Capacity planning software is a supply chain solution that helps manufacturers and distributors compare production loads against available capacity. Also known as design capacity, this management software provides resource capacity data in real-time to help eliminate production bottlenecks.
Essentially, finite capacity is determined by calculating efficiency by the number of workers and shifts. Capacity planning software determines if any resources are being underutilized. By doing so, companies can eliminate discrepancies between customer demand and production capacity. While capacity planning tools have similarities to manufacturing resource planning (MRP), it covers more of the supply chain from raw materials to the finished product distribution.
Note: Capacity planning is sometimes used to describe IT capacity management, a way of increasing software and hardware storage. Check out our CMMS category to find these solutions for your IT department.
There are many benefits to using a capacity planning software for your business:
Multi-echelon supply chains are not easy to manage without a comprehensive management software. All it takes is one step of the chain to fall behind to set your entire business back. It could be as simple as a delivery vehicle breaking down or an accident on the shop floor. If a resource is unavailable or a manufacturer is falling behind, capacity planning software can help.
First, you have to identify the type of bottleneck. Is it short-term or long-term? A short-term bottleneck may be the result of being short on labor due to worker illness. A long-term delay could be the result of seasonal resources being out of stock. Legal issues from changing regulations can also cause delays. Planning software makes it easy to accommodate for both scenarios by process mapping the workflow to find these potential bottlenecks so you can plan ahead.
Once you’ve identified possible bottlenecks, you can plan around them in order to shorten production lead times. This will let you maintain or increase your production schedule. Manufacturing resource planning modules, along with advanced planning and scheduling, make it easy to coordinate your distribution schedule from raw materials to finished product. You should have a plan for resource shortages, employee absences, and other common supply chain disruptors.
Using a capacity planner may reveal extra steps in your current production workflow. Find these weak points in the supply chain and start working to remove them. Then enjoy even shorter lead times and faster product turnarounds!
Think you can replenish your stock based solely on previous product performance? Think again. All sorts of tiny changes to the market can affect the current demand. Capacity planning once a year is not enough. Demand forecasting can provide real-time data so you can continually update your capacity and accurately replenish your inventory.
When you use a capacity planning software, you can find out exactly how much you’re capable of producing without going overcapacity. Use a forecasting application to accurately predict your on-premise safety stock needs so you’re prepared for possible bottlenecks in the future.
The faster your supply chain, the faster you can satisfy customer demand. From the moment the manufacturer accepts raw materials, you should be planning how you can get the finished product to suppliers and retailers. However, you don’t want to overproduce and flood your warehouse with overstock.
Plan every step with capacity planning software. Scheduling applications help you control inventory arrivals and distribution. Inventory optimization applications are your solution for making sure your warehouse efficiently takes in and redistribute products.
Just like production bottlenecks, capacity forecasting is divided into short-term and long-term. The terminology can vary based on the scale of your operations. Short-term planning can go by day, week, or month. Long-term capacity planning can cover multiple years. Depending on your business, you might also have medium-term capacity, which is between the other two at quarters or a fiscal year. If you are running a small startup,
Capacity planning software lets you account for both long-term and short-term demand forecasting. Use your short-term planning to better plan out for the rest of the year. And use long-term planning to get ready for the future.
Experiencing a short-term bottleneck? See how it will change your long-term planning. Then adjust your product schedule to make up for potential losses and see if you need to start using your safety stock.
Common issues which occur without capacity planning software include:
Even with the best planning solutions, you can still encounter production bottlenecks. If you don’t use any sort of capacity planning you’re more likely to encounter issues with under- and overstocking. A basic ERP system may assist with some resource planning but a capacity-specific program is designed for handling this exact situation.
When you use a capacity planning software to get real-time updates on production, you can keep your entire supply chain informed. For multi-echelon enterprises, you’ll need to ensure everyone is on the same page to avoid shortages or overproduction.