Rough cut capacity planning is a technique used by manufacturing companies to test the viability of their manufacturing production schedule (MPS) before production begins. By comparing required resources to available resources, companies can modify their MPS or add resources to meet production goals. This process helps reconcile management goals with the capabilities of those doing the physical work and serves as a tool for negotiating changes in the MPS.
Rough cut capacity planning is a control technique used by manufacturing companies. As company management develops a manufacturing production schedule (MPS), they base their schedule on the belief that all the materials needed to meet that schedule will be available. This isn’t always the case in the real world, and a lack of available resources can quickly derail the best plans. Planning allows companies to test the real-world viability of MPS before it is put into motion. This process can alert management to potential scheduling issues so that MPS can be modified or resources can be added as needed to meet production goals.
Management creates an MPS based on demand forecasts, customer orders, and financial goals. The program itself typically has little bearing on factory capacity or the amount of raw materials available. By performing rough cutting capacity planning before production begins, factory owners are able to reconcile management goals with the capabilities of those working on the floor.
During planning, staff members compile a list of all the resources needed to produce the quota indicated in the MPS. This includes equipment and machinery as well as raw materials and supplies. It also includes the staff and management needed to operate the factory and operate the equipment during these production runs. Next, the company compares these required resources to a list of currently available resources and notes any discrepancies. If certain resources are missing, the company plans to obtain them.
Based on the results of rough cutting capacity planning, the company can add more machines or reconfigure existing assembly lines to better meet its goals. They can also order more raw materials or look for new sources of inventory. The company could also hire more employees or add shifts to meet demand. The company may change certain procedures and practices to improve efficiency.
The planning process has many advantages for manufacturing companies. It helps reconcile the goals of senior management with the capabilities of those doing the physical work and also serves as a powerful tool for negotiating a change in the MPS, although this is generally considered a last resort scenario. This planning process helps with short-term inventory and hiring processes and also points out issues in long-term capital investment and purchasing procedures.
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