Capacity planning is the process of accurately matching production levels with marketplace demand.
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Without capacity planning, manufacturing firms would be unable to maintain a steady and efficient supply of products for their customers. Too much production would result in excessive inventory, while too little would send customers to competitors.
The term "capacity planning" actually refers to a series of planning strategies, each of which is designed to address a different issue and stage of the planning process. Resources Requirements Planning (RRP) occurs early in the process and gives senior managers a long-run planning perspective about the labor and equipment (i.e. resources) that will be needed to achieve necessary capacity. Rough-Cut Capacity Planning (RCCP) happens mid-process and begins to identify required capacity by machine and/or work station.
Detail Capacity Planning (DCP) takes place at the end of the planning process. As the name suggests, it is much more detailed than either RRP or RCCP. Instead of focusing on resources or machine-level capacity, it addresses the specific manner in which shop floor activities need to be arranged to reach capacity targets.
Although it's possible to conduct DCP on paper, there are a number of software applications that make the job much easier. Either way, effective Detail Capacity Planning should cover several key issues:
- Order mapping. DCP maps manufacturing orders against actual capacities. Despite all of the prior planning that may have occurred, it's still possible to run into capacity issues at this stage of the game. But if you have conducted a thorough planning process, the capacity problems you encounter at this point should be small, manageable, and capable of being remedied with scheduling changes or other workflow adjustments.
- Order planning. Detail Capacity Planning fine tunes labor and equipment inputs to accurately match real-time customer demand. But it also manages work orders and work center assignments to maintain a steady flow of production. Many DCP applications allow users to test workflows in computer-generated simulations before implementing them on the shop floor.
- Manufacturing-Planning connection. Effective DCP is a critical linchpin between the shop floor and the executive conference room. If it's fed back to the senior capacity planning managers, the information that arises during Detail Capacity Planning can be used to inform and shape the planning process on a go-forward basis.