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Managing capacity in a make-to-order environment

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In a ‘make to order’ environment products are tailored to the specific requirements of customers. As is often the case, managers are focused on keeping the production staff busy, sometimes pulling orders forward when demand is slack. This risks customer’s changing requirements resulting in rework or scrap. When demand is high, lead times stretch, resulting in potential loss of sales.

In order to maintain control in this situation three things need to be in place; understand your demand, understand your capacity, and understand how to flex your capacity. The ability to make is very dependent on your capacity to make. Your capacity is very dependent on what you are being asked to make. The first step is to understand your demand, then you can use this information to estimate your capacity. We have another blog ‘Understanding Capacity in Make to Order / Bespoke Environment’ that talks about this process in more detail.

The problem with make to order manufacturing is that you can’t hold finished stock. Therefore, the key to managing capacity is to have strategies for both higher than normal and lower than normal demand.

The key areas to think about for higher-than-normal demand are:

  • Using standard components and materials as far as is possible.
  • Dual sourcing for your most at risk components or materials.
  • Streamlining your manufacturing process to ensure production flows effectively.
  • Ability to flex your labour requirement up quickly.
  • System for forecasting that gives you time to react.

The key areas to think about for lower-than-normal demand are:

  • Using standard components and materials as far as is possible.
  • Ability to slow down or switch off supplies of components or materials.
  • Streamlining your manufacturing process to ensure production flows efficiently.
  • Ability to flex your labour requirement down quickly.
  • System for forecasting that gives you time to react.

The benefits to talking this approach can be significant – what would this look like for your business?

If you would like to arrange for a no obligation review of your current operations, please feel free to get in touch on enquiry@w-l-p.co.uk

You may also be interested in

  1. Managing Capacity Flexibility in Make-to-Order Production Environments
  2. Understanding Capacity in Make-to-Order Production Environments
  3. Improving Productivity in Make-To-Order Production Environments
  4. Improving Productivity Through Good Measurement