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Capacity Management: Definition, Process, and Examples

  • Pragya Soni
  • May 01, 2022

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Capacity of an organization depends on several factors. It is a variable quantity that may change due to changing conditions and external influences, like seasonal demands, industry changes, and other macroscopic events of the surroundings. But an ideal company must remain quick enough to constantly meet the expectations of the market.

It is important for the organization to implement capacity management, meet the demand-supply inventory of the market. It can be achieved by several modifications and adjustments. In this blog, we will study the details about capacity management.

Also Read | Business Process Management

What is Capacity Management ?

Capacity management is defined as the act of ensuring maximum potential activity of businesses. It focuses on greater production output all the time, under each and every condition. It is basically defined as the business benefits a company can achieve, produce, or sell within a given time period.

The process of capacity management includes a wide variety of planning actions. These actions ensure that a business infrastructure has adequate resources to maximize its potential activities. It also focuses on guarantee production in any organization under any condition.

The theory and action plans of capacity management consists of planning, IT monitoring, and information related to IT and technology management. The plan laid capacity to handle data processing requirements across different life cycles. The major goal of capacity planning management is to balance costs incurred against resources required.

The procedure of capacity management primarily deals with the performance, memory, physical space, operational, and development environment. It includes the development of all aspects of businesses for example, human resources, hardware, networking equipment, software and peripherals.

The capacity management helps to compare the available resources within the time deadline. It analyzes the capacity and gives you an overview of your business. Such as if the composition of human capital in a company matches with the actual needs of the organization or not.

Capacity management helps in analyzing resource availability and make it easier for the companies to check their availability and skills for the upcoming projects. This analysis also assists the project managers and directors to take effective decisions for hiring new people and projects. It also helps in managing the demand and supply of the resources.

Objectives of Capacity Management

Capacity management is the art of capacity management that emphasizes well utilization of resources. The objective of capacity management is to maximize the profits for businesses within the given limits. 

Capacity management planning differs from organization to organization. It is different as per the business types. The common and shared objective of capacity management are as follows:

Capacity management planning helps to identify the capacity requirements.

The planning helps to meet current and future projected workloads.

Capacity management helps in the development and maintaining of businesses.

Capacity management ensures that the performance goals of an organization are met on time.

Capacity management ensures the process of business within the budget.

Capacity management monitors the capacity continuously to bind the service level management.

Capacity management assists in diagnosing and resolving incidents occurred during business procedures.

Capacity management helps in analyzing the impact of variances on capacity.

Capacity management takes proactive measures to improve performance.

Capacity management helps in cost optimization during the whole process.

Also Read | Cost Benefit Analysis

Examples of Capacity Management

Different organizations have different criteria for capacity management. The capacity of a business depends on the type of the products, services, and duties delivered by the organization. The examples of capacity management may include the following cases.

A coffee café that can produce 500 cups of coffee per day.

A call center that can handle 5000 calls per week.

A pharmaceutical production line that can assemble 30 lakhs capsules per month.

A restaurant that can accommodate 100 family dinners per night.

A car service system that can repair 10 cars per hour.

Let us consider a broad example of a television manufacturer. A TV producing company always needs to make sure that it is able to meet the demand of the market. Now the company will hire a special team to read and realize the market requirements.

The special team analysis that IPL is going to begin in the coming month, so the demand for television in the market will be apparently higher than usual. It also released data that HD television with prime quality will be more than the usual televisions. 

Now, the next step of the organization is to check its capacity, if it is sufficient enough to meet the market requirements or not. The organization analyzes that it doesn’t have sufficient requirements to handle the demand. Also, the fact that the market demanded is expected to go down as soon as the IPL season ends. 

So, now applying the principles and procedures of capacity management the company would think of leasing employees and machines rather than purchasing or buying for permanent.

Once the company leases machines and employs manpower for the purpose. It will start producing fresh new HDR television sets for the market. This is how the process of capacity management works in real life, and the way by which industries and organizations manage their capacity to meet the supply and demand chain of the market.

Also Read | Business Process Notation

Process and Procedure of Capacity Management

Capacity management tools help in measuring the volumes, speeds and efficiencies of the movement of data. Data journey helps in the data’s journey through the IT infrastructure. Capacity management helps in the process of organization of applications.

Capacity management enables the organization to examine the operations of all hardware and software in the environment. It also captures the critical information related to data flow. The capacity management program has measurement and analysis tools that must enable it to observe the individual performances of IT assets.

The capacity management includes the elements such as servers, end-user devices, storage systems, storage network devices, cloud services, and network communication devices. The capacity management can be achieved via software, hardware or by manual means. Capacity management relies on the interception of data movement metrics.

The first step of capacity management is the emulation programs. Emulsion programs are effective tools for capacity management. The programs mimic the application programs like database management . It ensures its own sets of test data to ensure accurate and consistent results.

The second approach of capacity management involves the employment of hardware-based monitoring devices. The capacity management focuses on the network performance and provides comprehensive information.

A capacity management process is three step procedure that involves following steps:

Capacity Calculator

The first step of capacity management is to estimate a clear detail of the current resource capacity. The organization first needs to prepare a utilization report. The utilization report helps to understand the expected shortages of the business. Thus, helping in maintaining the capacity management strategy for upcoming processes.

Determining the Resource Needs

Based on the purpose or scope of the project. It is essential to make a list of present resources and missing resources. This will help you to determine the kind of team you need to hire for the purpose.

Prioritizing the work

Hiring and assigning the team task isn’t the only task to do. It is essential to do some smart projects and task prioritization. If you don’t make your list first, this might make you miss your capacity.

Also Read | What is Cloud Mining?

Components of Capacity Management

Capacity management provides high-level information on a variety of business components. It assists to gather as much possible information that attempts to correlate the measurements into an application-centric picture.

The major categories include processing power, memory, storage capacity and speed for all the intermediate processes for the businesses. Here is the brief introduction to all the components of capacity management :

1. Performance: Performance is the key metric factor in capacity management. It is essential for an organization to detect its bottlenecks. It affects the overall efficiency of businesses. Best performance helps in the upgradation of businesses.

2. Memory: Memory is the other important factor in capacity management. If the memory of the company system isn’t stabilized it will slow down the overall process. Insufficient memory is itself the biggest bottleneck for the organization.

3. Physical space: Physical space is commonly associated with the focus to generate storage space for application and data.

Also Read | Business Process Discovery

Factors that weaken the Capacity Management and Project Delivery

There are several factors that affect the organization performance and play a vital role in defining the capacity management of the network or basically, website business. The primary list includes:

1. Delay: Sometimes the delivery of a project or network takes too long to deliver. It takes a whole time for data transmission as several factors are responsible for this. 

A simple data is broken into several parts such as frames, pockets and segments. While reliable protocols allow receivers to get a notification after delivery of each data. Thus, making it possible to measure the round-trip time.

2. Reception order: Some real-time protocols, for consideration voice and mp4 require packets to arrive in the correct order to be processed. If packets arrive out-of-order, it may drop the data transmission.

3. Packet loss: Packet loss may occur due to errors in overloading of the intermediate network. Packet loss can also occur due to intentional discarding of the traffic to enforce a particular service level.

