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Capacity Planning
Capacity Planning
Can you keep up when business cycles fluctuate?
Regardless of whether the cycle swings up or down it is imperative to adapt capacity in every stage. Companies that have this ability have a greater chance of success in the long term. The companies that really succeed often use capacity planning.
The word success is a tricky word in this context. The dilemma is that even though the main principles are quite simple in theory, few companies can make capacity planning work and succeed in practice. Many try but soon realize that they lack complete control.
How is this possible when the principles are crystal clear and very familiar?One explanation is that effective capacity planning requires that carefully, thoroughly structured decisions are made very often. More like once a month rather than once every six months. It is vital that the organization is equipped to make recurrent decisions and that the CEO has the final say. We will reveal some not so secret secrets in this article.
Capacity planning during business cycle fluctuations
The financial crisis that hit in the fall of 2008 was a wakeup call for all of us. We suddenly found that the tables had turned. In just a short time we moved from the sensation of turning wheels to virtually full stop. Naturally, there were plenty of warning signals, but these were drowned out. As a result, many were taken back by the severity of the crisis.Looking at the many and far-reaching layoffs that generated and are generating immense apprehension it is perfectly obvious that many companies have been caught off guard.
Add to this that because of the financial crisis, the already predicted recession has evolved into a deeper, more difficult depression. A novelty in this context is that industries whose customers are having difficulty financing their orders have been hit hard by the financial crisis. For instance, the automotive and construction industries have been particularly afflicted as order books dwindle more than most could foresee. Now that we have understood what happened, we see that some companies have coped better than others, even in particularly afflicted industries. What sets these companies apart? What did they do differently? Capacity planning is the answer in many cases...
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