Capacity

Capacity Planning as a Weekly Operating Rhythm

Capacity misses show up as overtime, air freight, and lost orders. This playbook covers the math, the loading thresholds, and the weekly rhythm that prevents them.

Capacity mistakes are expensive in both directions. Promise more than the line can make and you pay for it in overtime at 1.5 times wages, expedited freight at 4 to 10 times ocean rates, and customers who quietly resource. Build capacity you do not need and you carry depreciation on idle iron; a $500,000 machine at 30 percent utilization costs you $35,000 a year in depreciation for nothing. The fix is knowing demonstrated daily capacity, not nameplate, and comparing it to demand every single week.

The math: daily capacity equals scheduled hours times uptime times yield, divided by cycle time. Take a line running 2 shifts of 7.5 productive hours, a 30 second cycle, 85 percent uptime, and 97 percent first pass yield. Gross rate is 120 units per hour times 15 hours, or 1,800 units. Multiply by 0.85 and 0.97 and demonstrated capacity is 1,484 good units per day. Against demand of 1,400 per day you have 6 percent headroom, which is not comfort, it is a warning. The Capacity Planning calculator makes this a five minute check instead of a spreadsheet project.

Use demonstrated numbers, never hoped-for ones. Pull uptime and yield from the last 4 to 8 weeks of actuals, and use the median week, not the best week the engineer remembers. Nameplate cycle time of 30 seconds often runs 33 in practice from micro-stops and operator variation, and that 10 percent gap is 148 units a day on the line above. Plants that plan on nameplate discover the gap in month three of a contract, when the recovery options are all expensive.

Loading thresholds matter as much as the capacity number. Plan lines to 80 to 85 percent of demonstrated capacity; the last 15 percent is where queue time explodes, changeovers get skipped, and maintenance gets deferred. Above 90 percent loading, lead times typically double or triple because there is no slack to absorb a bad day. If demand is 1,400 against 1,484 demonstrated, you are at 94 percent loading and should already be executing a capacity action, not discussing one.

Work the levers in cost order before buying equipment. Yield and uptime are the cheap capacity: lifting uptime from 85 to 90 percent on that line adds 87 units a day, equivalent to almost 45 minutes of extra shift time, free. Cycle time reduction adds capacity at the constraint only, so find the constraint first. Then shifts: a third shift raises capacity roughly 45 percent after netting out the productivity dip new crews carry for 8 to 12 weeks. Capital comes last, with 6 to 18 month lead times on serious equipment, which is exactly why the weekly check exists.

The failure modes repeat everywhere. Planning to average demand and getting killed by peaks: a demand of 1,400 average with 20 percent seasonal peaks needs 1,680 capacity in peak months or a deliberate inventory build starting 8 weeks early. Ignoring changeover load: 5 changeovers a week at 90 minutes each is 7.5 hours, half a shift of capacity that vanishes from the plan. And forgetting yield compounds through routings: three sequential operations at 97 percent each deliver only 91.3 percent of what starts, so the front of the line must run 9.5 percent over shipment demand.

Run the rhythm. Weekly: compare the next 4 weeks of demand to demonstrated capacity per line, flag anything above 85 percent loading, and assign a countermeasure with a date. Monthly: refresh demonstrated uptime, yield, and cycle time from actuals, and review a rolling 12 month demand versus capacity picture with sales. Quarterly: make the capital call on any line projected above 90 percent for two consecutive quarters. World-class plants show demand versus demonstrated capacity by line for the next quarter on one page, catch gaps 8 to 12 weeks out, and treat overtime above 5 percent of hours as a planning failure, not a badge of effort.

Published 2026-07-02.