It’s hard to plan how much capacity you’re going to have or need for a certain task, project, moment, or scenario in most areas of life.  Many people adjust as they go, making room where they can. 

While this is a somewhat unfortunate truth of life, it doesn’t have to be one in business. Though there’s no way to know for sure how much product to order in six months or how many workers you’ll need in a year, there is something that can get you as close to these answers as you can possibly be: capacity planning.

What is Capacity Planning?

Capacity planning refers to the process of deciphering how much resource you’re going to need to meet demand. This “demand” can be for any unit of time: the coming week, next season, or even in a year’s time. 

Some things that fall under capacity planning are:

  • Employing staff to meet coming demand
  • Having enough resources
  • Securing everything needed to complete the work ahead

In short, capacity planning is all about preparing yourself and your business for the future, whatever that looks like for you. With it, you’ll know how to scale, create better design, and even identify bottlenecks in the supply chain before they happen.

Types of Capacity Planning

Capacity planning itself can be split into three types: workforce, product, and tool. Together they ensure that you have the right amount of three main resources for the short- and long-term. 

Workforce Capacity Planning

This capacity planning strategy ensures that you have the workforce needed to meet demand. It’s all about having the right number of workers and hours available to not just complete jobs but complete them well. Should you need to hire more workers (or possibly downsize) you’ll know how far in advance you need to start making changes to accommodate the length of the recruiting and onboarding process.

Product Capacity Planning

This capacity strategy ensures that your business is equipped with the right number of products or resources needed to fulfill deliverables. For example, a pet store needs things like food, pet toys, and equipment like carriers, leashes, and cages. These are all things which are required to fulfill demand.  

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Tool Capacity Planning 

Finally, this type of capacity planning strategy ensures that your business is equipped with the necessary tools. Such tools may include machinery, vehicles, assembly line parts, and anything else needed to create and deliver your product or service in a timely manner.

When Is Capacity Planning Required?

Capacity planning is useful and required any time you’re trying to ensure that your supply meets demand. This means whether it's a week, month, quarter, year, or more, capacity planning is always a good idea and rule of thumb to stick to. 

For many businesses, leaders and managers have a lot to handle. Among some of their responsibilities are:

  • Keeping track of autonomous teams
  • Being aware of changing priorities
  • Preparing for unpredictable tasks 
  • Matrix structures
  • Handling remote workers
  • The space between actual work and planned work (i.e., the reality of the situation)

With so many moving parts, it doesn’t make sense to go forward without a plan. Having a capacity planning strategy is a great way to get ahead of the challenges that are sure to arise. 

Capacity planning is a great way to invest your time because it helps you address possible future issues, take advantage of the benefits that come with planning, improve team performance, and streamline your business tasks for increased efficiency. 

How Does Capacity Planning Help in Sprint Planning?

To keep things organized, many companies practice sprint planning. Sprint planning refers to organizing and assigning all tasks to the right team members in a certain period of time. 

In many cases, sprint planning is dependent on each team member doing their part. This means that once a task is done, another team member can start their task, and so on. If one team member falls behind, it could derail the process to some degree, but this is where capacity planning comes in.

With capacity planning, sprint planning is made tighter, more efficient, and achievable. When you prepare for possibilities like missed deadlines, not having enough workers or product, or even bottlenecks in the supply chain, you’re better equipped to handle such issues should they come up. 

In a way, capacity is like having a Plan A and a Plan B in one: you have your main course of action as well as several contingency plans should anything go wrong, become delayed, or need extra attention.

Capacity Planning Benefits

If you’re looking for the main benefit of capacity planning, there are actually quite a few! Businesses who adopt a capacity planning methodology to increase efficiency and meet demand may find themselves enjoying some or all of the following benefits:

Reduce Stock-Outs

Stock-outs occur when you fail to meet customer demand. It’s no secret that customers don’t like to wait, and you being “out” of a product or service will only push them onto the next business that can meet their demand. Thankfully, one benefit of capacity planning is that you can reduce stock-outs and even avoid them altogether. Throughout your planning process you’ll see how the market and demand fluctuate, making you better able to predict supply and demand changes. 

Identify Inefficiencies in Your Business Process

Another benefit of capacity planning is knowing your minimum and maximum capacity of resources. Whatever you’re looking at (be it product, people, equipment, or resources), you’ll know what factors may limit capacity and how to avoid them to ensure you always have what you need.

Increase Delivery Capacity

Today’s customers want their products immediately. Quick turnaround times for deliveries can spell success for a business, while slower delivery times can lose business. Capacity planning is a great way to gauge your delivery capacity so that you know you have the workers available to deliver your products as soon as they’re purchased, making you a contender among the market competition.

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Confirm Availability 

Another notable benefit of capacity planning is ensuring future availability. Before you sign a new contract or send another proposal to a potential client, capacity planning helps you know for sure that you have the workforce and resources needed to take care of your new customers, projects, and more.

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