What are the strategies to manage demand to see it to the level of capacity?
Keeping capacity constant — Aroha knows that keeping capacity constant isn’t really an option, as customer demand fluctuates a lot over the day. Making people wait a while at lunchtime is okay, but not for so long that they go somewhere else. Aroha can’t make all meals in the quiet times, as that affects quality and creates waste. She needs to be able to serve people more quickly when demand is high, but she can’t do it alone. Show
Changing capacity to fit demand — Aroha considers hiring another staff member. She’d love to offer a fulltime job to someone local, but for much of the day the extra person would have little to do. That’s too much capacity, meaning a wasted cost for Aroha. Maybe she could hire someone for two or three hours in the middle of the day? She knows a few students who might like the part-time work. Influencing demand to fit capacity — Even with an extra part-time staff member, Aroha knows they’ll only just manage all the customers at lunch time. She wonders if she can influence her customers’ behaviour to help make the lunch rush easier. Aroha’s bagels are the most popular things on the menu — in fact, they’ve become her speciality, and the thing that many people come to her cafe for. Bagels are also very quick to fill and serve, with no cooking or reheating required. And they’re easy to take away, so bagel customers don’t necessarily need a table. Selling more bagels will mean Aroha can serve more people more quickly. Aroha decides to promote bagels over the big brunch by:
By influencing customer demand, Aroha calculates that she can serve more people and make the most of sales opportunities. This will allow her to afford her part-time staff member. Capacity management is a strategy utilized by businesses to make the best use of production efficiency with respect to the demand for a service or a product. The eventual goal of capacity management is to:
Capacity management helps companies conquer challenges that arise when they need to meet customer demands—be it short- or mid-term. It also helps manage the supply chain operations, and develop organizational plans for the future. Organizations need to review how much of their resources are available, to make sure it reaches the production output during a given period. Manufacturing, retail, service, and information technology heavily use capacity management. In nutshell, here are the key objectives of capacity management:
Why is capacity management important?Capacity management is an important part of an organization, but why? Here are a few points to discuss the same;
Capacity management processHere’s what a typical capacity management process may look like. However, these processes differ from organization to organization.
Capacity management vs capacity planningOftentimes, there is confusion between capacity management and capacity planning. While they are similar in certain aspects, they are quite different too. Firstly, capacity management is broad in terms, whereas capacity planning can be referred to as the subset of capacity management. However, the end goal of both is to ensure that there is the right amount of capacity at the right time to meet the demands. As per Mike Wise, author of the Microsoft DataDriven blog, “one big difference that sets apart capacity planning from capacity management is that capacity planning has a “throwaway” quality. That is to say, that capacity planning is something that is done upfront. It is the needs intake and assessment, but capacity management is the entire lifecycle of monitoring, collecting data, analyzing data, optimizing infrastructure, and landing back on monitoring again.” Digital organizations that plan to put forth a winning capacity planning and management strategy should think of these terms are separate entities. Wrapping up, capacity management is a continuous cycle that aims to enhance performance. On the contrary, capacity planning is an activity conducted initially. Best practices to improve capacity managementBefore you dive into capacity management, it is important to prioritize it and give it your undived attention. Effective capacity management includes the following components:
Here are a few best practices to make the best of capacity management
Capacity management is always a continuous process. Once a plan is devised, it is pertinent to update it regularly too. It is crucial to conduct capacity management planning on an annual basis to stay abreast of all important internal and external factors that influence capacity. Key terms related to capacity managementCapacity management is a broad concept and consists of diverse terms that you may or may not be aware of. We will define a component, capacity, capacity report, Capacity management information system (CMIS), performance, capacity managers, and capacity plan. Component. As per the CIPS Institute “A component is a fundamental structure of a particular service, an essential part of a service.” For instance, a database is the ‘component’ of a server. Components are substantial, so they need to be purchased, built, maintained, and monitored. Capacity. The definition of capacity as per the CIPS Institute is that it “represents the available resources that can be leveraged to meet a certain level of demand.” To illustrate with an example, in a restaurant, the capacity is:
