Are you constantly running into problems while running your day-to-day production lines? Have you had to completely stop production due to unforeseen circumstances? Stop. Think. There is something you need to do differently to eliminate these issues. But what?
Perhaps, a process that matches your production capacity with sales demand can be the solution in this case. If your business has the ability to determine the ability of your production line, service department, or function to meet a specified demand over a period of time and takes into account factors like downtime, legal, servicing, and other constraints, you can overcome a lot of your production pains.
Having said that, let us tell you about the process that can help you gain better control of your production. Capacity planning is the answer you’re looking for. Don’t worry, it isn’t another technical jargon we’re burdening you with. Effective capacity planning is imperative for your company, irrespective of size and scale of production.
Now to answer the basic question, what is capacity planning?
To put it simply, capacity planning is a process that helps your company gauge the production capacity in terms of manpower, equipment, and maintenance that is needed to meet market demand.
A proper capacity planning strategy helps you make critical decisions that affect the profitability of your company over time and helps you reduce supply chain costs and stay competitive in the market.
Capacity planning in manufacturing – know your variables
Before we get further into the details of capacity planning in manufacturing, it’s important for you to understand the variables involved in the planning process and what needs your attention to create an effective and optimized capacity plan.
The variables you need to keep in mind while creating a manufacturing capacity plan are:
- Capacity -Starting with the easy one, capacity refers to the number of units of a particular resource available for any length of time.
- Efficiency –Efficiency in the supply chain is not utilization. It is the measure of actual run time against projected run time.
- Run hours -Run hours or run time is the measure of time a specific operation will take for a resource to complete.
- Utilization – Utilization refers to the capacity usage measurement. It is a critical factor to consider for capacity management in manufacturing.
- Move hours – If an operation is scheduled to be finished at a certain time by a resource doesn’t always mean that the next resource can move immediately. It takes the material handler to move a task from one resource to another. This time in which a machine’s utilization is affected is known as move hours.
- Offset hours – If two operations are running at the same time and they have different run hours, the set-up time won’t be considered in that case. The total resource time is calculated and is known as offset hours.
Making capacity plans more efficient – it’s easier than you think!
Wondering if your capacity plan would work? Of course, it will! But first, you need to have a clear and complete understanding of every process in your supply chain.
From taking labor optimization into account to assessing whether your machinery is working at the desired capacity level, you need to understand your processes to the grassroots level. More about understanding and having a comprehensive view of your processes later, let us take you through how you can make your manufacturing capacity plan more efficient to gain control over your production capacity.
Quality control for better capacity planning
No amount of capacity planning can save you if product defects happen frequently. The whole process of pulling out inventory from shelves to evaluate quality improvement, stop production and recall shipments affects your business in ways you can’t imagine.
The best foot forward in such situations is to have strict quality control measures in place to combat quality issues and eliminate them for good. But it obviously cannot be done in a day.
By implementing enhanced monitoring of your production operations, you can prevent product defects from happening frequently. It allows you to integrate more scalable and feasible scheduling practices, which will give you more control over material and labor costs along with keeping a check on the quality of your products.
Preventing unplanned machine breakdowns or downtimes
Your manufacturing capacity is greatly affected by unscheduled breaks, surprise maintenance issues, and unexpected downtimes. By simply scheduling review maintenance and rescheduling employee work and rest hours, you can ensure full production teams are always on the floor and avoid operation lags.
In an increasingly data-driven world, you need data to detect, prevent, and reduce downtime on the factory floor. By deploying systems that can give you a plant-wide view and pinpoint exactly when a machine goes down or needs maintenance and allows you to cross-check this against other activities in the plant so that you’re aware of the lags and can plan accordingly.
Real-time supply chain management
We don’t need to stress the importance of intelligent systems to give you an end-to-end view of your supply chain processes in real-time so that you know well in advance if a disruption is about to happen and act quickly.
The COVID-19 pandemic lay bare the realities of supply chains across the world and exposed exactly how vulnerable we are to capacity planning problems. Doing the bare minimum isn’t enough anymore. Organizations need to get their hands on diverse information to achieve maximum efficiency and accuracy.
