What are the Biggest Challenges of Supply Chain Capacity Planning?

Capacity Planning

In a world where consumer demand can change at a moment’s notice, it can sometimes feel like planning for the future is a losing battle. If things are likely going to see long periods of unpredictability anyway, why should you attempt to plan? Why not just implement good reactive approaches instead of proactive ones?

While you may get lucky and your supply chain is able to survive a quick, unpredictable change in demand without much preparation for it, at some point that luck is going to run out. Sure, your supply chain likely has and will continue to jump small hurdles without it requiring too much planning outside of normal routines.

But it isn’t the small ebb and flow of consumer demand we are talking about. We are talking about ebbs and flows that are driven by much larger issues such as shortages, bottlenecks, and pandemics that disrupt entire industries, not just sectors of those industries. All of these are things that the global economy has been facing head-on in a big way over the last 2 years and in that time we have learned a lot of valuable lessons. The biggest of those lessons being the vital need for more resilient supply chains backed by solid planning across the board.

Being prepared and informed is always going to be the better option in just about every situation. And when we are talking about capacity and the ability to perform at a level that can exceed customer expectations, effective capacity planning is absolutely crucial.

 


What Is Capacity Planning?

Capacity planning essentially refers to the process of deciding how much equipment, how many workers, and how much product will be needed in order to fill orders in the future. The practice is important for both short-term (a few weeks into the future) and long-term (months to years into the future) planning needs.

A proper capacity planning strategy is one that relies on transparency between all areas involved in the supply chain. From manufacturers to vendors, full visibility of supply chain operations from start to finish is the key to ensuring that your supply chain has enough capacity to move and handle goods efficiently.

 


Capacity Planning Challenges

Being aware of the following capacity planning difficulties allows you to address them proactively and preemptively while sailing through both high-demand periods with minimal stress and difficulty.

 

Consolidating Data

On the surface, it may seem like extracting data from each section of your supply chain would provide a comprehensive picture of your capacity planning needs. You’ve run KPI reports for every section of your supply chain and you are ready to dig in… right?

Well, not quite yet.

When each of these separate parts of the process are examined in isolation and at different points in time, you are only getting a microscopic view of your supply chain through a fragmented view. Albeit, each of those fragments take a detailed look at specific areas.

Following this data in its raw form is not only going to be needlessly time-consuming as you venture to fix every small problem along the way, but it is also going to take attention away from the root causes of your issues. If you tackle those root causes, the rest of the issues may begin to disappear as well.

To properly handle, review and act upon the data you gather, you first need to consolidate it all together so as to allow you to compare the numbers, find gaps and ultimately give yourself a fuller picture. This is a bit of a time-consuming task but it really is the starting point no matter how you approach it.

 

Verifying and Analyzing Data

Consolidating your data is only the first step.

Once you have combined all the data together, it is time to run through it once more to double-check the integrity and accuracy of the information that is being presented. This will also help you to more easily weed out data that would not be of any use to this strategy or is otherwise unaffected by any issues.

How you go about quickly verifying the integrity of the data varies from one supply chain to the next. Doing so, however, is essential as you are about to analyze this data and you do not want there to be any errors present once you begin combing through it. If there are any false measurements within the data by the time you begin reviewing it, it puts your final findings into jeopardy and the entire process may need to begin again.

Again, how you go about verifying the data a second time is somewhat dependent upon a variety of factors within the chain. Nonetheless, this is probably one of the biggest hurdles that companies face when properly reviewing data. This is especially true for smaller companies with less manpower and limited tech capabilities.

 

Coordinating the Supply Chain

Every individual within the supply chain provides unique value to your capacity planning strategy. From those in upper management to those performing the labor, and everyone in between; everyones’ contribution to the order fulfillment and production processes is important.

Keep your various teams in the loop on your findings once complete. Their assistance on the floor where everything is happening is what is going to allow your supply chain to close some of those capacity gaps and begin leveraging the tools at your disposal much more efficiently.

Most of the time, the changes that need to take place according to your data are minor issues that your staff is not going to likely notice are being remedied by small changes here and there in their daily tasks.

But every so often when a larger problem regarding capacity planning, it may require big updates to old software or additional training on new software, new machinery implemented, staffing changes and the list goes on. When examples such as this become a reality, getting everyone on board and moving in the same direction as a team can prove to be a little difficult.

 

Changing Mindsets

Apart from analytics and collaboration considerations, many businesses are just unwilling to change a practice that they’ve had in place for a long time. Some business owners may not understand that the industry landscape has changed in so many ways and may thus be hesitant to allocate the necessary funds to implement the newest capacity planning solutions.

There is no easy way around this one as it is simply a mindset that needs to be overcome in most cases. To remain competitive while also catering to your consumers’ wants and needs efficiently may require that you begin to implement new technology, invest in better heavy machinery and possibly even hire more workers.

 


Overcoming Capacity Planning Challenges

There are 3 really straightforward overarching solutions to the primary supply chain capacity challenges we have presented in this blog post…

 

Centralization

All of the data extraction and data analytics practices need to be available on a centralized, transparent system that provides visibility throughout the entirety of the supply chain. The use of different techniques related to data management could lead to very different results. It’s always best to get everyone on the same page and have a single go-to source in order to implement good and transparent data collection practices.

 

Leveraging Technology

The same theme comes up again and again throughout all supply chains and throughout every industry in general: technology is the future. It is virtually impossible to coordinate the complex global supply chains of the world without using AI, predictive analytics and machine learning that can provide real-time data and analytics to businesses.

 

Demonstrate Value

As we covered earlier in the article, some business owners are simply unwilling to change their ways. The proverbial phrase “you can’t teach an old dog new tricks” comes to mind. But regardless of how stuck in their ways someone is, seeing that a change will result in increased profit over time always gets people listening. If this person happens to be you, we would urge you to test out the waters for yourself. No need to jump in head first, but testing out a little bit of change might give you some positive results you didn’t quite expect.