Strategic
CAPACITY
MANAGEMENT
a c i t y
C ap
1. Capacity is ‘the ability to hold,
receive, store, or
accommodate’. (a dictionary
definition)
p a c i t y 2. Capacity is most
Ca frequently viewed as the
amount of output that a
system is capable of
achieving over a specific
period of time. (in a
general business sense)
a c i t y 3. Capacity is the
C ap number of customers
that can be handled
between noon and 1:00
p.m. (in a service
setting)
p a c i t y 4. Capacity is the
Ca number of
automobiles that can
be produced in a
single shift. (in
manufacturing)
Strategic capacity planning is an
STRA T E G IC approach for determining the
overall capacity level of capital
CA PA C IT Y intensive resources, including
PLA NN IN G facilities, equipment, and overall
labor force size.
1. Lead capacity strategy, or
TH RE E lead strategy, is the
TY P E S O F process of increasing
production capacity when
CA P A CIT Y you're in anticipation of a
PL AN N IN G high demand.
2. Lag strategy planning is the
TH RE E process of increasing
TY P E S O F production capacity when
you’re experiencing a real-time
CA P A CIT Y demand.
PL AN N IN G
3. Match strategy planning is a
combination of lead capacity
TH RE E planning and lag strategy planning.
TY P E S O F The process of match strategy
planning requires slowly increasing
CA P A CIT Y capacity in small increments until
you reach the desired resource
PL AN N IN G utilization.
STEP 1 FORECAST YOUR ANTICIPATED DEMAND
STEPS
5 y
If you know you have a new project
ca pa c it coming up, make an educated estimate on
what work needs to be done for these
pla n n in g projects. This will give you an idea of the
capacity that you’ll need to complete the
pr oc e ss project and you can compare that to the
current capacity you have on hand.
STEP 1 FORECAST YOUR ANTICIPATED DEMAND
STEPS EXAMPLE You're planning to open a new coffee
5 y
ca pa c it shop in a bustling neighborhood. Based on
market research, you anticipate high foot
pla n n in g traffic and a steady demand for coffee,
pastries, and light meals. You estimate that the
pr oc e ss demand will be around 500 customers per day
within the first three months of operation.
STEP 2 DETERMINE REQUIRED CAPACITY
STEPS
5 y
Based on your initial estimates,
ca pa c it approximate the capacity you’ll need to
complete the work you forecasted in the
pla n n in g previous step. Try using a common unit of
measurement—like hours—or a project
pr oc e ss estimation tool
STEP 2 DETERMINE REQUIRED CAPACITY
STEPS To meet the anticipated demand, you need to
5 y
ca pa c it estimate the capacity required in terms of resources
such as staff, equipment, and inventory. For
pla n n in g example, you might calculate that you'll need three
baristas working in shifts, a fully stocked inventory
pr oc e ss of coffee beans, pastries, and other supplies, as well
as sufficient seating and service space to
accommodate 500 customers per day.
STEP 3 CALCULATE THE RESOURCE CAPACITY
STEPS OF YOUR CURRENT TEAM
5 y
ca pa c it If you’re adding another project to
your team’s plate, you want to
pla n n in g make sure they have the capacity
pr oc e ss to handle it so they don’t burn out.
STEP 3 CALCULATE THE RESOURCE CAPACITY
STEPS OF YOUR CURRENT TEAM
5 y If you already have a team of two experienced
ca pa c it baristas who can each work 8-hour shifts,
pla n n in g your total available capacity per day is 16
barista-hours (2 baristas * 8 hours). However,
pr oc e ss considering that you'll need three baristas per
shift to handle the expected volume.
STEP 4 MEASURE THE CAPACITY GAP
STEPS
5 y
Compare the required capacity (e.g., three
ca pa c it baristas per shift) with the available
capacity (e.g., 12 barista-hours per day). In
pla n n in g this case, there's a capacity gap of 4
pr oc e ss barista-hours per day (3 baristas * 8 hours
- 12 barista-hours).
