A capacity planning software goes a long way in ensuring an organization’s resource efficiency and planning. In the absence of a good capacity planning software, market needs are not catered to and this can create a dent in sales and revenue. Something that is not acceptable for the sales teams. Strong capacity planning strategies can guide resource requirements in the most accurate manner including the need for raw materials, equipment, skills and expansion in facilities that are needed for growth to meet the future demand. While excess capacity means the manufacturer’s money is being spent inefficiently, and this could have been invested elsewhere for a profit instead. On the other hand, low spare capacity implies the inability of the manufacturer to produce what the customer wants at a particular period of time.
By deploying a sound capacity planning software , manufacturers can answer the following questions
- Can the capacity be readjusted based on changing market scenarios and as demand-supply equations move?
- Is the existing strategy good enough or is a new strategy required to plan for contingencies ?
- Can financial requirements including working capital needs be flexed based on market requirements?
- What is the total added throughput potential for using excess capacity for new sales?
Importance of a Strong Capacity Planning Software
In the absence of a good capacity planning software, key cost centers get directly impacted. Along with operating costs and fixed costs, demand, supply and capacity are out of sync and this creates an imbalance in resource planning along the supply value chain. With the organization not being able to meet service level agreements most of the time, poor capacity can create labor shortages or an excess of manpower and both result in an increased cost per unit.
Top 5 salient benefits of a good capacity planning software are:
- Increased organizational resource flexibility and growth- As capacity planning helps better demand forecasting, capacity can be accurately predicted for seasonal trends and production requirements can be allocated accordingly. Based on this analysis, several factors like increased labor based on demand, additional or buffer capacity for anticipated products rollouts and product lifecycle alignment can be streamlined using these data points.
- Enhanced revenue margins- Capacity and demand alignment can boost customer service levels and quality of service as well. Manufacturers can easily minimize the gaps across the manufacturing process along with lower overtime costs, better skill and resource utilization and allocation of essential labor. This helps reduce the cost of per unit production and results in greater ROI and bottom line revenue.
- Greater asset performance management – Asset performance helps capacity planners, operations managers and chief supply chain officers get a bird’s eye view across the capacity levels. This helps give a holistic picture about the assets available, their performance across each level and margins for improvement where needed. A periodic utilization guide along with expected product load is also helpful here. Manufacturers are able to accurately estimate the capacity of the asset load and easily plan for scheduled or unscheduled maintenance.
- Better inventory management– With updated and real-time information across several inventory levels, manufacturers can use these insights to stay ahead of the market irrespective of fluctuations impacting inventory and production. This helps measure, track and trace inventory with recommendations on when and where reallocation is possible and balance resource availability and demand with deep insights on mid term and near term range. It also helps factor in inventory availability across the company and the needed buffer level to offset uncertainty in demand fluctuations.
- Effective product allocation – A sound capacity planning software helps simultaneously pick the best machines for each product while keeping the load on each machine to the optimal levels that can offset any output issues caused by the impact of variation. This ensures effective product allocation and control throughput losses by maximizing the real time demand, keeping the resource utilization under set capacity limit. This can drastically minimize operations expenses that tap into the purchase of extra capacity.
Sustainable Capacity Utilization Plans with ThroughPut
ThroughPut’s AI-powered Capacity Planning Software can eliminate ambiguities and guesswork from production planning processes by optimizing through efficiency and planned capacity. Some of the aspects through which it can help:
- It creates possible “what if” scenarios that help identify short-term and long-term operational bottlenecks and shortcomings and work out possible alternative solutions.
- It provides reliable algorithms and manual alternatives which help organizations easily focus on customer orders and align fulfillment mechanisms accordingly.
- It ensures inventory & supply chain optimization across all levels by accurately projecting finished goods and supply chain forecasting for each component-level.
- It uses relevant ERP data to continuously optimize production plans using inputs like available material, capacity constraints, and day-to-day shop floor performance.
- It provides a sound production schedule by including a demand/supply level strategy across the manufacturing facility.
Experience extraordinary capacity planning efficiencies for your business with ThroughPut.