Last period we discussed capacity and constraint management. Capacity is defined as the ability to hold, receive, store, or accommodate. In other words it is the maximum amount of work that an organization is capable of completing in a given amount of time. Constraint is when a companies system is limited in achieving its goals by at least one constraint. Managing both capacity and constraint will help the company identify the constraint and restructure the rest of the organization around it. If there’s a discrepancy between the capacity of a company and the demands of its customer then it could result in inefficiency, either in under utilized resources or unfulfilled customers. The goal of management is to minimize any discrepancies from occurring.
When trouble is on the horizon a strategic capacity plan takes formation. This type of planning matches capacity with anticipated demand requirements. Capacity can be increased through introducing new techniques and better utilization of existing capacity. A companies goal is to achieve its optimal or effective capacity which is the capacity at which it expects to achieve given is operating constraints. Now, theres a lot that is taken into consideration when assembling a strategy to alleviate any discrepancies in the organizations strategy. A company has to forecast accurately, understand its technology and find its optimum level of operation.
All things considered, there are a lot of companies that find themselves having discrepancies with their capacity and demand. One that quickly comes to mind are QSR’s. They have to accurately measure their output versus their demand. If they misjudge or miscalculate their capacity and constraints, it could cost them money in the short run. Additionally, their establishment could create a perception of inadequacy to the customer and cost them even more in the long run.
There are many other examples of companies or industries that often face this problem . Can you think of any? What problems do they potentially face with discrepancies in their management of capacity and constraints? Or can you think of a company that manages their capacity and constraints very well?