Running a business requires a great deal of planning and organization in order to be successful. One essential aspect of this is capacity planning, yet it is often overlooked and undervalued.
Capacity planning is a process through which businesses balance their demand with the resources they have to meet it. Without some level of this planning, your company could end up needing more than you’re capable of producing, which can lead to your customers going elsewhere.
It could also lead to the opposite: you produce more than you need at a given time, leaving inventory sitting on the shelf costing you money. As neither of these is a good option, it’s important that you make capacity planning a priority. Other benefits include the following.
Employee Retention
While most employees don’t mind overtime now and then and many don’t mind crossing over to help in other departments from time to time, none want it to be an all the time thing. However, it can become a common issue when companies do not properly prepare for the demand they need to meet. This leads to employees burning out, feeling undervalued, and often leaving their jobs for other companies.
Capacity planning allows companies to view an overall picture of what they have and what they need. This step can tell the company if they have the skills and employees necessary to cover the work so that they can take steps to rectify any potential issues before they become problematic.
Effective Prioritization
It’s imperative for the success of a company to ensure the necessary resources are allocated to their projects. It’s also vital to prioritize those projects to ensure that the most urgent ones are completed first and that others are prioritized efficiently. Capacity planning can help companies prioritize each project in the most effective order, ensure they have the employees with the right skills available, and allocate the necessary resources.
Improved Profits
Capacity planning can help you maximize profits for every project. One way of doing this is through the benefits mentioned above: it can help ensure that you are keeping your shelves stocked with what you need – not what will sit there for weeks, months, or even years.
Additionally, it typically costs more to hire and train new employees than it does to retain employees, which can eat into your profits. By improving customer retention rates through capacity planning, you are able to reduce the cost of hiring and training.
Effectively prioritizing projects and resources can also improve your profits in several ways. First, when you don’t have the necessary resources available for your projects, it can take longer to finish them. The longer it takes, the more it costs your company. It can also prevent customers from coming back for more, which can impact your sales for years to come.
Consider, too, that not all of your projects need your highest-paid senior employees, but some do. By ensuring your senior employees are working on tasks that actually require their expertise and allowing junior employees to take care of the rest, you are reducing the cost of each project.
Capacity planning plays an important role in successful companies. If you haven’t started yet or need to refine your process, make it a priority to do so now.
