How Capacity Planning Software Work?

In related articles, we have talked about the important business forecasting and having a reliable idea of how much product you will be able to push. We’ve talked about how effective supply planning can prevent overstocks and stock-outs of your inventory. We have discussed the importance of retail analysis software for retail companies to stay alive in an ever-increasing e-commerce market space. We have highlighted the power of sales and operations planning software and how it can directly increase revenue and decrease expenditures. All of these processes and tools deal with product and inventory, this article, however, will deal with the employee operations within a company itself.
Capacity planning tools could be considered one of the most important among these software solutions because they focus on the employees rather than the products. No matter how effective the tool, it will be useless unless your employees are performing at maximum capacity.
The hiring/training process for new employees can be both long and expensive. Without a proper plan in place, many negative scenarios can occur. Perhaps you hire a new employee to perform a specific task that they have a specialty in. They finish the task a lot quicker than intended and now have a lot of idle time on their hands that you still have to pay them for. You cannot simply let them go because then you will have to pay them severance. It would have been better to have hired a consultant or freelancer that works on a contract basis. That way, you could have had an agreed-upon amount of work or time and then both parted ways amicably.
On the other hand, let’s say that you hire a freelancer with a contract for 3 months. The person comes aboard the team but by the end of the 3 months, it looks like the project will take another 3 months to complete. You could hope that this person did not have another job lined up, but that might not be likely. Suddenly you lose your freelancer to another position and you need to hire someone else to replace them which will take a lot of time and money.
These scenarios are very similar to supply and demand planning software wherein the demand represents the hours of work needed to complete a project and the supply represents the availability of workers to meet the demanded work hours. The first scenario represents what happens when you have more supply than demand. Likewise, the second scenario represents what happens when you have more demand than supply.
This is where capacity planning comes in. Capacity planning takes into account how much work needs to be done. This can be on a weekly level, monthly level, or possibly a yearly level. Then it determines the best hiring scenario to meet the workload without over-employing. Capacity planning software uses mathematical algorithms and historical data to make these estimates in order to avoid the aforementioned negative scenarios.
Another positive benefit of capacity planning is the impact that it can have on company morale. By minimizing idle time, employees will both feel like they are making a contribution and be overall more productive. Scientific studies have shown that productive activities increase a desire to work. Think about it, we’ve all had those weekends where we don’t get much done initially, and therefore, we feel lazy at the end of it. The same happens to employees with an excess of idle time.
The opposite can be true too. If employees feel overworked and are forced to work long hours, this can subsequently decrease productivity. Having a large overwhelming project with a lack of the proper resources can lead people to a state of mind where they have no idea how to begin and therefore productivity is equally negatively impacted. Therefore, you can see that capacity planning tools not only improve the company financially but both the quality and quantity of results produced by employees significantly increase.
With a combination of every business/supply chain optimization tool, you can end up saving anywhere from tens of thousands to millions of dollars, depending on the size of your company. It’s no secret that proper planning tools improve the entire wellbeing of a company, but perhaps we have shed some light on added benefits that you may have not previously considered.
Finding a solution can be tricky, for any questions you may have on the subject, Avercast, a supply chain software company offering each of these solutions, has several articles on their products explaining the benefits in greater detail.
We encourage you not to underestimate the benefits of powerful planning tools.