What a Load of Rubbish?
Or that they can’t help. Their ugly old and should have died with the dinosaurs. There is a general fundamental lack of understanding of Capacity Planning and how its role is core to achieving the greater plan. Businesses seem not to understand that without Capacity Planning embedded back into the core they will never be able to move forward and actually start to improve their business. A very bold statement I know, but it’s true!
I’ve been fixing clients Std ECC Capacity Planning now for over 7 years in the production space and taking them back to the basics in understanding the role of Capacity Planning. There are lots of reasons why it’s not used, it’s like being at school again although I haven’t heard the dog ate my homework excuse yet …
I have heard more than this on the excuse-o-meter. So, there is one problem on top of all this and it’s almost too simple to believe that’s it’s not done. You see it all starts with Demand. Yawn!!!!!!! What’s that got to do with Capacity, you ask? Well, you need to understand that planning independently of your One System of Record is FATAL.
I bet a lot of you say “yes”. Well, I’m going to challenge you and say you don’t. There is a very simple way to see it using your One System of Record and I bet you that you don’t know how and if you do you’re not doing it.
Over the next few months, I’m going to be talking about how important it is to get your Capacity Planning back into your One System of Record. I will show you the benefits of doing so from a Business, Planning, Shop Floor and continuous improvement side. The potential to actually use your One System of record to run your business and make good decisions around the systematic evidence being generated by that crazy program MRP (You know the thing that also doesn’t work). It Just might seem crazy but it’s totally doable. I will dive into the topics of Machine and Labor Planning, Production Tools (Molds, Racks, etc.) and lots more. We will talk about how you can use the Std Reports to see the future, make good planning decisions and help with the continuous improvement that helps reduce the time of insite so that you’re not reacting.
Hold on to your hats people. Capacity Planning is the future and the key to massive process efficiency savings as well as at the same time a key element to help support business growth. I asked the question in my last article.
We need to understand why we have to actually do it and why as I say it is the core to pretty much everything that is Supply Chain based.
Capacity Planning is the process of determining the Production Capacity needed by an organization to meet changing demands for its products. In the context of Capacity Planning, “Design Capacity” is the maximum amount of work that an organization is capable of completing in a given period, “Effective Capacity” is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as Labor, Quality Problems, Delays, and Material Handling.
From a systematic perspective, we need to set things up with the design capacity. If we don’t then we have no way of seeing our inefficiencies.
It is the very core as I have said to the internal supply chain driving at every level. At the S&OP Level, it provides a rough-cut look at your high-level capabilities ensuring that the Forecast Demand doesn’t drown you and provides feedback at the strategic levels of the business. From an MPS/Production Planning perspective, it allows true vision at the Mix level taking into account true run times against work centers. The Shop Floor benefits because they are able to have a vision and start to plan things such as Labor.
Forecast, of course!
Sales Order Management
Once all 3 are in and being used and executed properly then and only then can you see your true capacity requirements. In my next article, we’re going to talk about, “Why it’s Done Incorrectly and What it’s Going to Take to Put it Right?”.
Tags: Forecast, Sales and Operations Planning, Supply chain