Manufacturing capacity planning and the top 10 benefits for your company

Manufacturing Capacity Planning

There are many essential elements that contribute to success in business, each important in their own way. Efficiency is one such element, and this can be improved by focusing on manufacturing capacity planning and combining it with simulation modeling.


  1. What is manufacturing capacity planning?
  2. Strategies for your company
  3. 10 benefits of capacity planning
  4. Manufacturing capacity planning with simulation
  5. Summing up

What is manufacturing capacity planning?

Manufacturing capacity planning is a technique for calculating or identifying your facility's or production lines' maximum capacity to meet expected demand and then developing a plan to maximize actual output. Both short-term and long-term objectives can be set for this.

It is essential for all companies, from small and medium-sized businesses to large enterprises.

Planning for manufacturing capacity requires data on all aspects of operations, including manufacturing capacity, the availability and experience of employees, the capacity of the supply chain, inventories, and maintenance schedules.

Capacity planning is made up of the following three resource elements:


This element guarantees that your company has the correct number of goods or resources required to satisfy the appropriate needs, requests, or orders.


By considering this element, you can be confident that you have enough workers to meet demand. The objective is to understand the number of personnel needed to successfully carry out the tasks now, as well as any prospective future adjustments to this number.


This component helps to ensure that your company has the equipment it needs, including any machinery, parts for assembly lines, and other items needed for the manufacturing and delivery of your product.

These three can work together to ensure that you have enough resources for both the short and long term.

Take a look at this simulation model developed in Anylogic showing a solar panel production line.

Solar panel production line

Strategies for your company

When deciding how to effectively plan capacity, you can select between three major approaches. These strategies depend on a variety of different variables, and what works for one organization might not work for another.

Lag strategy planning

This strategy relies on the current availability of resources to meet demand rather than projections. Basically, production capacity can be altered in response to the current demand. This is more advantageous for smaller companies with limited capacity.

Lead capacity planning

This approach requires having enough resources to meet forecasted demand. This planning method allows production capacity to be boosted in anticipation of high demand, such as the potential increase in customer traffic during the holiday season. By foreseeing this, adjustments can be made to make sure you can manage.

Match strategy planning

This combines the lag and lead strategies, where managers track actual demand, demand planning estimates, and market developments to modify capacity. The process involves slowly increasing capacity until the required level of resource utilization is reached.

Check out this simulation model developed in AnyLogic showing the process of concrete production.

Autoclaved aerated concrete factory

10 benefits of good manufacturing capacity planning

Planning for production capacity allows managers to schedule improvements that increase efficiency. However, there are more specific advantages that you can examine to fully understand its value.

Highlight inefficiencies in processes

As production capacity is revealed by data, opportunities to optimize processes lead to increased efficiency. Planning for capacity might point managers toward trouble spots where new standard operating procedures can make use of expanded capacity.

Lower costs

Management can reduce production costs by identifying underutilized capacity. This extra capacity can reduce overall production costs by making the factory more productive.

Boost profitability

Companies can minimize or even completely avoid slowdowns, bottlenecks, and even shutdowns with a robust capacity strategy. This guarantees operational effectiveness, which raises profits and revenues.

Scale with ease

Growth will be more manageable and less expensive if scaling is done gradually using a strong manufacturing capacity planning strategy.

Decrease stock-outs

To reduce the danger of overstock or stock-outs, supply chain management may purchase and receive inventory items and components with confidence when capacity is optimized.

Assist in risk management

Management can more easily mitigate risk because efficient capacity planning encompasses production capacity, tool capacity, and staff capacity.

Aid in supply chain management

With precise capacity planning, elements like purchasing and minimum order amounts can be enhanced, especially when supply chain management software is combined with real-time data from a factory monitoring system.

Aid human resource management

Resource management systems linked with sophisticated factory monitoring and machine data platforms are used for employee onboarding, training, labor assignment, and ensuring that all employees have the appropriate equipment and skill sets. The proper number of personnel can be hired and trained for the necessary roles when you have precise capacity plans.

Enhance delivery capacity

Increased production leads to more shipping and deliveries. As a result, there are now more economically efficient delivery methods available.

Improve customer service

Customers can receive their shipments on time and obtain precise lead times, so they always know where their goods are.

Manufacturing capacity planning advances using simulation

In the previous section, AnyLogic manufacturing simulation software was used to highlight the numerous advantages that effective capacity planning can bring to your company.

To do this, a simulation model that closely resembles reality can be created. Once the model has been validated and calibrated, it can be used to quickly assess different scenarios and identify the most advantageous plan.

Model of chocolate production

By using simulation to create a capacity planning model, it is possible to continuously analyze and update the model in response to unforeseen events such as unexpected changes in demand, production failures, and logistical problems.

As simulation advances and the capability to run "what if" scenarios becomes more widespread, the impact on workflow and productivity will be dramatically affected.

Simulation modeling is incredibly accurate in examining scenarios and incoming workloads. This enables project managers to see the effects of several situations on capacity and allows them to choose the most appropriate one.

Summing up capacity planning

Putting too much pressure on your capacity can result in overloading the system, which can lead to breakdowns. But getting your manufacturing capacity planning right using techniques such as simulation-based planning will help you avoid these problems and take your business to the next level.

To find out more about how simulation can be used to help develop manufacturing capacity plans, read our white paper on Material Handling Simulation below.

Get the paper

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