How to apply manufacturing capacity planning in your business

Resource capacity plan is the balancing act of your available capacity to meeting your forecasted demand. Discover what it is and how you can implement it.

Manufactuers using tools in production process.
Last updated: 02.12.2022

Figuring out the ideal time to start production can be a headache when managing your shop floor.

But you can cure those aches by adopting capacity planning into your business, a model that’s going to help you determine the most realistic approach to manufacturing.

In this article, we look into what is resource capacity planning, how it works, and how you can get started with it.

Getting more control over your production planning. Even with the perfect resource capacity plan in place, anything can happen to disrupt those plans. That’s why it’s important to find a tool with production planning with real-time functionalities. Try it for free with the 14-day trial.

What is capacity planning?

Capacity planning manufacturing is a method of calculating the realistic capacity (how much you can produce) of your production lines to keep up with forecasted demand.

Your capacity planning manufacturing can be set to achieve short or long-term goals.

Regardless of the period, the main objective of capacity planning is to increase your profits and minimize your costs.

You can read more about setting goals in the rough cut capacity planning article. But, for now, let’s continue with the resource capacity plan.

What is capacity resource planning?

Resource capacity planning is the technique of comparing future resource utilization for your later jobs, against the available capacity of your production lines.

Developing your resource capacity plan is based on several factors, such as:

  • All the projects that need to be completed
  • The forecasted resource requirements for a project within a time frame
  • The amount of work that needs to be completed that’s unrelated to manufacturing in a time frame
  • The standard available working time for resources

What’s the difference between capacity and resource planning?

There might not seem like much of a difference between a resource capacity plan and capacity planning in general.

It’s not a matter that one needs the other to function, but both of these planning techniques provide different results.

Resource management

You’re basically determining if you have enough workers to complete a project while also taking into account the allocation and utilization of those workers.

Capacity planning

This is where you get an overview of your entire business, from how much work you can do, to how much you can take on at any given point.

The 3 types of capacity planning

There are three main types of capacity planning that you need to be aware of before you get started. Having a plan in place will ensure that you have the right amount of everything you need to produce your products and grow your business.

Workforce capacity planning

Workforce capacity planning means you will ensure that you have enough team members working, for the required number of hours in order to produce your required products. Workforce planning is a lot easier when you have an overview of your shop floor operations, so it is worth investing in a tool that can provide this.

Equipment capacity planning

Equipment capacity planning is the process of ensuring that you have the right equipment available to produce and complete an order. Depending on what you are producing this can be anything from assembly line components to drilling machinery.

Product capacity planning

Product capacity planning ensures that you always have enough raw materials and products needed to complete an order. Raw material management is key to product capacity planning, and multi level bill of materials (BOM) are especially important if your products require a lot of product variants and subassemblies.

Why is it important to have a resource capacity plan?

Manufacturing capacity planning is important because it means you have the right people working on a project, and the monetary resources to deliver quality work on time.

Your resource capacity plan isn’t going to be just a matter of comparing work hours against requirements, but help you to create a healthy workplace with scalability as the focus.

Without a resource capacity plan, you run the risk of:

Capacity planning formula

Now that you have a better idea of what capacity planning is – how do you calculate resource-based capacity?

How you figure out your resource capacity plan depends on your location and industry, as your employees might follow different work calendars.

This is because business location and management will alter:

  • Which days are considered workdays
  • Which days are holidays
  • How many hours a day your employees work

You can determine your resource-based capacity by looking into your full-time equivalent (FTE), and you can use this formula for making your FTE calculations:

Resource Capacity in FTE (time period) = Resource Capacity in Hours (time period) ÷ Working Time of the Standard Calendar in Hours (time period)

What are the best practices for manufacturing capacity planning?

As you have already gathered, the best way to look at your resource capacity plan is to remember that these resources are people.

If you’re unable to plan for the human element of manufacturing, you’re going to encounter issues.

So, what are the best practices for developing your resource capacity plan?

1. Tracking time and level of effort

You might be under the impression that completing a task takes 30 minutes, but in reality, it might take up to one and a half hours.

If this is the case, you’re going to need to figure out where the discrepancies are occurring.

Ask team members how long it takes them to usually complete a task, or have them fill in timesheets.

This will help you make better forecasts on manufacturing completion times in the future.

2. Identify bottlenecks

Identifying bottlenecks in production and monitoring the amount of work passing through these points can allow you to not overload a workstation or cause a production-stopping problem.

You can keep on top of your bottleneck management by using MES software to:

  • Monitor production progress
  • Redistribute resources to address bottlenecks
  • Check-in with resources to see task status

3. Schedule buffers for L&D

According to one survey, 70% of workers believe they haven’t mastered the skills needed for their current jobs.

