Expand the limits of your company with Capability Analysis
Do you know whether your company would be able to produce everything it intends to sell ? Have you ever refused an order from your client because you didn’t know if you would be able to fulfill it within the stipulated deadline? Have you ever lost money because you don’t know your own company well ?
These are some of the various difficulties that most companies face on a daily basis. And it doesn’t stop there, losing money due to poor sizing of the company’s production capacity is very common!
For such losses to be mitigated, carrying out a capacity analysis in your company is essential! Shall we get to know a little more about her?
WHAT IS CAPACITY ANALYSIS?
Capacity analysis is an activity carried out in parallel with the company’s production plan (how much the company intends to produce each month over a stipulated time horizon). Its objective is to ensure that there is a balance between the production capacity available in the factory and the capacity necessary to achieve what was stipulated by the production plan.
It is important to highlight that the capacity available monthly (if the company considers its operations monthly) can be calculated in working hours . For example, if production is active for 8 hours a day, 20 days a month and an efficiency of 85% is considered, due to pauses, interruptions and the like, the available monthly capacity will be 8*20*0.85 = 136 machine hours per month!
USING CAPACITY ANALYSIS
Suppose your company sells products A and B , and has previously created a production plan for the months of May, June and July. Thus, for the month of May, it was planned to sell 80 units of product A and 20 of product B, for the month of June, 90 units of product A and 40 of B and finally, 100 units of product A and 50 of B in July. The situation is detailed in the following table for better understanding:
By performing and using a capacity analysis, you will be able to determine whether it is possible to actually produce everything that was planned for this period. However, if not, what to do?
Let’s assume that for the last month of planning (July) the maximum production capacity was exceeded. In this context, a very common technique is to “transfer” the production that cannot be carried out in a given month to other months! For example, it would mean producing more in the months of May and June and increasing stock, so that it can meet all the demand for the month of July, thus ensuring that all of the company’s sales can be delivered, avoiding losses due to a lack of products.
THE BENEFITS OBTAINED
As previously mentioned in the text, it is very important that your company periodically carries out a capacity analysis, as with this it is possible to know and expand the limits, increasingly leveraging the results obtained! Let’s look at the benefits it can provide:
Have greater control over your operations!
When carrying out a capacity analysis, it is possible to balance the quantities of products produced each month (if the basis adopted is monthly), and then extract the maximum possible sales for your company, given how much it is capable of producing.
Be more assertive in your sales!
With capacity analysis, this doubt will no longer be present. Find out how high you can fly when selling your products, have arguments to convince your customers that you can indeed fulfill their orders!
Avoid losing money!
Have you stopped fulfilling orders because you can’t meet all the demand? With capacity analysis, decision making becomes much easier. So, stop losing money on backorders or unused sales!
Maintain a good reputation with your customers!
One of the intrinsic consequences of responding well to your orders is the trust and loyalty that your customers will develop with your company, opening doors to new business, successful partnerships and organic growth for your company.