Capacity planning has been a topic under the limelight and is being discussed by the professionals from different industries from quiet sometime now, it is an established fact that capacity planning is a must for every business to survive and grow. But manufacturing sector cannot survive a day if there is no capacity planning For Business.
UAE has always been perceived as region rich in oil resources, oil is a backbone of any economy especially the businesses. Even though oil is vital essential for a business to perform be it manufacturing, services, transport, or IT sector. Oil having its own significance but is it only oil that is required for a business to be successful? No natural resources, work force, infrastructure, transport play a pivotal role to flourish a business.
Business environment has become extremely saturated, profits have squeezed, resources are becoming scarce by each passing day. UAE a nation comprising of seven states in the Gulf region is heavily -defendant on the resources that do not abundant there. Workforce being at the top of the list. Around 80-85% population in the country is expats, who are responsible to run the businesses in the country, weather conditions are not favorable for essential crops although efforts are being made to develop agriculture in the region using modern cultivation techniques.
Weather being extremely hot limit the performance when workout is to be carried out in the open. Finance is not big of an issue, but effective management of the finances is still a prerequisite for a business to grow. Due to high level of dependance on the imported resources that do not come cheap, cost of productions tends to sore that can impact the final produce not to be competitive when compared to the rival products produced at a lower cost.
Due to the constant evolution in the production methodologies and trial being made to get the most out of the available resources, it has been proved that if a business is able to mange to plan its available capacities efficiently it can still be profitable, and products can still be competitive despite the higher cost being paid for the essential resources.
What is Capacity and Capacity Planning
Capacity can be referred to the maximum amount that something can contain or produce. Capacity planning on the other hand, refers to the measures suggested and taken to make the best use of the available capacity avoiding wastage keeping the cost at the lowest with the highest levels of outputs.
Capacity as term with respect to a business can be manufacturing capacity, machine capacity, workforce capacity and financial capacity. Similarly capacity planning For Business is planning how much of the manufacturing capacity is to use for a certain number of units to be produced, at what capacity a certain machine is to be operated, how much workforce is to be employed, and what amount of finance is required to produce a certain number of units.
Like all the businesses around the word UAE business industry daily encounters the same question Capacity Planning and its Significance for Businesses in UAE. There are three main types of capacity planning:
1. Product Capacity Planning
It refer to the plan a business has in hand to furnish its current and upcoming requirements that may need to be furnished. E.g., a car manufacturing concern should have enough assorted units of the car model it produces in stock to furnish the demand that is put forward by the showrooms at different locations.
The specific number of units ready in stock with the business were determined by the capacity plan that the business had devised and implemented to produce that specific number.
2. Human Resource Capacity Planning
It refers to the number of personals required to produce a specific number of units, including not only the machine operators but people working in different areas in the business who help ensure smooth operations.
E.g., if a machine needs 1 person to run it smoothly and there are 2 people working on that machine, this instance will result in a financial loss since additional human resource were employed. Similarly, there is only a single operator operating 2 machines will result in a production loss since 1 worker was required to run the machine and to produce the optimum output.
3. Tool Capacity Planning
Machines, vehicles, fixtures are considered as tools in a business, planning and deploying tools efficiently is a must for a business to operate and in turn produce healthy desirable results. E.g., One forklift each is required to move the finished product from line to the store in order ensure uninterrupted production, and there are three such production lines in a manufacturing business. There are only 2 forklifts deployed to cater to the 3 production lines, this will result in choking all the three lines since product space will get choked resulting in both financial and production losses.
How to plan capacity
To start off with the capacity planning, there are three main steps need to be followed.
- Measure
- Analyze
- Formulate
Measure
Business should measure all its capacities be it production, workforce, finance or market reach and available time.
Analyze
Once a business has effectively measured its capacities, now it is time to analyze the available capacities and determine whether the available are in sync with each other and if they are capable to deliver the desired results? In case shortcomings are observed the capacity bundle should be fine-tuned by adding resources to certain areas or removing resources depending on the situation but the objective should always be to get a perfect balance of the capacities.
Formulate
The last step in capacity planning For Business is formulation of an effective business strategy capable of yielding the desired results and achieving the set goals. The formulation results are depicted in the ROI of the business.
Conclusion
Like anywhere else in the world capacity planning For Business is a much-debated topic in UAE as well. Capacity Planning and its Significance for Businesses in UAE has not at all anything of a less importance in any other market. It is the need of the hour to ensure best practices while dealing with the capacities. The capacity planning should be given a high level of importance since it is key success factor for any business. No matter what strategy is employed in capacity planning, be it the Lag, Lead or Match strategy they all should be able to translate into positive desirable results without any compromise on the product quality and socio, economic, cultural, and ethical responsibilities.
Bader Saleh Auditing of Accounts provides the best consultancy services for businesses in not only boosting business but also effective planning and capacity building. Feel free to contact us:
• Office # 0641, Tamani Arts Offices, Business Bay, P.O. Box 111390, Dubai, UAE
• +971 4 570 7357
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