When you look at areas of business that major companies often overlook, capacity planning generally ranks near the top of the list. It’s a crucially important element that, for one reason or another, tends to be ignored by many. Thankfully this is changing. New technology is making capacity planning easier and more accessible.
Why capacity planning matters
In simplistic terms, capacity planning is essentially the process of determining the production capacity an organization needs to meet the demand for its products. What makes this planning difficult is the fact that demand is constantly moving up and down. And since there are risks and costs associated with both shortages and surpluses, getting production right is important to the bottom line.
"Production capacity modeling was once only used by plant-level operations engineers to help optimize manufacturing capacity and production schedules,” CompuData Inc. explains. “Now many of the world’s leading manufacturing companies have discovered that accurately tracking their production footprint, routine procedures and daily production capacity as part of their end-to-end supply chain management helps them outpace their competition."
As a business improves its capacity planning capabilities, it becomes much easier to scale up and down, deal with sudden surges, and pivot in a new direction when the timing is right.
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Tips and techniques for improving capacity planning
This isn’t a guide on how to develop a capacity planning strategy. The assumption is that you already have one in place. What we hope to do is provide you with some tips and techniques for improving your accuracy and doing more with less.
1. Free up vertical lines of communication
Communication is one of the major points of contention in the pursuit of good capacity planning. Most businesses do a decent job with horizontal communication, but there isn’t always a lot of vertical transparency.
To ensure capacity planning is accurate, keep the lines of communication open between project management leaders, executives, department heads, and those on the ground floor.
2. Take advantage of capacity planning software
There’s no sense in handling capacity planning manually. With all of the improvements in technology, it would be foolish not to take advantage of the resources you have available.
Viewpath is an example of a solution that streamlines capacity planning by helping teams maximize resources in a dynamic environment. It includes features like predictive resource allocation, visually interactive resource charts, individual and team views, cross-project allocation, and weighted planning.
3. Be aware of nonlinear cost ratios
You have to get over the notion that all capacity upgrades will be linear. In fact, you really need to learn how to anticipate nonlinear cost ratios so that you don’t inadvertently blow through your budget.
"Some upgrades will be linear in the sense that doubling the amount of a planned increase in processors, memory, channels, or disk volumes will double the cost of the upgrade," IT professional Harris Kern admits. "But if the upgrade approaches the maximum number of cards, chips, or slots that a device can hold, a relatively modest increase in capacity may end up costing an immodest amount for additional hardware."
In the capacity planning field, this is known as the "knee of the curve." It’s the point on a graph where a previously linear relationship between cost and capacity accelerates into an exponential curve.
Take capacity planning seriously
It’s definitely not one of the more exciting aspects of running a business, but capacity planning isn’t something you can afford to take lightly. Without proper capacity planning, you’ll run your business into the ground. Take it seriously, and you’ll be rewarded with far greater efficiency and productivity – both of which positively impact the bottom line.