Learning and development (L&D) shouldn’t be considered an optional perk for your workers or exclusive training for managers.

L&D is an important part of ensuring the delivery of quality products and improving your manufacturing lead time.

This is why, when you’re putting together your resource capacity plan, it’s important to leave some time free to schedule L&D sessions for your workers.

4. Calculate your true availability

You’re going to have moments where employees are involved with tasks that will only be focused on their workload.

Some examples of this could be:

  • Checking emails
  • Searching for information
  • Even sitting in unproductive meetings

You’re going to need to calculate the amount of time that an employee spends on these tasks, to figure out their true availability when doing your resource capacity planning.

5. Prioritize project to allocate resources

Finally, a good practice for developing your resource capacity plan is to prioritize projects and manufacturing orders.

The criteria for a priority project can be:

  • Time-sensitive orders
  • An important opportunity for your business

Finding a tool that can help you prioritize manufacturing orders will allow you to easily communicate with your employees about which tasks need to be completed sooner rather than later.

Resource capacity planning challenges

When you’re working on your capacity resource planning there’s going to be challenges you’ll need to overcome to make your plans a success.

Project management maturity

This ties in with a lot with what was mentioned about focusing on the skills of your workforce. Your resource capacity plan is only going to be as strong as the abilities of the planner.

The best resource capacity plans are put together in collaboration between managers and team members.

Putting together this plan requires experience and flexibility to adapt when things inevitably don’t go to plan.

Data granularity

Your resource capacity plan relies heavily on data, such as the performance of your business, to be put together.

However, the more data or in-depth analytics you collect, the more effort that’s required to maintain these documents.

When collecting information, decide if you should be focusing on:

Production scheduling software

Katana manufacturing ERP supports 1000s of manufacturers and their businesses with intuitive software that connects your inventory, purchasing, and production in one platform. Katana makes production scheduling efficient, accurate, and hassle-free.
Glasses manufacturer at a workstation, measuring material and using a tablet to check progress on other jobs. Another working is in the background working on a different process.

Recommendations for using capacity resource planning

If you’re ready to get started on the road to developing your resource capacity planning, you can use the following tips to get you started on the right foot:

  1. Begin with looking into critical resources: You don’t need to jump into the deep-end by capturing and analyzing data for every team member. First, start by picking just one or two resources that have high demand, and start investigating their utilization and capacity.
  2. Start with looking into project or workstation estimates: If working out a resource capacity plan is something new to you, don’t start off by analyzing the individual tasks of resources. Even though that’ll be the eventual goal, just by looking into the performance of one workstation, you’ll start to understand the capacity levels of this area, address that, and move to the next station until you’re able to delve deeper.
  3. Capture and use data: You’re going to need to start capturing data, even if it isn’t perfect, so the rest of your workforce can start implementing good work practices of recording information for analysis. Otherwise, if the data isn’t being utilized, your workers will eventually stop collecting data for you as it’ll be a waste of their time.
  4. Communicate: While you set out to record and collect this data, be transparent with your workers. Make them aware that the purpose of this is to improve productivity. Let everyone in the business know what is expected of them and how it all serves to help everyone be more successful.
  5. Teach Workers or learn how to forecast demand: A great resource capacity plan all depends on how good a person’s forecasting is. Take the time to learn how to do your demand planning, as this information is going to be vital in understanding how much capacity is needed.
  6. Don’t begin your resource capacity planning with time tracking: Although time tracking can be useful, it’s not exactly necessary for a resource capacity plan.Clock-watching only serves to show what an employee has done with their time, and does not imply capacity.

So, that’s everything you need to know about what is a resource plan and how to go about implementing it into your business.

However, what’s the best software for helping you make these capacity forecasts?

Two workers with craft produced items packaging them for delivery. On the table nearby is a laptop with Katana ERP software open on the screen.

Capacity planning and Katana

Katana is an all-in-one smart manufacturing solution that gives you the tools to help you perform your resource capacity plan, along with:

  • Inventory management
  • Production management
  • Sales orders
  • Integration features to manage your entire business, all from one dashboard

However, Katana comes equipped with tools for shop floor planning and control, which will be essential for gathering data for your resource capacity plan.

So, from your office or on the shop floor, you’ll be able to:

  • Prioritize manufacturing orders
  • Manage tasks for employees and receive updates in real-time
  • Time tracking to understand capacity limits
  • Improved analytics and reporting

The video below details how Katana performs in a manufacturing setting:

And there you have it, capacity resource planning and how to get started.

We hope that you enjoyed this article and if you have any questions, please don’t hesitate to get in touch with us.

And until next time, happy manufacturing.

Katana ERP

Katana Team

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