Capacity Planning

Capacity planning occurs at three levels in manufacturing. Resource Requirements Planning (RRP) is the long-range view, typically covering 1–5 years. It evaluates whether the organization's production resources — buildings, major equipment, and workforce — can support the business plan's revenue projections. Decisions at this level include plant expansions, new production line installations, and strategic outsourcing. Rough-Cut Capacity Planning (RCCP) operates at the medium range, typically aligned with the Master Production Schedule (MPS) covering 3–18 months. It checks whether the MPS is feasible by comparing the required hours per work center against available capacity, flagging overloads that need resolution through overtime, subcontracting, or demand management. Capacity Requirements Planning (CRP) is the detailed, short-range view that verifies whether the specific production schedule for the next 1–4 weeks is achievable at every workstation, accounting for actual order routing, setup times, and current WIP loads. Each level provides progressively more detailed and accurate capacity information.

Available capacity is determined by multiplying three factors: time available (hours per shift × shifts per day × working days), number of resources (machines or workers), and efficiency (a percentage reflecting realistic output vs. theoretical maximum). For example, a work center with 2 machines, each running 1 shift of 8 hours per day, 5 days per week, with 85% efficiency provides: 2 × 8 × 5 × 0.85 = 68 effective hours per week. This must then be compared against the required capacity (the sum of setup time and run time for all orders scheduled at that work center). When required capacity exceeds available capacity, the planner has several options: schedule overtime, add a shift, outsource some work, negotiate later delivery dates with customers, or reschedule orders to flatten the load. LinePlanner's visual calendar makes capacity overloads immediately visible when too many orders are stacked on a production line for a given day or shift, allowing planners to rebalance before commitments are missed.

Effective capacity planning requires a combination of accurate data, appropriate tools, and sound management practices. First, maintain accurate and current cycle time data for every product-workstation combination — outdated standards lead to either over-promising (using optimistic times) or under-utilizing capacity (using pessimistic times). Second, account for planned downtime: maintenance windows, holidays, training days, and planned changeovers all reduce available capacity. Third, build in a capacity buffer — typically 10–15% — to absorb demand variability and unplanned disruptions without missing commitments. Fourth, conduct capacity reviews on a regular cadence: weekly for the short-range schedule, monthly for the medium-range plan, and quarterly for the long-range strategy. Fifth, integrate capacity planning with demand planning so that sales and operations are aligned — the Sales and Operations Planning (S&OP) process is the formal mechanism for this alignment. Finally, use visual tools that make capacity status clear to all stakeholders rather than burying capacity data in spreadsheets that only planners can interpret.