Capacity Requirements Planning (CRP) by Loading Machines

Material Requirements Planning (MRP) provides the foundation for calculating Capacity Requirements Planning (CRP), a tool used to complete the Master Production Schedule (MPS). In business, these two tools are run together to plan the Materials required to produce and also ensure that Machines / Work Centers are loaded with right components to meet the deadlines to meet Customer demands.

• Material Requirements Planning (MRP) looks at the inventory and at orders to generate the demands
• Capacity Requirements Planning (CRP) uses Routing and work centers 
and how to meet those demands.

Important here is the discipline to follow the process. If a company has an ad-hoc way of production, then its better not to go for Capacity Requirements Planning as it would not work.

Capacity Requirements Planning (CRP) calculates workload for a Work center or Machine. It does this by exploding the routing and processes for MRP planned and confirmed orders and determining start and due dates for each operation, using the work center and shop calendars and a technique called back scheduling.

The capacity for a work center is the number of machines or personnel available for that work center, defined in Work Center Maintenance, multiplied by work hours, defined in the shop floor calendar.

ACTouch has been designed to handle Materials requirements planning with a focus on Discrete, Process Manufacturing and Large and Heavy Machine Manufacturing companies.

Why Manufacturing Capacity Planning is important?

In Business, everything is scarce. Means People, Machines hours, Finance etc. So every business is focused to maximize the utilization of Human Resources and Machines Hours. If you ask any Manufacturing person on “one thing” that he hates is idle time of machine or machines are not running.

Its expected that Machines are continuously loaded with raw materials and quality production is done. So to make it happen, we need to have details of right Machine capacity, What Quality level it can produce, what repairs and preventive maintenance to be carried out regularly to ensure that machine breakdowns are less.

It’s important to know machine’s excess capacity and check the actual demand from Business. More than that we should know current capacity of Work Centers or machines. Understanding the current capacity with a clear demands helps us as part of capacity planning process. Resource capacity with its maximum capacity helps us to know the insufficient capacity and decide whether to outsource the work or delay the production. Machine Production rate or production capacity helps capacity planning strategy and proper planing.

So we need a tool to plan all these and increase the productivity. So Capacity Requirements planning is tool in this direction.

However this also means, you need to have a proper discipline in production and cant do any ad-hoc changes on daily basis. Else its of no use.

There are few details that helps to arrive at the capacity planning strategy is as below. We need first to arrive at the rough cut capacity planning and then fine tune and make its a final one.

1. Demand forecasts
2. Production quantity for an Hourly Rates
3. Material requirement plan tool helps to fine tune the actual quantity to produce.
4. Manufacturing process with BOM and Routing Process.
5. Inventory quantities / Available Stock.
6. Employee total hours per week available to use.
7. Types of capacity – what kind of machines available with its capacity.
8. Machine production time with Load rate and unload rates.

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How to execute Capacity Requirements Planning (CRP)?

Generate capacity requirements for manufacturing orders using Recalculate Capacity Plan. CRP explodes the routing and processes for the orders you select. It then determines capacity requirements for selected manufacturing orders by scheduling their operations. CRP determines operation start and due dates using the work center and shop calendars and a technique called back scheduling.

Capacity Requirements Planning: What is Backward Scheduling?

1. When Capacity Planning (CRP) back-schedules orders, it takes the due date of an WO and schedules each of its operations from the last operation in the order routing or process backward to the first one.
2. Capacity Planning (CRP) assigns each operation a start date and a due date, using the operation lead time components “Pre Production” and “Post Production” to calculate operation start dates. The start date of an operation is the same as the due date of the previous operation.
3. Capacity Requirements Planning (CRP) calculates run times based on the actual order quantity—that is, the order quantity less the quantity completed
4. When manufacturing order operations overlap, the system smoothes the scheduled start and due dates to prevent the scheduled due date for one operation from occurring later than the due date for a subsequent operation.
5. MRP calculates manufacturing order release dates using a manufacturing lead time that is based on an average order quantity defined in Item Planning.
6. If the order quantities used in CRP calculations differ from this average quantity, CRP may schedule the start date for an order’s first operation before the release date for that order. When this occurs, a message displays to alert you of the conflict. You can resolve such conflicts by adjusting the order release or due date and rerunning CRP.

Calculate Capacity: How Work Center Load Reports would help?

You can generate load reports by work center. Capacity Requirements Planning (CRP) determines load hours for a work center based on Pre and Post Production efforts. CRP determines the load an operation exerts on a work center using the following calculation:

Operation Load = Setup Time + (Run Hours/Unit x Quantity Open)

The quantity open for an operation is the order quantity minus any quantities reported complete.

Adjusting Machine Capacity Planning and Load is as below.