4. Retransmission: Retransmission occurs when packets are lost in a reliable network. Retransmission faces two delays, the first arises from re-sending the data and the second is the result of data waiting.

5. Throughput: Throughput is the amount of traffic, network can carry. It affects the project delivery of the businesses.

Also Read | Business Process Mapping

Types of Capacity Management Planning

Types of Capacity Management Planning : 1. Product capacity planning 2. Workforce capacity planning 3. Tool capacity planning

 Types of Capacity Management Planning

  There exist three types of capacity management planning, which serve the different needs of different organizations. It is beneficial for both short-term and long-term resources management:

Product Capacity Planning

Product capacity planning ensures the adequate product and services ready for the serving and delivery proposes.

Workforce Capacity Planning

Workforce capacity planning helps in estimating the efficient number of team members and hours required to complete the task. Workforce capacity also helps in identifying the ideal time to start recruiting new employees and onboarding process details.

Tool Capacity Planning

Tool capacity planning ensures the supply of adequate equipment to complete the jobs, assembly line components, and other requirements for the delivery of the products.

Advantages of Capacity Management

The advantages of capacity management are as follows:

Improvement of performance.

Reduction of consumption.

Fine tuning of applications and other components of businesses.

Elimination of reductant work.

Consistent monitoring of business plans.

Improvement of organizational and IT services.

Also Read | Examples of Information Technology

There are several providers available in the market and on the internet that provide capacity management plans and processes to the organization. All you need is to identify the goals and needs of your company, and then work in the required direction to implement full capacity management.

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Capacity Analysis in Operations Management

1/22/21 12:00 AM

By PlanetTogether

For manufacturing and production operations, there is a limit to what can be produced within a given day.

This can be due to space limitations in warehousing or a maximum number of items that can be processed on a machine in a given time frame.

In other words, the available capacity is finite and there is a finite amount of products that can be produced or stored in that timeframe.

capacity analysis and capacity planning in operations management

These frustrating situations highlight the need for proper analysis of the capacity you have and its utilization, to identify he root of the issues.

Capacity Analysis is the process of identifying the available capacity for your organization which includes the available inventory holding capacity, machine capacity, labor capacity, etc.

It also aims to identify how capacity utilization can be optimized to increase the total available capacity of the operations.

Optimize Your Production with Accurate Capacity Planning

The overall goal of many manufacturing companies is to create an optimized and efficient schedule to have balanced flow between supply and demand, while minimizing waste and costs.

Companies can get closer to their goals by maximizing the available capacity they already have.

To do this, it is helpful to model the capacity of the entire infrastructure, process, and/or machines. Then, as long-term production planning and demand forecasting are performed, a capacity plan can be developed.

The capacity plan ensures that the production facility knows which orders they can commit to based on the available capacity of their facility.

Capacity planning promotes a systemic approach of determining resource requirements for a projected output within a given time frame. Proper capacity planning will help identify whether you have the right capabilities (or 'skills') required to meet demand. 

capacity planning in operations management

Capacity Limitations

It is important to understand your capacity limitations so that you can identify areas of improvement and develop a capacity plan that is just right for your organization.

Many factors contribute and detract from the available capacity. These include the quality and quantity of labor, machine availability, waste levels, government regulations, required machine maintenance, and other external factors. 

Unexpected events, as most recently observed during the COVID-19 global pandemic, have highlighted how external factors can affect capacity levels.

Physical distancing requirements reduced the total available capacity for many manufacturers, leading to a decreased output. Some of these companies chose to add overtime capacity, while others chose to outsource some of their operations or even added automation to increase the output of their production lines. 

The prevailing theme for businesses that thrived during the pandemic had one thing in common - agility . These companies were able to quickly identify the effects of losing capacity in order to make the right choices to meet their business goals quickly and efficiently. 

Main Capacity Thresholds:

The key frameworks to model capacity are rooted in real world thresholds (constraints) of practicality and profitability. Most commonly, these include:

  • Price - The cost of equipment, machines, softwares, and other maintenance fees can create thresholds to the total available capacity on resources. 
  • Performance - The performance of your resources can affect the total amount of capacity you have. If older machines are running at a slower rate than they should, you are not able to produce as many items on it.
  • Capabilities - The resource capacity you posses must be capable to perform the work that is required. If your capacity bottleneck involves a process requiring a highly specific skill set, your capacity will be limited.

capacity planning and analysis in operations management

Capacity Analysis

The first step to take when you are constantly operating under constrained capacity is to identify the bottleneck .

A capacity bottleneck is a process or operation that has limited capacity and reduces the capacity of the entire production plant.

Bottlenecks cause delays in production, too much work-in-process items, and can be costly to the company. Identifying capacity bottlenecks can help identify the real cause of the problem and develop a plan to resolve it. 

There are many ways to increase resource capacity within your facility:

  • Perform regular maintenance on machines to increase their efficiency. 
  • Purchase another machines (best for inexpensive resources, if possible).
  • Hire another employee.
  • Invest in employee training.
  • Re-allocate existing capacity to increase the capacity of the bottleneck operation.
  • Optimize your production schedule to reduce sequence-dependent setups.

resource queue in capacity planning

Capacity Modeling and Advanced Planning and Scheduling

In today's manufacturing facilities, the optimization of production scheduling and capacity planning are changing rapidly and drastically.

Outdated capacity planning models that relied on guesswork and oversimplification lead to a decrease in efficiency and under-modeled capacity. 

However, Advanced Planning and Scheduling (APS) systems have changed the way capacity planning and analysis are handled today.

PlanetTogether’s software is by far the best and most encompassing planning software package offered today. ED CZYSZ, PRODUCTION SCHEDULING MANAGER, ILLES SEASONINGS & FLAVORS  

These systems use capacity performance models with real-time data and analysis to determine what capacity is needed. Capacity constraints are automatically applied to ensure that every machine is capable to perform the work that is assigned to it.

Advanced Planning and Scheduling systems are reshaping and augmenting ERP and MRP softwares by allowing faster and more accurate performance results that have improved operations planning as a whole. 

Advanced Planning and Scheduling (APS) Software

Advanced Planning and Scheduling Softwares have become a must for modern-day manufacturing operations as customer demand for increased product assortment, fast delivery, and downward cost pressures become prevalent.

These systems help planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

APS Systems can be quickly integrated with an ERP/MRP software to fill the gaps where these systems lack planning and scheduling flexibility, accuracy, and efficiency.

With PlanetTogether APS you can:

  • Create optimized schedules that balance production efficiency and delivery performance
  • Maximize throughput on bottleneck resources to increase revenue
  • Synchronize supply with demand to reduce inventories
  • Provide company-wide visibility to resource capacity
  • Enable scenario data-driven decision making

The implementation of an Advanced Planning and Scheduling (APS) Software will take your manufacturing operations to the next level of production efficiency by taking advantage of the operational data you already possess in your ERP system .

APS is a step in the right direction of efficiency and lean manufacturing production enhancement. Try out a free trial or demo!

