Mar 28, 2023 | 4 min read
An effective capacity planning software is a tool that eliminates the ambiguity about the overall volume a business can produce. Companies use the software to manage and determine the capacity of three primary resources, machines, tools, and people. Before setting up a plan to meet the demand, the planners need to know how many hours in a week, month, or year these resources can be used. The calculation is used to devise an effective strategy that enhances customer experiences and improves your bottom line.
However, devising a capacity planning strategy is a task of many hands. You need to understand the needs and requirements of the resources to meet the forecasted demand, and simultaneously you need to devise a strategy that makes efficient use of the current resources. Read on to unravel the elementary details of capacity planning.
The fundamentals of Capacity Planning
What is Capacity Planning?
In the ideal world, you can have unlimited production capacity; however, there is no such word in the real world. You need seamless planning to align your resources and manage them accurately. Capacity planning does that for you without even breaking into a sweat. In simpler words, capacity planning is identifying the resources you need to take your product from raw form to finished goods and then deliver it to your final customers.
Why is Capacity Planning needed?
The necessity of capacity planning is now more than ever. With the booming digital age, customers rely heavily on your digital channels to buy your products instead of visiting the brick-and-mortar shop. Additionally, the customers’ loyalty and patience are gone. If you do not have it and your competitors have it, you know what they will do.
For instance, let’s say you advertise on social media. Supposedly, your product went viral overnight, and its demand went sealing high. Do you have the ability to fulfill and meet the need, or will you let the golden opportunity slip away? Capacity planning can help you solve this riddle easily.
How does capacity planning software aids your process?
From ensuring you have an appropriate workforce to fulfill the delivery needs to having enough human power to complete the production process. Capacity planning tools will assist you in determining the correct capabilities.
Similarly, capacity planning software allows you to identify bottlenecks that adversely impact your entire process, resulting in a slowdown or, even worse, halting and rectifying your operations. With the assistance of software, you can allocate resources effectively, enhancing efficiency and reducing waste.
Benefits of Capacity Planning SoftwareWhether you are a big manufacturing enterprise or a small service offering firm, you cannot overlook the advantages of rough-cut capacity planning and capacity planning software. From streamlining your entire process to improving profitability, here are some of the vital benefits of the software:
Decrease in Stock-out numbers: No business wants customers to leave empty-handed because there are no stocks. However, due to poor capacity planning, many companies experience this phenomenon every now and then. Additionally, once the customers leave, you cannot predict whether they will return, which signifies a loss of customers. Capacity Planning Software allows you to optimize your production planning. The software aids in improving your business retention level and reduces the risk of stock-outs.
- Enhanced Customer Satisfactions: As stated in the previous point, you can quickly lose customers due to lousy capacity planning. However, if done right, it improves the customer experience with your brand. The software aligns perfectly with the primary idea of the supply chain, i.e., delivering the right product, at the right time, in the right place. It also aids businesses in not going beyond forecasted demand: overproducing, and then spending their revenues on supervising them.
- Improved Efficiencies: Do you know how your resources are being used? Are they getting used to most of their potential? Or are they overburdened? What is the efficiency of your resources, and how likely are they to fulfill the demand at the exact time? All these questions and many more hidden are the reason one should go for Capacity Planning Software. Increasing efficiency and taking full use of every potential is a vital tenant of the software.
- Reduction in Costs: Whether you are overproducing and losing your revenues or producing less and letting customers slip away, you are the only one at a loss. Losing customers means more money for advertising, and more production means storing and managing it in different warehouses. In any case, you are bearing a cost that could have been easily avoided through proper capacity planning. Likewise, the software enables you to identify inefficiencies in the entire process, correct them, and reduce expenses.