload spends most of the time. This will be able to provide insight into resources that take up a larger section of every workload.

Making Future Plans

After an analysis of the current capacity, it is time to make a future plan. This plan should be formulated in such a way that processing requirements do not overload a system. For this reason, one should be aware of the work that is going into the system over the next few quarters. This will help configure a system that provides good levels of service during this period. There should also be some buffer so that the new plan can also handle future peaks. Modeling or load testing can also be done to provide further confidence in the system’s ability.

The project should be analyzed concerning resources and scope. This helps plan for the project in a better way. It is also possible to set priorities at this stage. Essential projects can be given precedence over projects that can wait. This is very crucial to the success of a small business. Depending on the importance level and priority, resources can be allocated to a specific project. This helps fill in organizational goals.

Different Planning Strategies

Two major strategies in the planning process can be implemented in a production plant. They are:

Push

This strategy is all about delivering a systematic service that differs a lot between one client to the other. The most important element is consistency, as modifications to deliverables or timing can end up having a major impact on the final product if there is no standardization. If the company has to on delivering the same kind of product or service, this strategy can be very effective.

Pull

This strategy is about pulling a work towards the end of the process so that there is no new addition of jobs at the end. The primary advantage of this strategy is the reduced likelihood of resources becoming stretched. There is also less incidence of bottlenecks.

A similar firm can implement both kinds of strategies. One such example would be an accounting firm, where the push strategy is followed for long-term jobs, and pull strategy is employed for short-term work.

Differences between Resource Planning and Capacity Planning

It is quite common to see capacity planning often mistaken for resource planning, with both terms being interchanged quite often. However, they are fundamentally different, and this can be understood by a closer look at how they work.

Capacity Planning

  • This process is used to plan, design, and determine if a business has sufficient resources to meet a specific skill set.
  • This is profoundly concerned with supply and demand.
  • This is one of the planning tools that make it possible for a business to hire resources or projects. It is still capable of canceling, proving, or even deferring projects.
  • The presence of resources within the team is analyzed with high precision.

Resource Planning

  • Resource planning is all about coordinating and allocating resources to a specific project if the project demands a particular set of skills.
  • Project managers are supplied with a plan that helps make a decision when it comes to running and executing projects. Hence, it is similar to a requirements planning tool.
  • Resource utilization is the core attribute of the resource planning section.

Conclusion

Several tools are available for capacity planning. Unlike before, these resource management tools can be sourced online. All these elements help plan for the future and make a business much more efficient. This also results in clients who will be a lot happier.

What’s your opinion on planning? Let us know in the comments!

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Thomas Glare

Thomas Glare is a business consultant for this FutureEntech. He has been in this industry for over 9 years. He works with small and medium-sized businesses that want to optimize their processes and planning. You can follow him on Twitter @thomas_glare.