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Topics: Reschedule activity , Advanced Planning and Scheduling , Lean Manufacturing , capacity planning , control design , constraint , scheduling , JIT , MRP , theory of constraints , enterprise resource planning , ingredients , multi-plant , Demand Forecasting , Material Requirement Planning , Capacity Modeling , workload

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How to Perform a Manufacturing Capacity Analysis

Manufacturers face a mountain of challenges to produce the goods we use in our lives. And each one must address these challenges with limited resources in the form of capital, skillsets, technological advances, and more. The managers who orchestrate this complex arena best look for ways to maximize the tools they have at their disposal by understanding their shop's capacity. Better use of manufacturing space, materials, labor, and optimized equipment performance is critical for companies to drive efficient production and capture the highest profitability.

A capacity analysis can be an excellent solution for auditing a manufacturing plant and diagnosing if there is hidden capacity waiting to be unlocked.

What is Manufacturing Capacity?

The goal of every manufacturer is to run its operations at full capacity. But what is manufacturing capacity? The short answer is that manufacturing capacity represents the state in which all equipment and resources within a company are utilized at the highest operation rate for the product mix and volume their industry requires. This means that all processes from operations to maintenance are optimized with a set amount of resources and that no unnecessary downtime is incurred. When this condition is reached, the equipment has reached full capacity.

Many factors further complicate the journey to this ideal state. A factory may suffer from a rash of availability losses such as mechanical failures where valuable time is lost for repair. Or they could lose valuable production capacity due to changeovers, setups, and adjustments.

Manufacturing capacity can also suffer from performance losses. These include untrained or inexperienced operator actions and stops for jams, idling, runouts. These are often addressed hurriedly with little analysis into what caused it and how to prevent it from happening again.

Manufacturing Shop Floor with Production Dashboard

Finally, manufacturing capacity can be negatively impacted by quality losses, including both process defects and yield reductions. Some causes include an under-optimized workflow, human errors, or a broken process. In addition to robbing a factory of valuable capacity, quality losses can also generate added waste that may need to be reworked or thrown away, adding cost to the product.

These hindrances to capacity are often referred to as the Six Big Losses. And their effects can be devastating. At best, lack of understanding of capacity can trigger expensive overtime, waste, missed deliveries, or unnecessary capital expenses in the form of new equipment to make up for the loss.

What is a Capacity Analysis?

When a manufacturer needs to increase capacity, they often start with the kneejerk responses above. However, one can only purchase so many machines and schedule so many shifts before the focus on improving capacity moves inward. And the best way to pinpoint where action should be taken to increase capacity is in the data.

The process of capacity analysis is the difference between potential capacity and the actual output a company currently achieves. By collecting production data, manufacturers can identify what process, equipment, or function needs to be changed to increase capacity. This will essentially allow manufacturers to drive greater utilization from their existing resources via process optimization .

Further reading: How to Increase Manufacturing Production Capacity

Companies that perform a manufacturing capacity analysis are able to reduce downtime and waste. They can also mine the data to optimize processes and streamline workflows. Doing so can help them understand what the existing constraints are and make real-time decisions to solve problems as they happen. As data support these solutions, managers can drive improvement throughout the operation and increase capacity without additional investment in equipment or labor. For companies looking to improve their manufacturing capacity, here are the steps required to unlock existing capacity:

Benchmark Data

If you don’t know where you’re at, you’re not going to see where you’re headed. It’s common to overestimate current equipment utilization as many companies may not even realize that utilization is as low as it is.

Benchmarking includes determining existing capacity. Machine speed, quality losses, downtime by categories – such as breakdowns, changeovers, and performance losses – must all be measured to determine the current capacity. And in many cases, that number is shocking. Several best practices can be used to create a solid and practical framework for benchmarking:

  • Internal Meetings: An internal kickoff meeting helps set expectations and ensures that everyone is on the same page. By bringing the right team together, everyone will know what the utilization goal should be.
  • Checking the Data: There are times when the current data reported says little about the actual status of the machine. It may be incorrectly recording the status, or it may be part count, downtime, or some other parameter. Making sure the data is true will help in analyzing what needs to be done.
  • Evaluating Data: This is where original assumptions are compared with actual current utilization. It represents a new launch point on what improvements can be made.
  • Planning: By creating an improvement plan, managers can pull together the pieces of original expectations, the actual data-driven state of capacity, and what improvements can be made.

MachineMetrics Utilization Report

An example of a MachineMetrics utilization report, one of many pre-built reports that can be used for benchmarking data.

Analyze Downtime

Once a manufacturing operation has benchmarked its data and understands its true utilization, a downtime analysis must be conducted. This involves managers, technicians, manufacturing engineers, operators, and others who can help identify all the reasons for downtime and plan how to reduce or eliminate it.

With the revelations that accompanied the benchmarking of the facility, team members can move on to measuring the downtime driving that utilization. By answering how much downtime is occurring and what category the downtime falls under, steps for improvement become more apparent. This is best done by automated machine data collection software to ensure that accurate data is used and standardized and real-time.

It can also be helpful to document the reason for the downtime. Categories to consider may include:

  • Planned vs. Unplanned Downtime: Each takes a machine out of service, but they both have quite different approaches to minimizing occurrences and bringing the machine back online.
  • Human Error or Operator Action: In a large and complex manufacturing environment, operators may have different levels of training or may perform tasks or actions in an order that reduces efficiency. These can often be spotted and trended through downtime analysis.
  • Quality Fallout: Quality is a broad category that must be included in downtime analysis. It may lead to insights on training, machine state, and upkeep, inbound vendor quality, or even ambient conditions within the facility between warmer days and cooler nights.

Once the categories are determined, team members can drill down to determine the reasons for downtime within the category. For example, there may be many types of planned downtime, including scheduled maintenance, seasonal production, and others.

Downtime Pareto Chart

The MachineMetrics Downtime Pareto reveals the most egregious downtime reasons and is a great starting point for finding processes to improve upon.

Likewise, there are countless reasons for unplanned downtime. These can range from material not at the machine when needed to an improperly maintained machine. It may also point to a wrongly designed workflow where material from upstream is not ready when needed, creating a domino effect.

The same is true for human error. Manufacturing operations are becoming more automated, but there is still a need for labor. Fatigue, inadequate training, lack of understanding about the workflow, or broken process steps can mean workers make mistakes they would not otherwise make.

The best way to gather this information is through automation and software. By making the data visualization intuitive and easy to record, operators can utilize a dashboard to enter actual data and see its impact. Just as an operator can enter the reasons for the downtime, tools such as Pareto charts can help understand the downtime analysis as it moves forward. This gives users insights and often helps trigger improvement suggestions.

business management capacity analysis

By the end of the downtime analysis, actual downtime costs and their impact on the bottom line can be determined. This also helps identify the “low hanging fruit,” the quickest and easiest items to fix with the most significant impact on dollars saved and capacity added.

Further reading: How to Track and Analyze Machine Downtime

Rollout Process Changes

Managers are now equipped with accurate and verifiable data that drives real change at this point in the capacity analysis. These changes can be used to tackle the most significant capacity constraints, unlock the hidden capacity to eliminate overtime, reduce the need for capital expenditure, and hone a maintenance program that works in sync with changeovers and other operating conditions instead of contention with them.

