Capacity Requirement Planning (CRP)

What is capacity requirement planning (CRP)?

Capacity requirement planning forms part of the operational stage of the planning process and works in conjunction with a manufacturing requirement planning (MRP) system. A detailed capacity requirement plan provides an operational level overview for the production cell and assists the operations manager with identifying all of the elements that will be required to deliver the output.

For the operations manager to accept the capacity plan they may need to take into account, materials, machine production time, machine change over time and tooling, maintenance and downtime, along with manpower availability and skill, so that shift work can be assigned and resources can be used efficiently.

The operational team will feedback their ability to meet the planning requirements to the planning team, who will then look to ensure materials or components required for the production process are made available in time and in full via the procurement team. The planning team will then confirm the capacity plan and the materials requirement plan and generate a works order which will then be passed to the production team.

What are the steps in capacity planning?

Capacity management requires the analysis of two types of capacity:

  • Short and medium-term capacity – review of a 2-18 month demand forecast
  • Aggregate capacity – a horizon scan of the capacity of the whole organisation to meet fluctuations in demand

There are three stages in the capacity management process:

  • Measuring and forecasting aggregate demand
  • Identifying the different capacity plans required to meet forecast demand
  • Identification of the most suitable capacity plan to meet the aggregate demand given the organisations capacity constraints

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How is capacity planning used in manufacturing?

If a capacity requirement plan is not followed in a production process there is the risk that a company may commit to make goods that it does not have the resource available to deliver the finished product to the required specification, on time or in full.

It’s important that the planning team liaise with the operations team to ensure that the operations team have the right skilled production team available and that the production machines are available and running at the right capacity to make a production pass.

The capacity plan is an essential step in the planning process to ensure that the appropriate resources are made available and how the product will be routed through the plant to its finished state and financial implications of doing so.

What are the factors affecting Capacity Planning?

These are some examples of factors that can influence capacity planning:

  • Financial investment – Having the machinery or workforce to invest in.
  • Product complexity – a very complex item can slow down the production process and require a skilled workforce, simple products can be passed through the plant in higher volumes or in shorter timescales.
  • Workforce availability – there may be a shortage of skill, or consider the impact of organisations competing for the same skilled labour. These can affect output capacity or financial investment if you need to compete for labour.
  • Machine capacity – Working with aged machinery that requires repair and maintenance vs investment in new machinery.

To find out more about this subject read the full knowledge paper: Capacity Requirement Planning (CRP).

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Capacity Requirement Planning (CRP)


For addition reading on this topic visit Operations Management


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