How to perform manufacturing capacity planning: A handy guide Part 1

Manufacturing capacity planning
Digital Transformation

How to perform manufacturing capacity planning: A handy guide Part 1

Do you constantly encounter bottlenecks and hindrances while running your day-to-day production lines? Did you ever face a situation where you had to stop production due to unforeseen emergencies and problems?

If you answered yes to any of the two questions that we asked, then you need to implement a process that matches your production capacity with sales demand. 

If you attain the capability to forecast the ability of your production line, service department and function to meet a specific level of demand over a particular duration, and take into account factors like downtime, legal challenges, maintenance requirements and other constraints, you can overcome a lot of your production problems.

Having said that, let us guide you through a process that will empower you to gain better control of your production. Capacity planning is the process that we are referring to and effective capacity planning is crucial for your company irrespective of the size and scale of your production.

First things first, let us first unravel what the term capacity planning means!

What is capacity planning?

Capacity planning is a process that enables your company to gauge the production capacity in terms of manpower, equipment and maintenance needed to meet market demand.

Put simply, it allows you to calculate the realistic capacity of your production lines to keep up with forecasted demand. The main goal of performing capacity planning is to increase profits and reduce costs.

Benefits of capacity planning

Capacity planning can help manufacturing companies plan well for demand and arrange the resources and costs necessary to meet that demand.  

It provides a structure and roadmap so that other plans such as supply chain planning, maintenance planning, production scheduling and even sales can know what is currently possible and what can be done over time to meet service level goals now and in the future.  

That being said, the benefits of capacity planning include:

  • Monitoring and reduction of costs – By knowing current capacity and understanding what is required to add or reduce capacity, companies can both monitor and reduce costs. Since production variables such as labor and equipment speed can be measured, managers can use variances between the aggregated and disaggregated plans to control costs and make changes to stay on track over time.
  • Plan for growth – Most companies want to grow over time.  But it is best if that growth is controllable and can be done incrementally in a way that doesn’t affect cash flow or outstrip capex plans.  Knowing your factory capacity helps plan that growth in measured and cost-effective ways.
  • Human potential – Human potential is a vital aspect of production capacity planning.  With accurate capacity plans, human resource managers can plan hiring, training and other staff related tasks in a way that optimizes the cost of onboarding staff. 
  • Greater profitability – When capacity planning is absent, problems may arise in production as demand shifts. Managers may not know what resources are needed and how to acquire them.  By utilizing capacity planning, these gaps can be greatly reduced.  This results in less downtime, increased workplace satisfaction levels and excellent equipment utilization. 
  • Continuous improvement – Accurate capacity planning demands measurement of key factors of production as mentioned earlier.  Because these variables are measured, areas for improvement can be identified effectively and appropriate measures deployed to drive continuous improvement of production processes. These changes can help enhance efficiency and capacity through optimal use of existing resources.

A blueprint to perform capacity analysis: Steps 1 and 2 to attain manufacturing perfection

If you’re ready to enhance your manufacturing capacity, here are the steps that you can take to get going!

          Read More: Reduce Manufacturing Waste Using Data

Benchmark Data

If you don’t know where you’re at, you’re not going to see where you’re headed. It’s common to overestimate current equipment utilization as many companies may not even realize that utilization is as low as it is.

Benchmarking includes determining existing capacity. Machine speed, quality losses, downtime by categories – such as breakdowns, changeovers, and performance losses – must all be measured to determine the current capacity. 

Several best practices can be used to create a solid and practical framework for benchmarking:

  • Internal meetings: An internal kickoff meeting helps set expectations right and ensures that everyone is on the same page. By assembling the right team together, everyone will know what the utilization goal should be.
  • Leveraging the power of data: There are times when the current data reported says little about the actual status of the machine. Making sure the data is true will help in analyzing what needs to be done.
  • Extracting actionable insights from data: This is where original assumptions are compared with actual current utilization. It represents a new launch point on what improvements can be made.
  • Planning: By creating an improvement plan, managers can pull together the pieces of original expectations, the actual data-driven state of capacity, and what improvements can be made to reach utilization goals.

Analyze Downtime

Once a manufacturing operation has benchmarked its data and realized its true utilization levels, a downtime analysis must be conducted to reduce downtime. This involves managers, technicians, manufacturing engineers, operators, and others who can help identify all the reasons for downtime and plan how to reduce or possibly eliminate it.

Armed with the insights mined from the benchmarking process, team members can move on to measuring the downtime driving that utilization. By answering how much downtime is occurring and what category the downtime falls under, steps for improvement become more clear. 

This is best accomplished by harnessing the power of automated machine data collection software to ensure that accurate data is collected and used.

In addition, you must also identify the reasons for downtime. Categories to consider may include:

  • Planned vs. unplanned downtime: Each takes a machine out of service, but they both have quite different approaches to minimizing occurrences and restoring the machine to high performance levels.
  • Human error or operator action: In a large and complex manufacturing environment, operators may have different levels of training or may perform tasks or actions in an order that reduces efficiency. These can often be spotted and rectified through downtime analysis.
  • Quality fallout: Quality is a broad category that must be included in downtime analysis. It may lead to insights on training, machine state, and upkeep, inbound vendor quality, and even ambient conditions within the facility.

Once the categories are identified, team members can determine the reasons for downtime within the category. For example, there may be many types of planned downtime, including scheduled maintenance, seasonal production, and others.

In a nutshell

There’s a whole lot more to manufacturing capacity analysis which we’ll cover in Part 2 of this ultimate guide. Until then, stay tuned!