Capacity plan. Basically, defining scenarios for expected demands. For example, resources required in a certain time frame. Capacity plans help businesses deliver the right customer service. Capacity report. A document that includes data related to the service provided, resources deployed, and the overall team performance. Capacity reports help avengers take the right decisions. Capacity management information system (CMIS). A virtual repository to gather and store data related to capacity. Performance. Capacity management, it is a metric that reflects how fast a system can respond to requests. Challenges faced during capacity managementCapacity management is an essential task within a workspace. But not an easy one. As per Forbes, below are common challenges faced during the process of capacity management. Let’s explore them in detail. Data challenge. On a daily basis, capacity planners need to tackle a truckload of information that needs to be added to project spreadsheets, mostly manually. For a seamless capacity management process, the data added needs to be accurate and mentioned in a proper format. For example, the same units of measure. Once the data is added, they need to incorporate details about demand and supply. After which they make use of formulas to ascertain information about the available capacity. Complexity challenge. A complexity challenge is quite similar to a data challenge. Since capacity planning involves the managers working around with countless calculations and complex formulas, mistakes are bound to occur. For example, adding inaccurate data to the spreadsheet. Unfortunately, such occurrences can deter the entire process. Furthermore, things can worsen because capacity management generally involves various levels or layers. Accomplishing all of them requires time, resources, and data. In nutshell, too many employees involved in the planning process increase the chance of mistakes. Therefore, there have to be proper processes in place to avoid this. Communication challenges: Communication is the cornerstone of any successful company. Lack of communication or worse inadequate communication can lead to a sea of problems. In order to steer clear of such scenarios, it is crucial that all employees that are part of the capacity management process exchange information on a regular basis. Clear and transparent communication ensures that your capacity management process will run smoothly. The business communication tools will make the process quicker and simpler. Now that we’ve discussed the recurring challenges during a capacity management process, it’s time to learn the most efficient strategies to overcome the issues. Strategies for capacity managementManagers across the globe have come up with a few capacity management strategies to attain better results, in order to grow the business production capacity. Take look at these extensively used capacity management strategies:
Capacity management examplesCapacity management is used by software companies, finance operation teams, creative agencies, and product teams, alike. In this we take the example of a TV manufacturer. There are two things in place for a TV manufacturer:
Since there will be a surge in demand, the managers of the company need to understand the approximate number of TV sets that need to be sold to meet the growing demand. So, automatically, the next step is to examine if the capacity present at the moment is adequate to meet the additional demands. An analysis like this may reflect that they would need more resources, and manpower to handle the growing demand, but it is also forecasted that the demand might decrease as soon as the world cup comes to an end. So, here the company may want to rather lease the machines ], or work with different contractors for that period of time, instead of buying new machines or hiring new people. As soon as the lease and manpower are in place, production can commence. However, the company will have to start it at least 2-3 months before the world cup starts. This will ensure that the TV sets have reached the retail channels, and are available exactly when there is a rise in demand. Few more examples,
Get a 7-day FREE trial Related postsProject Management A Comprehensive Guide to Marketing Project PlanningDid you know that 77% of the teams that perform well on projects employ project planning software? Marketing campaigns are the backbone of sales. An effective marketing campaign creates more avenues for a business to gain from... teamdeck Project Management Project Schedule Management – Role, Challenges, ToolsEvery successful project, regardless of size or scope, starts with proper project schedule management. A project schedule is a roadmap of how the project will be executed from start to end. It details the activity’s start and... teamdeck Project Management How Will Your Business Benefit From Using An Employee Tracking App?Where does the time go? Do your team members use their working hours effectively? Using an employee tracking app, you can track all the activities of your employees, get detailed reports and measure the overall performance of... What are the 5 capacity management strategies?5 CAPACITY MANAGEMENT STRATEGIES. 5.1 Recognizing Capacity Problems. ... . 5.2 Incorporating Capacity Issues Into Management. ... . 5.3 Incentive Blocking Capacity Mitigating Measures. ... . 5.4 Incentive Adjusting Capacity Correcting Measures. ... . 5.5 Strategic Capacity Management.. What is strategies for the capacity?One of the strategic choices that a firm must make as part of its manufacturing strategy. There are three commonly recognized capacity strategies: lead, lag, and tracking. A lead capacity strategy adds capacity in anticipation of increasing demand.
What are the strategies of capacity planning?There are three capacity planning methodologies to assist you in meeting the demand, covering your resource needs, and boosting the productivity of your team members.. Lag Strategy. The lag method entails having sufficient resources to fulfill demand rather than planned demand estimations. ... . Lead Strategy. ... . Match Strategy.. Which one is a strategy in managing capacity?Capacity management strategies have focused on incentive blocking and incentive adjusting measures (FAO, 1998). Incentive blocking measures can be argued to be measures that are designed to hasten the market adjustment of excess capacity.
|