You calculate the available production capacity
 
Knowing the capacity available in your production facilities and those of key suppliers is essential for verifying that the production plan can be delivered on time.   Running the factory at below full capacity introduces additional costs that directly erode profit margins, therefore the ability to manipulate capacity cost effectively is important
Key Issues
·         Calculating the actual capacity of your factory is relatively difficult because it is dynamic, influenced by many factors, including;
o     Volume and mix of products in the production schedules
o     Work content of the different products
o     Loading of bottle neck processes
o     Flexibility of equipment to handle the range and mix of products
o     Skill of the maintenance and production teams in keeping equipment available and running
o     Changeover times between operations
·         This calculation is further complicated by day to day changes;
o     Absenteeism, levels of overtime, attitudes of your people
o     Equipment failure, machine runtimes, condition of equipment
o     Availability of materials, tooling, and consumable items
o     Quality problems, process capability, rework, scrap levels
·         Calculating exact capacity is made much easier by organising the factory into modules/cells, since the capacity can be determined at cell level and controlled by the module leader
·         Ways to increase or decrease the available capacity in the short term are relatively restricted and usually involve people working more or fewer hours
·         A risk assessment should be undertaken to identify the different capacity constraints and actions required, based on projected volume changes
·         Various capacity modelling tools are available, but these need accurate detailed information to provide meaningful results. Local PC-based tools integrated into the factory computer systems may be the best option.
·         Real time simulation tools are becoming more sophisticated and, if your data is accurate, can be used for determining available capacity. You might use one of two techniques to determine capacity:
o      Calculate the capacity using steady-state models and then refine it using “what if” scenarios to establish the most likely figure
o      Use the capacity available from the limiting bottleneck process
Factors for Success      
Factors to  Avoid
1.     Understanding your capacity drivers and the extent to which they impact the business
2.     You determine, in advance, ways of making capacity changes economically
3.     You recognise that the capacity calculation needs personal judgement
1.     Reliance on computers to calculate capacity. The calculation is too complex
2.     Using infinite capacity to calculate production schedules
3.     Managers failing to take account of capacity constraints
Who does this apply to?
Operations managers, module teams responsible for customer deliveries
Realisable Benefits
The resources needed for production are used cost effectively, increased profits

Guides:

Logistics co-ordinationLogistics co-ordination

Logistics co-ordination

Uninterrupted material flowUninterrupted material flow

Uninterrupted material flow

Responding to changes in volumes and product mixResponding to changes in volumes and product mix

Responding to changes in volumes and product mix

Make versus buyMake versus buy

Make versus buy

The supplier approval processThe supplier approval process

The supplier approval process

Monitoring supplier performanceMonitoring supplier performance

Monitoring supplier performance

Sharing information with suppliersSharing information with suppliers

Sharing information with suppliers

Managing inventory throughout the supply chainManaging inventory throughout the supply chain

Managing inventory throughout the supply chain

Improving the delivery performance of suppliersImproving the delivery performance of suppliers

Improving the delivery performance of suppliers

Material flow and the factoryMaterial flow and the factory

Material flow and the factory

Production scheduling processProduction scheduling process

Production scheduling process

Calculating production capacityCalculating production capacity

Calculating production capacity

Visual managementVisual management

Visual management

Health and safetyHealth and safety

Health and safety

HousekeepingHousekeeping

Housekeeping

WasteWaste

Waste

Ensuring equipment is availableEnsuring equipment is available

Ensuring equipment is available

ChangeoversChangeovers

Changeovers

BottlenecksBottlenecks

Bottlenecks

Consistent manufacturingConsistent manufacturing

Consistent manufacturing