There are a lot of examples of significant drains on capacity. Here are a few that can be found during most digital transformations:

Expected Cycle Time Longer than Actual Cycle Time

The size and complexity of today’s manufacturing environments can mean that individual performance is buried beneath a mountain of data, volume, and a push for higher production. When data is true, and part counts at the machine are accurate, operators are accountable for their output instead of buried under it. This accountability can be a positive tool that allows them to become part of identifying areas for improvement. As improvements on the most apparent downtime begin to work, further optimization of the cycle time can be initiated to continue the process to include even small changes that add up quickly.

Quality Issues

As mentioned previously, quality is a broad topic that impacts many areas. But that affords more opportunity for improvement. Not only does the 80/20 rule apply for quality, but it also affects the subcategories within it, including human error/training, vendor quality, maintenance improvements, product design, etc. By leveraging unsiloed data analyzed in real-time, the largest culprit in each area can come under improvement steps to render a more considerable cumulative impact on quality overall. As these efforts take root, capacity increases, quality improves, reduces costs, and enhances order and delivery performance.

Further reading: Quality Assurance in Manufacturing: Everything You Need to Know

mm20-laptop_0020_Reports-Quality-2_dropshadow

Equipment Failure

Few things drive manufacturing managers mad as much as equipment failure . And often, these failures are the result of a reactive maintenance program. By running to failure or by inadequate tracking of machine state, companies cede vast chunks of capacity in the form of downtime. But data analytics and real-time machine conditions offer new opportunities to increase capacity. By understanding machine states and deploying IIoT sensors and technology, managers can leave reactive maintenance behind and drive higher capacity and lower costs. One study by Deloitte shows that predictive maintenance programs can increase uptime for equipment by 10-20%.

Measuring equipment utilization is more than simply measuring just the machine. By capturing, contextualizing, and analyzing data, managers can view an individual machine and the entire ecosystem of equipment within the facility. This can lead to insights about equipment layout, staging, WIP, and other process-related variables that can be used to increase capacity. While it may point to a need to reorganize a production floor or cell, it may also be as simple as moving a few machines a few feet or changing the way material flows from one station to the next within the workflow that makes the difference.

Unlocking Hidden Capacity

A capacity analysis coupled with advanced data capture and analytics can help companies find their path to full capacity quicker than most would think, and lead to a leveled production . When Avalign Technologies struggled to track OEE and downtime, production bottlenecks, inadequate SOPs, and other factors put a drag on capacity.

Using MachineMetrics, Avalign acquired instant visibility across the shop floor to realize a 25-30% increase in OEE and millions in additional capacity, without the addition of labor, equipment, or additional resources.

Watch the video case study:

Avalign Technologies Video Case Study

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business management capacity analysis

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The Ultimate Guide to Capacity Planning

By Joe Weller | November 30, 2021

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Make intelligent decisions to accurately meet the demand for your company’s goods and services with a comprehensive overview of capacity planning. 

Included on this page, you’ll find a capacity planning worksheet sample , a checklist with the most important capacity planning considerations, and tips from capacity planning experts .

What Is Capacity Planning?

Capacity planning is the ability to make informed decisions on whether you have enough resources available for a project. The goal of capacity planning is to optimize service delivery and meet service level agreements (SLAs).

Why Is Capacity Planning Important?

Capacity planning is important to overall client satisfaction. The process allows a business to match current capacity with future demands, as analyzing capacity data ensures that teams are productive and projects don’t fall behind schedule or run over budget. 

Richard Gimarc

Richard Gimarc , an independent consultant and author who specializes in capacity management, shares the importance of capacity planning: “If a business is providing a service to its customers, capacity planning ensures the customers are receiving a responsive service and there is a full understanding of the cost of the digital infrastructure required to provide that level of service.”

Benefits of Capacity Planning

Capacity planning provides transparency into what the team is working on, skill sets, and availability. The number one benefit of capacity planning is that it enables teams to deliver on-time, on-budget projects.

Below are the top four benefits of capacity planning:

  • Cost Savings: Capacity planning helps identify the most cost-effective way to utilize resources.
  • Resource Availability: Capacity planning helps organizations identify the most cost-effective way of meeting both human and IT resource requirements.
  • Skills Inventory Check: Ensure the team possesses the skills needed to deliver on your strategic initiatives.
  • Talent Acquisition: Data-informed staffing decisions can swiftly address critical talent gaps.

Gimarc says, “In the perfect world, capacity planners work with their business partners to predict the impact of business demand on the availability and scalability of their digital infrastructure, and then determine the most cost-effective way to optimize service delivery and meet SLAs. Capacity planning is the single source of truth for the business process in question.”

He offers the following example: “How well is the digital infrastructure supporting SLAs and application availability, and what does the future look like based on business demand? Are we near a digital infrastructure breaking point, are we introducing new business services, or are we continuing business as usual?”

What Are Four Key Considerations for Capacity Planning?

Capacity planning requires collaboration among the business, application, IT, and facilities teams. Communicating across each of these silos tends to be a significant challenge. 

In their research paper, “The Language of Capacity Planning: Business, Infrastructure, and Facilities,” Gimarc and Amy Spellman, Former Global Practice Principal, 451 Research Advisory Services, describe the four key silos to consider as you promote capacity planning and discuss the importance of the capacity planner role in merging communication.

“Today’s capacity planner must work with all areas of an enterprise’s digital infrastructure, which includes the business owners, the application teams, the infrastructure group, and facilities. In a sense, this is good news. As the central point of contact for planning and coordination, the capacity planner is well-positioned to ensure that there is sufficient capacity across the breadth and depth of the digital infrastructure to satisfy business demand cost-effectively.”

How Do You Manage Capacity Planning?

Capacity planning is not a siloed, one-time activity; it is collective and continuous. Business goals and insight into future growth are crucial to managing capacity. To succeed, you need to continually measure, analyze data, and anticipate the future plan.

“The capacity planning group works for the business. Consider starting out with a line of business that is directly associated with revenue, such as sales,” suggests Gimarc. “The best way to manage capacity planning is to focus on a business owner who is willing to work with you. Once you get the business owner on board, look at metrics and infrastructure that is specific to that line of business.”

What Are the Steps Involved in Capacity Planning?

Capacity planning minimizes costly mistakes. Teams can begin by measuring current capacity, then they can forecast demand, analyze gaps, and plan for the future.

  • Measure Current Resource Capacity: Calculate the capacity of your current resources. To determine the human resource capacity, multiply the number of hours in a work period by the number of resources, and then subtract the amount of non-work time.
  • Forecast Anticipated Demand: Make an educated estimate on the resource needs of each project. To forecast demand, some organizations rely on past demand, but today’s predictive analytics solutions account for unknown variables that can significantly impact demand. 
  • Analyze Capacity Requirements: Use the initial measurements to assess whether you have the resources you need to complete the forecasted work. You can do this in a spreadsheet or another tool that will calculate the difference between your current capacity and expected demand. 
  • Align Capacity with Demand: If your team cannot meet the anticipated demand, use the capacity planning spreadsheet or tool to determine whether more team members, overtime, or shift work will help get the projects done.

Use these capacity planning templates to measure, forecast, and analyze capacity.

