Manufacturers face a mountain of challenges to produce the goods we use in our lives. And each one must address these challenges with limited resources in the form of capital, skillsets, technological advances, and more. The managers who orchestrate this complex arena best look for ways to maximize the tools they have at their disposal by understanding their shop's capacity. Better use of manufacturing space, materials, labor, and optimized equipment performance is critical for companies to drive efficient production and capture the highest profitability.

1. HOW TO PERFORM A MANUFACTURING
CAPACITY ANALYSIS

2. • Manufacturers face a mountain of challenges to produce the goods we use in our
lives. And each one must address these challenges with limited resources in the form
of capital, skillsets, technological advances, and more. The managers who
orchestrate this complex arena best look for ways to maximize the tools they have at
their disposal by understanding their shop's capacity. Better use of manufacturing
space, materials, labor, and optimized equipment performance is critical for
companies to drive efficient production and capture the highest profitability.
• A capacity analysis can be an excellent solution for auditing a manufacturing plant
and diagnosing if there is hidden capacity waiting to be unlocked.

3. What is Manufacturing Capacity
• The goal of every manufacturer is to run its operations at full capacity. But what is manufacturing
capacity? The short answer is that manufacturing capacity represents the state in which all
equipment and resources within a company are utilized at the highest operation rate for the
product mix and volume their industry requires. This means that all processes from operations to
maintenance are optimized with a set amount of resources and that no unnecessary downtime is
incurred. When this condition is reached, the equipment has reached full capacity.
• Many factors further complicate the journey to this ideal state. A factory may suffer from a rash
of availability losses such as mechanical failures where valuable time is lost for repair. Or they
could lose valuable production capacity due to changeovers, setups, and adjustments.
• Manufacturing capacity can also suffer from performance losses. These include untrained or
inexperienced operator actions and stops for jams, idling, runouts. These are often addressed
hurriedly with little analysis into what caused it and how to prevent it from happening again.

4. • Finally, manufacturing capacity can be negatively impacted by quality losses,
including both process defects and yield reductions. Some causes include an under-
optimized workflow, human errors, or a broken process. In addition to robbing a
factory of valuable capacity, quality losses can also generate added waste that may
need to be reworked or thrown away, adding cost to the product.
• These hindrances to capacity are often referred to as the Six Big Losses. And their
effects can be devastating. At best, lack of understanding of capacity can trigger
expensive overtime, waste, missed deliveries, or unnecessary capital expenses in the
form of new equipment to make up for the loss.

5. What is a Capacity Analysis
• When a manufacturer needs to increase capacity, they often start with the kneejerk
responses above. However, one can only purchase so many machines and schedule
so many shifts before the focus on improving capacity moves inward. And the best
way to pinpoint where action should be taken to increase capacity is in the data.
• The process of capacity analysis is the difference between potential capacity and the
actual output a company currently achieves. By collecting production data,
manufacturers can identify what process, equipment, or function needs to be
changed to increase capacity. This will essentially allow manufacturers to drive
greater utilization from their existing resources via process optimization

6. How to Perform a Manufacturing Capacity
Analysis
• Companies that perform a manufacturing capacity analysis are able to reduce downtime and
waste. They can also mine the data to optimize processes and streamline workflows. Doing
so can help them understand what the existing constraints are and make real-time decisions
to solve problems as they happen. As data support these solutions, managers can drive
improvement throughout the operation and increase capacity without additional investment
in equipment or labor. For companies looking to improve their manufacturing capacity, here
are the steps required to unlock existing capacity:
• Benchmark Data
• If you don’t know where you’re at, you’re not going to see where you’re headed. It’s
common to overestimate current equipment utilization as many companies may not even
realize that utilization is as low as it is.