Capacity planning affects all aspects of a company's operations. The advantage of employing a match strategy is that it most effectively matches actual capacity to what's required. Companies use other strategies when an exact match is unimportant. The lead strategy tries to anticipate future required capacity and expands capacity to meet it. The lag strategy only expands capacity when present capacity is fully used. Both have a high risk of not providing required capacity. The match strategy closely tracks capacity use and incrementally increases capacity as needed.
Ensuring Capacity Availability
One of the main advantages of the match strategy for capacity planning is that it ensures the availability of sufficient capacity to meet the needs of the company's customers. The manufacturing or service capabilities of a company exist to serve its customers, and customer satisfaction depends on the company's timely response to their requests. When enough capacity to meet customer needs is not available, customers will be inconvenienced or make other arrangements. The match strategy, with its focus on matching actual capacity to that which is required, avoids these problems.
It is possible to plan for sufficient capacity by projecting future needs based on past experience. Such planning avoids capacity bottlenecks and dissatisfied customers, but it does so at the risk of installing substantial overcapacity. When projected sales or planned events don't work out as predicted, the company will have installed capacity it cannot use. The match strategy avoids potential overcapacities by only increasing capacity when market conditions indicate the need -- and then only incrementally.
Both capacity bottlenecks and overcapacities reduce the efficiency of company operations and increase costs. When insufficient capacity is available, customer requirements can't be fulfilled and the company must create a system of waiting lists or back orders to accommodate customer requests. When these are ready to be fulfilled, customers may no longer need the product or service, resulting in lost business and uncovered costs. When projections result in overcapacity, the extra capacity generates fixed costs without any offsetting income.
Avoiding Resource Misallocation
A final advantage of the match strategy for capacity planning is that it avoids the resource misallocation resulting from capacity planning mistakes. A failure to match capacity to market requirements uses up resources that could be employed productively to meet customer needs. Instead, the company must assign employees to troubleshoot problems caused by incorrect capacity planning. Employees work extra hours in a crisis atmosphere trying to satisfy their customers without the required products or services available. The match strategy ensures that when employees pass on customer requests the matching capacity is in place.
- Stockbyte/Stockbyte/Getty Images