Capacity Planning Checklist

Below you will find a capacity planning checklist to guide you through the six main capacity planning considerations. Use this any time you need to plan for future capacity. 

  • Check Current SLA Levels: It is crucial to understand the current capacity and SLAs before looking ahead.
  • Analyze Existing Capacity: Review how well your systems meet your current needs.
  • Understand Future Needs: What skills are necessary for future projects, and do you have the essential resources in place?
  • Identify Consolidation Opportunities: Capacity planning is an ideal time to consolidate workloads.
  • Make Recommendations: Use current capacity data to inform decisions on future initiatives. 
  • Execute on the Plan: Create an actionable plan with an eye on the future to keep your organization on track. 

Capacity Planning Checklist

Download Capacity Planning Checklist — Adobe PDF

Capacity Planning Example

Capacity planning is a valuable practice, regardless of industry or company size, as it helps with planning human resources, production tools, and IT resources. Below is a worksheet for new practitioners. 

Agile Capacity Planning Worksheet

Use this example Agile capacity planning worksheet from Nicole Eiche , a senior Agile consultant and solution engineer at Method, to balance team capacity to iteration load and arrive at team velocity. Eiche suggests that the team “conduct iteration planning before starting each iteration where your team determines goals based on the amount of backlog they can commit to.”

What Are the Types of Capacity Planning?

A business can use capacity planning to ensure critical resources are available to meet project demands. Here are a few common types of capacity planning:

  • Product: A product capacity plan involves ensuring enough products are available to meet deliverables. 
  • Workforce/Team: An effective workforce capacity plan can ensure that you’ve scheduled an appropriate number of team members and work hours for the project.
  • Tool: A tool capacity plan ensures that you have the necessary tools for a project.
  • Requirements: Capacity requirements planning (CRP) helps you to establish, measure, and adjust limits or levels of capacity.
  • Agile: Agile capacity planning helps teams determine the number of available, productive hours for an upcoming sprint. You will find Agile capacity planning templates in this template roundup . 
  • IT: Capacity planning for IT invo lves balancing costs and capacity, followed by supply and demand.
  • ITIL: Capacity planning for ITIL services aims to deliver the agreed service level targets under budget and on deadline.
  • Rough-Cut Capacity Planning: Rough-cut capacity planning (RCCP) verifies that you have enough capacity to meet the master production schedule requirements.

What Is Capacity Planning in Project Management?

Project management capacity refers to the maximum amount resources can produce or accomplish in a given timeframe. Capacity planning in project management aims to adjust resources to meet demand, with the goal of improving capacity while minimizing cost.

What Is the Difference Between Capacity Planning and Resource Planning?

Capacity and resource planning are related and complementary. Capacity planning balances the future need for resources against the capacity of resources. Resource planning process functions to allocate people and teams to meet the demands of your projects and programs .

Visit this resource planning guide to learn more.

Capacity Planning Best Practices

Companies can benefit from capacity planning, particularly when available resources continually don’t meet the demands of project work. To adequately plan, you must first gain insight into current capacity and future demand. Below, industry experts share their advice from practical experiences.

Cindy VanEpps

Cindy VanEpps, a principle consultant at Project and Team , suggests that capacity planning take place as a team: “Capacity planning is more than just the addition of estimates by each team member. Combining the estimates with building high-performing teams that focus on the same product or outcome helps the team collaborate and identify disruptors.” 

VanEpps offers a quote from Donald G. Reinertsen’s book, The Principles of Product Development Flow: Second Generation Lean Product Development : “Operating a product development process near full utilization is an economic disaster.” 

Of this statement, VanEpps says, “Reinertsen is correct; planning at 100 percent capacity is an economic disaster. The team must understand the work enough to account for variability imposed by learning. By working in smaller, more manageable batches, the team can allow for potential variability.”

Additional tips for capacity planning include the following:

  • Business Alignment: Align work with business goals to maintain your teams' focus on what matters most.
  • Team Forecasting: In order for role-based planning to add up to meaningful teamwork, forecast total demand at the team level. 
  • Understand Current Capacity: Analyze current capacity to plan and know if you can meet current and future requirements more accurately.
  • Evaluate Potential Scenarios: Scenario planning can home in on the most valuable combination of investments and types of work that align with your organization's strategic goals.
  • Consider Distractions: Remain aware of distractions that sneak into the mix. Consistent monitoring can help your teams stay focused on critical work.
  • Anticipate Change: Expect change and anticipate adjustments down the line, often as a result of inaccurate estimates. You may need to reassign resources to stabilize workloads and stay away from bottlenecks regularly.
  • Continuous Planning Flow: Continuous planning is necessary because change is inevitable. Capacity planning should also be a proactive process.
  • Proactive Planning: Remain proactive in reducing multitasking, minimizing distractions, and streamlining processes to increase productivity.

Mistakes to Avoid When Building a Capacity Plan

Lack of historical information and business insights leave capacity planners without the necessary data to make intelligent decisions, and planning will fail without data. Below, industry experts share their advice on mistakes to avoid when creating a capacity plan.

Joao Natalino De Oliveira

Joao Natalino De Oliveira, Regional Chair and International Officer at Computer Measurement Group , says that the first mistake he sees with startups is the failure to build a capacity plan. “Eighty-five percent of startups fail because they don’t analyze and plan for demand,” he says. “Enterprise companies have dedicated capacity planners. In the early days, these companies preferred to work with large server farms and disk subsystems to sustain during peaks. After several outages, they turned to capacity planning.” 

He gives a specific example: “I visited a digital bank with a large number of cloud resources, but without a dedicated capacity planner. They started seeing elevated costs. They saw drastic improvement with a capacity planner that focused on better appropriation.”

Working in silos is another avoidable mistake. As Gimarc says, “Capacity planning should be a point of intersection for the business, application, IT, and facilities teams. Ignoring technology advances is another mistake. Capacity planners should utilize observability information rather than depending on ad hoc documentation and outdated flow diagrams. Finally, a capacity planner must speak the proper language, translating from the business to applications, infrastructure, and facilities.”

Other mistakes to avoid include the following:

  • Not Having Historical Data: Always ask for historical information, not just current requirements.
  • Not Understanding Business Objectives: A solid understanding of your organization's capacity is crucial.
  • Not Understanding the Impact of Change: Even small changes matter, so plan carefully to minimize employee stress.
  • Not Correctly Defining Timelines and Scope: A solid grasp on both timelines and scope will negate the risk of running over time and budget.

Capacity Planning Strategies

There are four main strategies for capacity planning. You will choose a lag, lead, match, or dynamic approach to helping optimize capacity. 

Here’s how each strategy works:

  • Lag: Adding capacity only when the actual demand is observable.
  • Lead: Adding capacity in anticipation of high demand for the product.
  • Match: Adding small amounts of capacity to the anticipated demand signals and current market potential of the product.
  • Dynamic: A forecast-driven approach to capacity planning that involves adjusting production in advance.

Capacity Planning in 2021 and Beyond

Having the right resources on hand to forecast and manage customer demand is not a new concept. Capacity planning is more crucial than ever. Fortunately, AI tools are available to accurately bill, optimally staff, and effectively plan for future projects.

