Capacity planning is the process of projecting future capacity needs based on current company use and industry trends. For example, the gradual increase of a production workforce in response to an increase in product demand is capacity planning. A company invests significant resources into capacity planning, including the purchase of new equipment and the leasing of new facilities. Understanding the advantages of capacity planning can help justify the costs.
Capacity planning takes into account personnel, facilities, production schedules and supplies. When the capacity level is carefully planned, the company can monitor costs during periods of growth and recession. Being able to see projected capacity needs allows the company to budget for upcoming changes, and apply financial resources where needed. Capacity planning is also used to help develop delivery schedules for supplies and shipping schedules for completed products.
Your company can use capacity planning to maintain proper production levels during expected business cycles. For example, if your company traditionally sees an increase in orders during the summer in anticipation of the Christmas season, then you can use historical data to plan production capacity and have ample staff on hand to handle the rise in demand. Your capacity planning also identifies when the cycle starts to head downwards so that you can lay off seasonal workers and avoid the added personnel expense.
As your company grows, you may find the need to open new production facilities. Using your capacity planning information from your existing locations, you can develop a more accurate projection of needs for facilities and personnel levels, and of the kind of production that can be expected from the new location. This is a valuable tool when putting together the business plan and budgets for your company's growth.
Personnel and production are not the only areas where capacity planning can be useful. Your company accumulates digital information on a daily basis. That information is critical in being able to run your business and maintain profitability. A capacity plan that stays ahead of digital information storage demands and also allows for the permanent archiving of vital information is essential in the efficient growth of your organization.
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