How to perform effective capacity management

Across all industries, knowledge is a competitive advantage. Leveraging data to not only look into the past but forecast into the future provides critical insights into how your business can anticipate trends and create an effective capacity management strategy that works for your business.

What is Capacity Management?

Capacity management is how your business plans to allocate resources to meet upcoming demands. It gives you the ability to answer important questions about your overall operation:

  • What is my maximum capacity?
  • When will I reach it?
  • How does it compare to expected demand at that time?

Done correctly, its advantages include: 

Capacity is an integral part of doing business and you’re likely already managing it on some level, but working through a formal capacity management plan and securing the right tools to execute it efficiently can give you a competitive advantage in your industry.

Below are five steps in capacity planning you can take to best position your business to not only weather future demand fluctuations but use them to your advantage.

Five Steps in Capacity Planning

1. Gather and Visualize Data

Data is vital to determining current capacity and making plans for the future. A great place to start is by looking at the data you’re already collecting to identify what you have and what you need to complete the planning process. Depending on your industry, that data could include machine capacities, maintenance schedules, seasonal fluctuations, workforce fluctuations, or historical data on demand trends. 

Because of the vast quantities of data available, it can be challenging to effectively utilize without graphic representations. Visualizing your data makes it easier to detect trends and understand and communicate deeper trends.

2. Identifying Your Baseline

Once you’ve captured enough relevant data, you can use it to determine your baseline capacity and how that compares to demand. It’s important to look at how well your output matches demand and whether there are adjustments you can make to better align operations to current needs.

3. Look to the Future

To maximize the benefits of capacity planning, make sure to go beyond simply reacting to changes in demand as they occur. Using predictive capacity management tools, such as machine learning and predictive analytics, you can anticipate changes in demand and gain time to plan how you will react.

4. Choose a Strategy

Armed with the information gathered in the previous steps, you can now create a proactive plan to address upcoming issues before they begin to impact your bottom line. There are three main capacity management strategies you can adopt:

  • Lead strategy: ramping up operations to meet anticipated future demand before it occurs. This strategy allows you to quickly and fully satisfy customers and potentially gain market share but can mean added costs or unused inventory if demand predictions are inaccurate.
  • Lag strategy: ramping up operations quickly to meet demand spikes after they occur. This strategy mitigates the risk of allocating too many resources to unrealized demand spikes but could mean you’re caught short if demand spikes unexpectedly fast.
  • Match strategy: incremental adjustments in response to current and near-term fluctuations in an attempt to match operations to demand. This mitigates the risks of both Lead and Lag but can take some time to perfect.

5. Monitor and Adjust

Your capacity management plan is a valuable tool that needs to be monitored and adjusted over time. As you gain more experience and gather more data, you’ll uncover insights that will help you refine your strategy. You can do this by scheduling recurring times to check in and make these adjustments manually, or you can take advantage of the efficiencies offered by machine learning capacity planning, which mimics the human learning process to automate insights and improve your plan as more information becomes available.

Avoiding Pitfalls in Capacity Management

The steps to effective capacity management are simple enough—but vast quantities of data; the expense and difficulties associated with traditional, manual analysis; and the need for continuous review and adjustment means it’s not easy. 

Industry 4.0 has changed the landscape for how data is gathered and analyzed, and the benefits it promises are being realized across virtually all industries. Even traditionally brick and mortar operations, such as manufacturing, are turning to artificial intelligence and technology like Sightline to gather and analyze data in real time.

Sightline is an industry-agnostic software solution that uses machine learning capacity planning to provide critical insights to industries ranging from IT to manufacturing to aquaculture, reducing tedious, time-intensive manual tasks and allowing you to redirect those resources elsewhere.

You can simplify data analysis and visualization with Sightline’ EDMs capacity planning reports, which streamline data collection and conduct analysis in real time; establish a baseline for operations and production; compare current and future capacity for expected jobs; appropriately plan and allocate resources to maintain or expand production; and automate predictive capacity planning by forecasting when and where capacity will run out, up to years in advance. 

Book a conversation with an EDM expert to learn more about improving the capacity planning for your business with Sightline Systems today.


What tools are available for capacity planning?

Sightline EDM

What is capacity management and why is it important?

Capacity management is how your business plans to allocate resources to meet upcoming demands. It can allow your business to operate at maximizing efficiency, reduce waste and meet customer expectations by helping you:
– Lower operations costs
– Ensure availability of your product
– Maintain ability to meet varying demand levels
– Manage resources

What are the five steps in capacity planning?

1. Gather and visualize data to detect and understand trends.
2. Identify your baseline to assess how your output compares to demand.
3. Look to the future with predictive capacity management tools that help anticipate changes in demand before they occur.
4. Choose the strategy to address fluctuating demand that is right for your business.
5. Monitor and adjust your plan as needed either through manual assessments or by utilizing machine learning capacity planning to automate insights and improve your plan as more information becomes available.