Modern tools geared toward capacity planning promise greater visibility into projects, resources, and teams, along with the effective prioritization and management of workloads. Gimarc would not be surprised if a new term arises for capacity planning: “The terms capacity planning and capacity management were introduced over 50 years ago, and they do not always garner positive opinions.” 

As for what the future holds, De Oliveira says, “in the near future, capacity planning means saving money, surviving, and winning in the IT jungle.” He expects to see more AI, deep learning, and machine learning to automate capacity planning: “The instrumentation of business applications that targets capacity and capacity planning will continue to expand from the mainframe arena to other platforms, even edge computing.“

What Tools Do You Use in Capacity Planning?

Experts contend that there is no gold standard tool for capacity planning. Some consider capacity planning to be old and outdated. Still, here are three commonly used tools for capacity planning: Kanban boards, critical path, and Gantt charts.

  • Kanban Board : A Kanban board visually displays progress and reduces waste by keeping track of workflow. Kanban boards also help with capacity planning by showing the number of tasks a team has taken on. 
  • Critical Path : The critical path method can determine how much computing capacity is necessary to support a service or group of services. The tool aids in analyzing critical application performance and capacity requirements.
  • Gantt Chart : A Gantt chart is a bar graph for project scheduling and planning to outline task information. Connect the chart to Google spreadsheets. The tool will pull in data and display it for information sharing, collaboration, or discussion with others.

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Capacity Planning Metrics: Tracking and Optimizing Agency Capacity Management

Lucija Bakić

November 21, 2023

To achieve your capacity planning goals, tracking and managing your performance with capacity planning metrics is essential.

Keep reading to learn more about key performance indicators for managing quality, cost, and delivery. We’ll also discuss the best practices for successful implementation and analysis. Learn more about the top strategies for effective capacity forecasting and management in our Capacity Planning Guide .

Key Takeaways

  • Capacity planning metrics are essential for assessing and optimizing an organization’s capabilities.
  • Key performance indicators (KPIs) help determine the resources required to meet demand and ensure optimal performance and resource allocation.
  • Resource utilization and response time are critical capacity planning metrics for professional services and IT capacity planning.
  • Capacity planning metrics can be most easily evaluated by using robust capacity planning software and benchmarking your data across competitors or industry standards.

What Are the Different Types of Capacity Planning Metrics?

Capacity planning metrics support various aspects of operational and strategic performance in agencies. They help measure efficiency, quality, the financial impact of capacity decisions, and the potential to expand or the need to limit activities. We can categorize them into the following main types:

1. Performance Metrics

  • Capacity Utilization: This metric assesses how much of the total available capacity is used. In manufacturing, this relates to product output. In professional services agencies, it denotes the ratio of billable hours to total workable hours. In both contexts, it’s the main indicator of production efficiency and operational effectiveness.
  • Throughput: Measures the rate at which products or services (material, data, etc.) can be delivered within a specific time period.
  • Cycle Time: The total time needed to complete a production process. In professional service agencies, this can refer to time spent delivering a client engagement, such as specific tasks or projects.
  • Work in Progress (WIP): WIP represents the number of in-progress units within the production process. In a professional services setting, it shows the capacity of your team’s workflow through the number of in-progress tasks.
  • On-time Delivery: This metric measures supply chain efficiency, or the rate at which an organization meets promised delivery times.
  • Bottleneck Analysis: Bottleneck analysis is a management tool that examines potential disruptions to the workflow, the point at which they occur, and why.

2. Financial Metrics

  • Cost Capacity: Denotes expenditure made to expand or increase capacity. This can include both fixed and variable costs related to labor, equipment, maintenance, and other operational expenses.
  • Return on Investment (ROI): The main measurement for gauging the profit derived from any investment, such as software implementation or expansion efforts.
  • Profit Per Unit: Analyzes the profitability of a particular product compared to the company’s overall profit. In an agency environment, this is usually done by comparing profit margins on client projects.
  • Breakeven Analysis: Weighs the costs of a new business, service, or product to determine at which stage a company can make a profit. In other words, it reveals the point at which costs will be covered.

3. Quality Metrics

  • Yield: Also known as production or manufacturing yield, this metric shows the ratio of the number of good units produced in a cycle.
  • Scrap Rate: Measures production quality by depicting the percentage of materials or products that cannot be reworked or become usable.
  • First Pass Yield: Compares the ratio of excellent products against the overall results from the production process.

4. Flexibility Metrics

  • Changeover Time: A measurement of how long it takes to switch a production line or plant from making one product to another.
  • Volume Flexibility: The ability of an organization to change volume levels, either by producing more or less than installed capability, in order to respond to changing demands.

5. Innovation and Growth Metrics

  • Capacity Growth Rate: Measures an organization’s ability to generate revenue over a set period of time, used to gauge its performance and potential for expansion.
  • Product/Service Innovation Rate: The innovation rate measures the revenue share of innovations across total company revenue.

Key Capacity Planning Metrics for Professional Agencies

Capacity planning involves assessing the resources required to meet the demand for a particular service or product. This process is facilitated by tracking and managing certain key metrics. For professional agencies, this is the resource utilization rate. The utilization rate is a ratio of billable hours to total hours worked. This metric gives actionable insights into how efficient your agency really is. A high utilization rate means your employees spend most of their time on client work. However, if utilization is too high, it can also signify that you’re not investing enough in agency initiatives or employee retention strategies.

GET UTILIZATION RATE INSIGHTS AND FORECAST YOUR FUTURE CAPACITY WITH PRODUCTIVE

Another critical metric that can greatly impact your client relationships is response time. In service-oriented capacity management, it signifies the time needed for your agency to identify and implement a solution to reported issues. In IT capacity planning , response time can also denote network capacity, or the capabilities of particular systems to respond to user requests. Some other key metrics for software and technology are error rates, application availability, memory usage, and throughput.

How Do You Calculate Metrics for Successful Capacity Analysis?

Capacity planning metrics can be calculated manually by using spreadsheets of manual data comparison. However, this process can be greatly simplified by utilizing capacity planning software . To give a practical example, let’s consider the all-in-one agency management tool, Productive . Wit h Productive’s Resource Planning feature, you schedule time and allocate employee hours according to availability, including their time off and sick days.

WITH PRODUCTIVE, YOU CAN BUILD RESPONSIVE RESOURCE PLANS THAT ADAPT TO PROJECT CHANGES

Then, by switching to the budgeting view, you can see your budget burn and profit margin, according to how you’ve allocated your resources. Inputting changes into your resource plan updates your metrics in real time. This lets you plan out and resolve additional client requests in a timely manner, or try out different resource planning strategies. Additionally, Productive can be used to forecast your utilization rate over certain periods, giving you valuable information on whether you have enough capacity to take on new projects. It can help guide your human resource planning and sales strategies.

That’s a key thing that we get out of the reports that really feeds into our utilization and resourcing. If we know we’re doing 30% on internal projects, then we know we’ve got the capacity to take on more client work .

