Efficient capacity planning: 5 tips to avoid shortages
In this article, you will learn the most important things you should bear in mind when planning capacity and requirements in the industry.
Capacity planning or demand planning - a buzzword that is associated with stress by most managers. It not only requires good capacity planning in general, but also a previous and continuous analysis and improvement of the process. Sounds complicated? Actually not really!
To untangle the knot and help you achieve more efficient and clear demand planning, we have summarized the 5 most important tips you should pay attention to in order to avoid shortages.
Where is production capacity planning used?
Production capacity planning or demand planning is an important process in the manufacturing and production industry. It ensures that a company is able to manufacture the desired products in the required quantity and quality at the right time. The process can be broken down into the following steps:
- Capacity analysis
- Demand forecast
- Capacity planning
- Production planning
- Resource allocation
- Monitoring and adjustment
Efficient demand planning in the industry
In order to guarantee efficient requirements planning, you should set yourself the general goal of increasing the efficiency of your company. To achieve this goal, you should keep the following points in mind when planning:
- Avoid shortages
- Optimize production costs
- Ensure customer satisfaction
These points are particularly important in sectors where demand fluctuates greatly. Software solutions can support or optimize the planning of this complex process.
Find out now how you can avoid shortages in your capacity planning or demand planning and identify the causes at an early stage.
How do shortages arise in production capacity planning?
Before you think about how you can avoid shortages, you should understand the causes of shortages.
There can be various reasons for shortages in production.
- Insufficient capacity:
Means the existing production capacity is not sufficient to meet the demand, this may be due to limited machine capacity or labor shortage, among others. - Material shortage:
Raw materials or other materials needed for production are in short supply or there are delays in the supply chain. - Poor planning and control:
Arises from errors in production planning, inaccurate demand forecasts, poor analysis or data collection of production processes in recent quarters or incorrect assignment of tasks. - Quality fluctuations:
Product quality issues can negatively impact production capacity, as products may have to be reworked or thrown away. In addition to raw material waste, this also leads to delays in the production process. - Weaknesses within the software:
If old tools are used without automation or different systems are not linked, this can lead to data silos. This leads to a suboptimal data situation, on the basis of which the software solutions then create correspondingly poorer production plans.
Avoid shortages in capacity planning.
5 Tips to avoid shortages
The requirement for avoiding shortages is a careful and forward-looking approach and monitoring of the planning and control of production capacity.
Tip 1: Demand forecasts
Analyzing the data from previous quarters and using it as a basis for the current quarter is important in order to be able to estimate demand for the coming quarter as accurately as possible.
It is also possible to analyze the data with the help of market research or other relevant sources in order to estimate demand as accurately as possible if no or too little of your own data is available or has been collected.
This helps to assess unexpected peaks and depressions in demand and prepare accordingly.
This forecast can also be used to draw conclusions about other necessary measures, such as an expansion of capacity. The need to expand capacity can arise from an investment in new systems, machines, technologies or employees and requires long-term planning.
Tip 2: Intelligent HR management
Intelligent HR management ensures that enough employees are scheduled at the right place, at the right time and the required qualifications. You can avoid the problem of incorrect personnel planning by using software such as shyftplan, which automatically creates suggestions for an optimal personnel deployment plan. This saves you valuable time and effort that you would otherwise have to invest in manual planning. This is particularly useful for companies that have to plan for 600 or more employees.
Before and during planning, you should identify potential risks that could arise from inadequate production capacity planning (e.g. failure to complete on time due to lack of resources, budget overruns due to external procurement of missing resources or unavoidable rejection or delay of orders).
In order to avoid or minimize these or any other risks, you should plan through possible risk scenarios and develop corresponding plans. Measures could include, for example, expanding the supplier base or creating contingency plans.
Tip 4: Good inventory management
Good inventory management ensures that there are always enough materials available without incurring high storage costs. There are various ways to ensure good inventory management. This can include cyclical stock checks, where obsolete or no longer required materials are identified and storage space is freed up for more important materials. Or through just-in-time delivery, where stocks are reduced to a minimum by delivering them just before they are needed. However, this requires highly efficient planning.
Tip 5: Continuous monitoring
With continuous monitoring, you can track production performance in real time to identify shortages or problems at an early stage. By continuously monitoring and collecting data, you can review previous planning and identify and resolve problems for the next quarter. This may help you achieve an increase in efficiency.
Which software can help with planning and how?
Depending on how and for what size of company you want to use the software, software can make the planning process easier
- Enterprise Resource Planning (ERP)
With ERP systems such as SAP Business One or Oracle ERP, planning accuracy can be increased, costs can be better controlled and help to plan for future growth. - Production planning and control systems (PPS)
With the use of PPS systems such as PP Ease (Bock & Heitbreder) or SAP PPS, production can be organized efficiently, capacity can be used optimally and compliance with production targets can be ensured. - Manufacturing execution system (MES)
MES systems, such as SAP Digital Manufacturing or AWS Industrial Solutions, can contribute to overall productivity and profitability by making the manufacturing process information-based.
These softwares can help to reduce costs, increase profits and boost profitability in the company, as they provide access to automation and analysis options. - shyftplan
shyftplan solves a problem in human resource planning (PEP) that inevitably occurs in large companies with a large number of employees in the manufacturing industry. In companies with 600 or more employees, shyftplan optimizes the scheduling of employees and significantly reduces the planning effort.
The software is not designed directly for capacity planning, but for workforce planning and management. Nevertheless, the benefits of shyftplan do extend to some aspects of capacity planning. Among other things, you can use shyftplan to monitor staff deployment in real time, working hours, absences and vacation requests. This allows you to ensure that staff are properly scheduled to make the best use of available resources and maintain production.
Through effective communication between employees, which allows short-term changes in shift schedules to be communicated quickly, or through efficient staff scheduling, which allows work schedules to be created for employees and labor needs to be better met.
This can help to avoid bottlenecks by ensuring that enough qualified employees are available at the right time.
Conclusion:
In order to achieve effective production capacity planning, the correct control and planning of capacities is important, both in terms of material, but also employee and machines. Furthermore, it is equally important to monitor the process retrospectively in order to identify any weak points and improve them in the next quarter. The optimal use of software can significantly increase the efficiency of capacity planning and especially in large companies. Efficient planning of employees is inevitably a huge issue where time and costs can be saved with the use of shyftplan.