While capacity planning can never be perfect, leveraging real-time data about your supply pipeline can help you create a near-perfect capacity plan, from planning strategy and material procurement to facility allocation and warehouse management.
Real-time insights on overall demand can also help your organization identify trends or fluctuations and adjust production programs or facility allocations before these fluctuations can have a significant impact on productivity.
Getting started with a production plan
With an effective production plan, you can ensure that your resources are available at the right time, at the right place, achieving maximum efficiency. Production planning and control involve a few steps that are crucial for effective production.
Step 1 – Determining demand
Demand is at the core of your manufacturing business. One of the first steps to production planning is demand determination through demand sensing and demand forecasts using the right tools and technology. It gives you a fair idea about the number of resources you’ll need to meet the market demand.
Step 2 – Determine available production capacity to meet demand
Once you are aware of the demand, you can assess whether you’re equipped to handle the demand and how much resources you’ll require to meet the deficit.
Step 3 – Raw material stock requirement analysis
The next step involves taking stock of the raw material available for production and how much more you’ll need to procure.
Step 4 – Material Resource Planning
Determine production sequences and detailed material requirements with the help of Material Resource Planning or MRP.
Step 5 – Striking the balance between demand and supply
Once you understand demand and have a complete view of your resources and their availability, you need to balance demand and supply. Conventional planning tools aren’t effective enough to help you achieve this balance. Then what should you do?
Making capacity planning a breeze!
Artificial Intelligence (AI) is your most competent companion to handle production planning and control without a glitch. AI in the manufacturing sector is likely to be valued at USD 16.7 billion by 2026 and is forcing global enterprises to rethink and adapt their strategies and move to the AI model. According to a Deloitte survey on AI adoption in manufacturing, 93% of companies believe AI will be a game-changing technology that will drive growth and innovation in the sector.
You can use AI to integrate and optimize supply and demand planning simultaneously. It allows you to assess different scenarios, consider ‘what-if’ questions, and determine profits, ROI, and operating costs.
AI helps you move from silos to an integrated system where operations and workflows are transparent and makes teams accountable. In smart production, AI is mostly used in factory automation, order management, and automated scheduling. Over the next two years, AI technologies will be extended to quality monitoring and defect management, thanks to the advances in computer vision technology.
You just can’t make effective decisions without analytics!
You don’t have to depend on guesswork anymore when you have the power of AI at your fingertips. Prescriptive analytics in the supply chain accentuates your production planning and control decisions by providing real-time analysis of the available data.
It helps your management teams use the data derived from various systems within your organization to optimize manufacturing decisions and plan for emergencies. Additionally, the visibility into how the manufacturing functions together gives you the ability to update models for new production lines and facilities.
AI-powered predictive analytics in capacity planning gives you more valuable information to analyze and helps you better predict situations that were previously unpredictable and had a negative impact on your business. These insights help you determine what exactly is causing delays in production and adjust your capacity plan accordingly so that the issues can be resolved immediately and downtime is reduced significantly.
With AI-powered analytics determining patterns that indicate symptoms of machine failure or need for maintenance, you can schedule preventative maintenance and make it a part of your capacity planning so production doesn’t stop just because a machine isn’t performing at a given time. By analyzing these “what if” scenarios, you can plan in advance to minimize risk and prevent costly delays across processes.
Where do you go from here?
Coming back to understanding and having a comprehensive view of your processes, you need an intelligent system that can not only optimize your production and distribution capacity but also keep you aware of the risks and market fluctuations so you can take timely decisions.
ThoughPut’s ELI – An AI-Powered Capacity Planning Software works as a bottleneck elimination engine that evaluates your process data in real-time and continuously detects, examines, and works towards eliminating bottlenecks for optimized capacity planning. ELI helps you overcome operational constraints and stay ahead in the game by accurately tracking and tracing your manufacturing operations.
Find out more about what ELI can do to transform your manufacturing business. Schedule a demo with the ThroughPut team and experience the difference!