Brendon Nicholas, Co-founder and Technical Director AT DotDev

In short, by providing accurate and timely data, resource capacity planning tools with forecasting and reporting capabilities can greatly streamline how you approach all essential agency operations. See also : Agency Operations 101: Achieve Operational Excellence

How Do You Use Capacity Planning Metrics to Improve Your Capacity Planning

Here are three ways in which capacity planning metrics can support your project resource management:

  • Identifying capacity bottlenecks : Capacity management performance indicators can help pinpoint areas where resources are underutilized or overutilized. By identifying where and when resource gaps occur, project and resource managers can proactively reallocate resources and optimize their resource capacity planning .
  • Forecasting future needs : Performance metrics can provide valuable insights into resource usage patterns over periods of time. Organizations can build future scenarios by analyzing historical data and planning their capacity accordingly. This can help prevent resource shortages or excesses, ensuring smooth operations.
  • Measuring performance : Capacity planning analysis allows agencies to monitor the effectiveness of their capacity planning strategies. By regularly monitoring and analyzing agency and project performance metrics, businesses can make data-driven decisions to optimize their maximum capacity and resource costs.

Related : Strategic Long-Term Capacity Planning for Professional Services

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What Are the Best Practices for Collecting and Analyzing Capacity Planning Metrics

Here are some essential steps to ensure you’re getting the most out of your business metrics.

Define Clear Objectives

What do you want to achieve through capacity planning? Whether you’re looking to increase customer demand, increase efficiency, or prepare for future growth, it’s important to note these goals. This helps you keep track of your progress and ensure that you’re working towards achieving your business goals at all times.

Select Relevant Metrics

After you’ve sorted out your objectives, make sure to focus on metrics that are relevant to your desired business growth. This could be billable utilization, lead or response time, or perhaps your profit margins. Related : Mastering the Digital Marketing Agency Profit Margin: Tips for Agencies

Implement Effective Techniques

Now that you know which metrics you want to keep an eye on, make sure you’ve got a way to do this reliably. Automated capacity planning software can help you gather data and generate real-time reports, increasing your efficiency.

The truth is, we can quickly get a pulse for where we are, at any given time. One way to get a pulse on the business is to get the monthly financials, but for the monthly financials to come in, it takes the accounting department about 15 days after the month ends before we get a picture of how we really did that month. Whereas, with the financial tools that Productive offers, you can check it on a daily basis. We have clear visibility at any given time.

Orion Jensen, CEO at Clear Launch

See full story : Clear Launch Has More Predictability and Consistency With Productive

Regular Monitoring and Reporting

Finally, implement a routine for monitoring your metrics. This can be as simple as scheduling reports in your software — Productive, for example, can let you set up automatic project reports, sent directly to your email. However you manage your process, make sure to allow for continuous improvement to account for changing future demands and internal capabilities. See also : Mastering Capacity Requirement Planning (CRP): Essential Strategies for Professional Services

TRACK AND MANAGE KEY AGENCY METRICS WITH PRODUCTIVE’S FINANCIAL MANAGEMENT CAPABILITIES

How Do You Benchmark Your Capacity Planning Metrics Against Other Organizations

In the strictest sense, benchmarking refers to the practice of comparing the performance of different IT systems by using a set of specialized programs. This is part of IT capacity planning. In a broader sense, it involves measuring your capacity planning metrics against the performance of similar organizations or industry standards. We’ll briefly discuss statistics relating to the agency utilization rate, one of the most important metrics for effective capacity planning. According to Promethean Research , the recommended utilization rate for production-level staff varies between 70 to 90%, and between 60 to 80% for account management. According to a survey by The Wow Company, average company-wide utilization rates are around 65%, though this varies significantly from role to role. Another interesting finding is that agencies that use manual processes for project management, such as spreadsheets, have a utilization rate of 66% for non-director roles; this percentage rises to 75% once capacity management software is implemented.

Find out more about utilization in crisis times :

Some of the main steps for successful benchmarking are:

  • Identify benchmarking sources: You can compare your performance internally or externally. Consider measuring utilization rates between departments, or even different units within a particular department — this can be useful for large companies. When it comes to external benchmarking, you can consider direct competitors, companies with similar processes, or companies from different industries for inspiration.
  • Collect relevant data: Consider implementing technology that delivers reliable numbers on key metrics such as utilization and profitability. During the comparison process, always keep in mind the proper context for metrics, including factors such as market segments, business models, or operational scale. To find relevant reports, consider various industry reports, databases, or benchmarking services.
  • Develop strategies for improvement: Set goals to close potential performance gaps, such as training your workforce or investing in improved technologies. Always keep in mind that benchmarking is a continuous process- you should update your data regularly and access the most recent reports to be able to respond to industry trends properly.

How Do You Communicate Your Resource Planning Metrics to Stakeholders?

To effectively communicate capacity planning metrics, consider the following: 1. Use monitoring tools: Implement monitoring tools to collect data on resource utilization and performance metrics. Tools with extensive reporting capabilities, such as Productive, can support your stakeholder communications by providing insights in real time. This helps you get quicker financial and progress insights, helping you stay aligned with your client.

I think that in project management there’s a tendency to focus solely on profitability, but it’s inevitable that projects will go over budget, and that’s ok. However, it’s important to have transparency on where that stands , and Productive gives us that visibility.

Amy Nichols , Director of Operations AT Seven2

Read the full story : Seven2 Saves Hours on Operational Tasks Each Week Using Productive

2. Provide visual representations: Use charts, graphs, and other visual representations to present capacity planning metrics in a clear and easily understandable format. With an effective capacity planning tool such as Productive, you can create dashboards with relevant reports or even schedule them to email. This all facilitates your project collaboration.

PRODUCTIVE TURNS YOUR PROJECT DATA INTO EASILY COMPREHENSIBLE VISUALIZATIONS

3. Engage stakeholders in discussions: Create opportunities for discussing capacity planning metrics with all stakeholders. This can include scheduling meetings to discuss reports, inviting them to your project dashboards, and conducting feedback directly in your capacity management software solution. For example, with Productive, you can invite clients to your projects, free of charge. Related : Mastering Agency Project Management: The Ultimate Guide

Takeaway: Optimizing Capacity Management Metrics

Capacity planning metrics are crucial in effectively managing and optimizing resources within an organization. By calculating and analyzing these metrics, businesses can drive internal improvements by benchmarking their metrics and making data-driven decisions. Furthermore, managing your key performance indicators can improve client relationships by allowing you to always stay on top of your projects. With good capacity planning comes better stakeholder collaboration and communication. All of this allows you to stay competitive in the volatile, ever-evolving professional services landscape.

What are capacity metrics?

Capacity metrics are quantitative tools that measure the production capabilities of a system or the ability of an agency to deliver services effectively.

How is capacity planning measured?

Capacity planning is measured by using key performance indicators like utilization, throughput, cycle time, and work in progress.

What are the five types of capacity measurements?

The main categories of capacity planning indicators are performance, financial, quality, flexibility, and innovation or growth metrics.

What is the KPI for resource capacity planning?

The main KPI to evaluate resource capacity planning is the resource utilization rate, or the ratio of billable hours worked across all available working hours.

What is the KPI for capacity?

Common KPIs to assess capacity include capacity utilization and throughput.

What are the four measures of capacity?