STEP 5 ALIGN CAPACITY WITH DEMAND
STEPS
5 y
Look at the previous gap in capacity and optimize
ca pa c it current and available capacity so they are balanced.
If your team is currently at capacity and can’t take
pla n n in g on additional work to complete the project, add more
team members in the short term to get the project
pr oc e ss done. If you have excess capacity, consider adding
another project to effectively optimize your available
resources.
STEP 5 ALIGN CAPACITY WITH DEMAND
STEPS
5 y
To bridge the capacity gap, you might need to hire an
ca pa c it additional barista or adjust the shift schedules of
your existing staff. For instance, you could hire a
pla n n in g part-time barista to work during peak hours or
extend the working hours of your current staff. By
pr oc e ss doing so, you ensure that you have enough resources
to handle the expected demand and provide excellent
service to your customers.
STEP 1 FORECAST YOUR ANTICIPATED DEMAND
STEPS
5 y
STEP 2 DETERMINE REQUIRED CAPACITY
ca pa c it STEP 3 CALCULATE THE RESOURCE CAPACITY
pla n n in g OF YOUR CURRENT TEAM
pr oc e ss STEP 4 MEASURE THE CAPACITY GAP
STEP 5 ALIGN CAPACITY WITH DEMAND
IT PREPARES YOU FOR DIFFERENT SCENARIOS
Ben e fit s A WELL-STRATEGIZED CAPACITY PLAN CAN HELP
PREVENT SCOPE CREEP AND TAKE PRESSURE OFF OF
of YOUR TEAM. IF YOU KNOW THE STEPS YOU HAVE TO
cap a cit y TAKE FOR EACH TYPE OF CAPACITY—WHETHER
THAT’S EXCESS CAPACITY OR A LACK OF RESOURCES
pla n n ing —YOU’LL BE ABLE TO MEET DEMAND DURING ANY
GIVEN PERIOD.
IT OPTIMIZES TEAM BANDWIDTH
Ben e fit s EFFECTIVE CAPACITY PLANNING ALIGNS YOUR
CURRENT TEAM’S SKILL SETS WITH THEIR
of AVAILABILITY FOR NEW PROJECTS. IF THERE ARE
cap a cit y NOT ENOUGH AVAILABLE RESOURCES FOR A
PROJECT, YOU’LL KNOW THAT YOU NEED TO ADD
pla n n ing MORE RESOURCES TO YOUR TEAM.
IT MINIMIZES PRODUCTION COSTS
Ben e fit s WHEN YOU MANAGE YOUR TEAM'S CAPACITY,
YOU'RE OPTIMIZING YOUR RESOURCES FOR THE
of SCOPE OF WORK THAT YOU NEED TO COMPLETE.
cap a cit y THIS MEANS THAT YOU'RE NOT PAYING FOR MORE
RESOURCES THAN YOU NEED, ULTIMATELY
pla n n ing MINIMIZING PRODUCTION COSTS
IT MAKES PLANNING FOR THE FUTURE EASIER
Ben e fit s AND MORE ACCURATE
CAPACITY PLANNING ISN’T JUST HELPFUL FOR
of YOUR CURRENT PROJECTS, IT CAN ALSO HELP YOU
cap a cit y SCOPE OUT CAPACITY NEEDS FOR THE FUTURE.
WHEN YOU CREATE A CAPACITY PLAN FOR ONE
pla n n ing PROJECT, YOU CAN USE THAT AS A TEMPLATE FOR A
SIMILAR PROJECT IN THE FUTURE.
IT CREATES TRANSPARENCY
Ben e fit s
YOUR CAPACITY PLAN WILL HIGHLIGHT ANY
of INEFFICIENCIES THAT YOU CAN OPTIMIZE. THIS KIND
cap a cit y OF DATA IS HIGHLY VALUED BY STAKEHOLDERS
WHO LIKE TO BE IN THE KNOW WHEN IT COMES TO
pla n n ing HOW THEY INVEST THEIR RESOURCES AND MONEY.
