Capacity Planning for Manufacturers

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Manufacturers must work hard to meet customer demand while managing production capacity. Fulfilling orders and maintaining high service levels requires intricate planning processes and tools, especially when resources are constrained. Hence, capacity planning is used to help ensure a business is able to meet demand while minimizing costs.

Keeping costs low while trying to achieve higher service levels is not an easy feat, especially if planning is done manually and/or in spreadsheets. Businesses can’t afford to “make a best guess” when it comes to projecting customer demand or planning how to fulfill it. Mistakes or poor assumptions are costly and can be avoided. A benefit of a truly integrated capacity planning solution like Vanguard’s is that it can carefully consider all constraints and produce an optimized plan based on real-time data streams.

A good planning solution will understand which products might be competing for resources and will use a rule-based system to make interactive decisions.  Examples might include categorizing customer accounts into low and high priority, or optimizing around profit, cost savings, stability, or other metrics like minimizing change-over time.

Manufacturers need to know what to produce on a daily basis in order to meet their corporate objectives while fulfilling demand.  But in many industries, demand for certain products can be volatile while demand for other products is more stable. Unlocking just-in-time production, minimizing carrying costs, will rely on careful calculations and the ability to plan continuously. Companies need strategies to match supply with predicted levels of their demand because carrying inventory is often costly. The advantage of an integrated planning solution is that you can wait until the last minute to make important decisions, and still produce your products on time (just in time).

Manufacturers need to address:

  • Accurately forecasting demand for products
  • Allocating their resources to meet customer demand
  • Long term planning decisions, like investing to increase capacity

Ultimately, manufacturers have several areas they need to consider as they grow and scale. Whether it’s increasing or optimizing capacity, or dealing with sudden operational changes, capacity planning can help determine best courses of action

Integrated capacity planning is an integral aspect to business that no manufacturer should be without. It helps businesses maintain a competitive edge in an ever-changing environment, while ensuring lower cost-to-serve.