Steps to effective manufacturing capacity planning

One of the cardinal sins for any manufacturing business is not maximising its production capacity. It is a sure-fire way of missing out on extra revenue. But that is not the only downside of poor capacity planning.

Putting too much pressure on your production capacity can also result in overloading the system which can, in turn, lead to plant breakdowns.

All machinery must be properly maintained and serviced. Without appropriate maintenance, machines that incorporate moving parts will one day fail, and that failure can be catastrophic, both in terms of downtime and expensive repairs.

Getting your manufacturing capacity planning right will help you to avoid the problems associated with both under and overcapacity situations. With the fast-moving demands of today's economic environment, the best way to achieve manufacturing efficiency/production line efficiency programming is to install a state-of-the-art MRP system.

But to get the best out of any MRP system and getting your production capacity planning spot on, you must first take certain steps.

Strategic Business Planning

All businesses should develop a strategic business plan taking into account the organisation’s corporate objectives while focussing on customer lead times, productivity and profit. It is this corporate plan that helps define the direction that the company will take, and how it is that it intends to achieve its targets.

Create a Sales and Operations Plan

The sales function is the discipline that ultimately should be driving production. But of course, it is not only the actual sales that any business must take into account. Forecast sales are also relevant; especially where product manufacture is affected by significant raw material and component lead times.

With a sophisticated MRP system in place, staff will have the opportunity to compare actual sales to actual production, filter in the forecast demand and the current physical stock levels, and feed the data through to enable capacity planning to be adjusted accordingly.

MRP - Materials Requirement Planning 

Getting the materials planning right is essential. There are, of course, many elements to be taken into account, but the starting place is to create a bill of materials (BOMs). The BOM is the catalyst for everything. It will, through the BOM explosion process (an inbuilt function within any good MRP/ERP system) detail exactly what materials are required; take into account any unallocated materials and parts already held in stock, and provide a list of things for purchasing.

Once the provisional production requirement has been determined, the MRP system will then compare the workload in terms of production, to the capacity of the factory floor, creating the first capacity planning blueprint.

Lead times and finance 

Lead times play a key role in the capacity planning arena. If certain raw materials or components are not in the right place at the right time, production can grind to a halt.

The ordering of materials can affect cash-flow, so the finance department needs to be in the loop to avoid any surprises.

Taking into account all of these disciplines, plus the ongoing maintenance of plant and machinery, and weighing everything correctly within the mix, to ensure optimum capacity planning is a complex process.

The world-class ERP software that has been developed by WinMan is the perfect choice to help you to maximise your capacity planning due to its built-in MRP. It is eminently scalable (so it is appropriate for any size of business) and will help your company to operate a profitable, lean business strategy. Contact us to find out more.