Recently I have been working with manufacturing companies which make to order because the product they make is specified by the customer prior to manufacture. In both cases the process of manufacture is consistent, it is just the size of the product that varies. Orders typically involve a mix of sizes. One manufacturer has semi-automated equipment that makes the product to size, the other has a purely manual process.
So how can we estimate the capacity of each manufacturing plant?
The challenge comes as the time it takes to manufacture is defined by the product size. With the semi-automated equipment, the time per component varies on size but not significantly. What does vary is the number of components that are needed in the final product. With the manual process the time is driven by size, together with any additional requirements requested.
The solution boils down to demand and time.
The best assessment of demand is to look at historic data. Using order details received over an appropriate period, the range and frequency of sizes that will be ordered in the future can be estimated. Clearly some intelligence can be applied. If there is commercial knowledge on changing requirements of significant customers this can be used to adjust the demand profile.
Based on this profile we can then estimate the time required to manufacture the product. To estimate the time an exercise needs to be done to be able to model the time to manufacture versus the sizes on the demand profile. This is a more complex exercise.
Once we combine the demand profile with the manufacturing model, we produce a time required profile which defines what work is required to produce the demand. Although this is not exactly capacity, if we compare the time required with the time available then we understand whether we have enough capacity and how much spare capacity we have – or we discover we don’t have enough capacity. Appropriate decisions can then be made.
Be sure to visit my follow-up post, on managing capacity flexibility in make to order production environments.
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