Capacity Planning

1957 Words Mar 12th, 2013 8 Pages
Capacity Planning: A Tactical Decision with Strategic Impact The business environment has never been more challenging than it is right now. The speed of change in the marketplace is creating a stress on corporations to respond quickly and effectively. The foundation that is required to react to dynamic changes in supply and demand is based on understanding your supply chain’s capacities. Understanding and then building the infrastructure that provides the needed flexibility and speed requires an in-depth understanding of how capacity impacts your business. The impact of capacity management is felt throughout the organization, within every element of the supply chain. Supplier capacity can bring production to a standstill. …show more content…
From identifying bottlenecks, to backup suppliers, to available alternate routings, to contingency planning, the true cost and impact of decisions can be evaluated. Because all elements of the system being studied can be represented at once, sub-optimization can be avoided. Alternatives can be objectively evaluated to determine their true impact on a variety of performance measures, including throughput capacity, inventory levels, and cycle times, before expensive and disruptive changes are made. Competitive Advantage: Knowledge is Power
Capacity’s pervasive influence and the pace of change make the need for accurate knowledge and flexibility a necessity. The ability to quickly react, while making educated and informed decisions, will directly impact the health and success of your organization. It will enable you to rise above your competition, to compete based on your supply chain and the service and flexibility you can provide. Case Studies Beverage Company
Certain segments of the beverage industry face extreme supply and demand seasonality—at the same time. These changes can be so dramatic that fulfilling all demand becomes an impossibility. Though this situation is not a desirable one, the question then becomes “which demand is the most profitable?” With capacity management issues at the suppliers, production
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