1. If a Machine Capacity / Work Center is overloaded or under loaded, you can modify either Machine Capacity or the timing or amount of the load.
2. Adjusting Machine Capacity Planning – Add or subtract workday hours as needed for work center or shop calendars.
3. Adjusting Machine Load and machine activities – Adjust the timing or amount of load by modifying
   1. Work order due dates
   2. Operation lead time components

FAQ’s on Capacity Planning

1. What is Capacity Plan?

A Capacity Plan is a strategic and systematic approach used by businesses to ensure that they have the necessary resources, facilities, and capabilities to meet current and future demand for their products or services. It involves assessing and optimizing the available resources, such as equipment, labor, and infrastructure, to achieve efficient and effective production or service delivery.

Capacity planning considers factors like production volume, lead times, workforce availability, and equipment utilization to determine the optimal level of resources needed to fulfill customer demand without overburdening the organization. It helps businesses avoid bottlenecks, minimize underutilization, and maintain a balance between supply and demand.

An effective capacity plan ensures that a company can respond to changing market conditions, manage growth, and achieve its operational goals while maintaining quality and customer satisfaction.

2. What is Manufacturing Capacity Planning?

Manufacturing Capacity Planning is the process of determining the production capacity needed to meet the demand for goods while optimizing the use of available resources. It involves evaluating factors such as machine capacity, labor availability, production schedules, and raw material availability to ensure that production remains efficient and meets customer expectations.

Manufacturing capacity planning aims to answer questions like:

• How much can we produce in a given time frame?
• What resources are required to meet production targets?
• Are there any constraints that might affect production capacity?

By analyzing and planning manufacturing capacity, businesses can enhance productivity, reduce lead times, manage costs, and maintain a competitive edge in the market.

3. What is Capacity Planning?

Capacity Planning is the process of assessing and optimizing an organization’s ability to produce goods or deliver services in order to meet current and future demand. It involves determining the required resources, such as personnel, equipment, facilities, and materials, to ensure that the organization operates efficiently and effectively.

Capacity planning takes into account various factors, including production volumes, lead times, workforce capabilities, technological capabilities, and seasonal fluctuations. It helps organizations strike a balance between supply and demand, avoid overutilization or underutilization of resources, and maintain consistent product quality and customer satisfaction.

By implementing effective capacity planning, businesses can align their production capabilities with market demand, make informed decisions about resource allocation, and enhance their overall operational performance.

4. How to Calculate Capacity?

Calculating capacity involves several steps:

1. Determine a Time Frame: Choose a specific time frame for which you want to calculate capacity, such as an hour, day, or month.
2. Identify Resource Availability: List the resources needed for production, such as labor, machines, and facilities.
3. Calculate Resource Utilization: Determine the utilization rate of each resource by dividing the actual production time by the available time.
4. Calculate Capacity: Multiply the utilization rate of each resource by the total available quantity of that resource. Sum up the capacities of all resources to get the overall capacity.

For example, if a machine is available for 8 hours a day and is utilized for 6 hours (75% utilization), its capacity would be 8 hours * 75% = 6 hours.

5. How to Calculate Machine Capacity?

To calculate machine capacity, follow these steps:

1. Determine Time Frame: Choose a specific time frame for calculation, such as a day or a week.
2. Count Available Hours: Determine the total available operating hours for the machine within the chosen time frame.
3. Count Operating Hours: Calculate the actual number of hours the machine operates during the selected time frame.
4. Calculate Machine Capacity: Divide the operating hours by the available hours and multiply by 100 to get the machine’s capacity as a percentage.

For instance, if a machine operates for 18 hours out of 24 available hours in a day, the machine’s capacity would be (18 / 24) * 100 = 75%.

6. What is Employee Capacity Planning?

Employee Capacity Planning is the process of determining the optimal number of employees needed to meet production or service demands while considering factors such as workloads, skills, shifts, and productivity levels. It involves aligning workforce availability with business requirements to ensure that tasks are completed efficiently and on time.

Employee capacity planning helps organizations:

• Allocate tasks effectively based on employees’ skills and availability.
• Avoid overloading or underutilizing employees.
• Ensure smooth workflow and maintain employee morale.
• Adjust workforce levels according to fluctuations in demand.

By implementing employee capacity planning, businesses can improve labor management, enhance productivity, and achieve operational goals.

7. What is Production Capacity Planning?

Production Capacity Planning is the process of assessing and optimizing an organization’s ability to produce goods or services to meet customer demand. It involves analyzing production volumes, resource availability, production schedules, and operational efficiency to ensure that production capacity aligns with market requirements.

Production capacity planning helps answer questions such as:

• How much can we produce in a given time period?
• Do we have the necessary resources to meet production targets?
• Are there any constraints that might impact production capacity?

By effectively planning production capacity, businesses can reduce lead times, manage costs, and maintain a competitive edge in the market while delivering high-quality products on time.

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