Four common metrics to measure capacity are capacity utilization, throughput, cycle time, and work in progress (WIP).

What are the five steps of capacity planning?

The five main steps of capacity planning are: 1) determining capacity requirements, 2) analyzing current capacity, 3) forecasting future capacity needs, 4) developing actionable strategies, 5) implementing capacity planning strategies and monitoring progress.

What is the best way to measure capacity?

The best method to measure capacity depends on the context but often involves a combination of utilization, throughput, and cycle time measurements. Capacity planning analysis can simplified by using specialized software, such as Productive, that provides insights in real time and reflects all project changes.

What is the capacity planning model?

The capacity planning model is a strategic process used to determine the production capacity needed to meet changing demands.

What are the three tools for measuring capacity?

Tools that can be used to measure capacity are scenario planning tools, resource planning software, or all-in-one agency management software .

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Harvard Business School

Capacity Analysis: Sample Problems

By: Ann E. Gray, James Leonard

Three examples of capacity analysis are provided. Calculations for cycle time, manufacturing lead times, capacities, labor cost, labor content, and utilization are performed for three different types…

  • Length: 8 page(s)
  • Publication Date: Aug 28, 1995
  • Discipline: Operations Management
  • Product #: 696058-PDF-ENG

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Three examples of capacity analysis are provided. Calculations for cycle time, manufacturing lead times, capacities, labor cost, labor content, and utilization are performed for three different types of processes: a bread-making process with two independent lines; a croissant-making process involving two parallel dependent lines, one for making the dough and one for mixing the filling; and an automobile component assembly operation. The impact of process imbalance, machine reliability, and scheduling on available capacity is illustrated.

Aug 28, 1995 (Revised: Jul 29, 1997)

Discipline:

Operations Management

Harvard Business School

696058-PDF-ENG

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Integrated Project Portfolio Management

What Is Capacity Planning in Project Management? The Go-To Guide

Imagine, if you will, your company is caught off guard by a sudden surge in demand or struggles with underutilized resources.

Enter capacity planning – the secret to staying agile and competitive. Capacity planning is the key to optimizing resources, avoiding resource constraints , reducing costs, and ensuring smooth operations. It’s what separates the top industry leaders from the rest.

In this guide, we’ll unveil the power of capacity planning and provide actionable insights for your organization’s success.

Table of contents

What is the goal and benefits of capacity planning, what is capacity planning in software development, what is capacity planning in the healthcare sector, what is capacity planning in the retail sector, what is capacity planning in data centers, what is the difference between capacity planning and resource planning, what is the lead strategy, what is the lag strategy, what is the match strategy, step 1: define your goals and objectives, step 2: gather data and forecast demand, step 3: assess current capacity, step 4: develop a capacity plan, step 5: monitor, adjust, and improve, what are the capacity planning best practices, what are the capacity planning tools.

Let’s get started with fundamentals.

What is capacity planning?

Capacity planning is a strategic management process that involves assessing and managing an organization’s ability to meet current and future demands for its products or services.

It’s a crucial aspect of business operations that ensures resources, including workforce, equipment, infrastructure, and technology are efficiently utilized to achieve optimal performance and profitability.

At its core, capacity management and planning encourages informed decisions by assessing changes in market fluctuations and customer needs and matching available resources with demand while maintaining a balance to avoid overutilization or underutilization.

Pro tip: If you want to become a top-tier project manager , consider getting a certification. We’ve written an article about all the major project management certifications . Take a look.

Critical elements of resource capacity planning include:

  • Demand forecasting: The capacity plan begins with accurate predictions of future demand, analyzing historical data , market trends, customer behavior, and other relevant factors.
  • Resource analysis: After forecasting demand, organizations evaluate their existing resources. This includes assessing the capacity of production facilities, the capabilities of the workforce, and the availability of machinery and technology.
  • Gap analysis: A gap analysis is conducted to identify any imbalances by comparing forecasted demand with available resources. This step highlights potential bottlenecks, resource shortages, or excess capacity that need to be addressed.
  • Optimization: With the insights gained from gap analysis, organizations can take strategic actions to optimize their capacity. This may involve investing in new equipment, hiring additional staff, implementing process improvements, or outsourcing certain tasks.
  • Continuous monitoring: Capacity management is not a one-time effort but an ongoing process that involves continuous project monitoring and adjustment to ensure that capacity remains aligned with changing market conditions and business goals.

Now that we’ve explored workforce capacity planning let’s dive into its key goals and benefits.

The primary goal of capacity planning is to strike a balance between an organization’s resources and the demands placed on them. By achieving this balance, businesses aim to achieve several key objectives:

  • Optimal resource utilization : Capacity planning ensures that resources are neither overutilized nor underutilized. This optimal resource allocation minimizes waste, reduces costs, and maximizes efficiency.
  • Meeting customer demand: The foremost goal is to meet customer demand consistently and reliably. Capacity planning helps organizations ensure they can fulfill orders, deliver products, and provide services as and when customers require them.
  • Enhanced flexibility: Well-executed capacity planning allows businesses to adapt swiftly to changing market conditions, surges in demand, and unexpected disruptions, the flexibility of which is crucial for staying competitive in today’s dynamic business environment.

Pro tip: Flexibility is crucial when managing a remote team. We’ve created a comprehensive guide on how to manage a global team for you to explore.

  • Cost reduction: By avoiding excess capacity, organizations can cut down on unnecessary expenses related to idle resources, maintenance, and storage, resulting in business savings and improved profitability.
  • Strategic growth: Capacity management provides the foundation for strategic growth initiatives. When an organization can accurately predict and plan for future capacity needs, it can confidently expand operations, enter new markets, and innovate without risking overextension or missed opportunities.
  • Risk mitigation: Effective capacity operations help mitigate risks associated with resource shortages or overages, ensuring that potential disruptions have minimal impact on operations and customer satisfaction.

Now that we’ve covered the fundamentals of capacity plans, let’s explore practical cases where it plays a crucial role.

What are the practical cases of capacity planning?

Capacity planning is not a one-size-fits-all concept; its application varies across industries and organizations. Let’s explore some practical capacity plans that play a pivotal role:

When a software development company experiences rapid growth in its customer base and project portfolio , they need to ensure they can deliver software projects on time without overloading their development teams.

In the software development industry, effective IT capacity planning involves evaluating the current capacity of development teams, analyzing project pipelines, and forecasting resource requirements for upcoming projects. 

Pro tip: Productivity is essential when planning human resource capacity. Check out our guide on boosting productivity !

It includes assessing factors like the number of software engineers, their skill sets, and the availability of necessary development tools and infrastructure.

Hospitals preparing for flu season will anticipate an influx of patients and need to ensure they have the necessary capacity for beds, medical staff, and equipment to handle the expected increase in patient volume.

Capacity planning in healthcare involves forecasting patient admissions, analyzing historical data, and adjusting staffing levels and resources accordingly to continue to provide quality care during peak periods without overwhelming capacity.

During the holiday season, retail chains need to avoid stockouts of popular products while minimizing excess inventory that ties up capital.

Here, capacity planning involves predicting customer demand for specific products during the holidays, optimizing inventory levels, and coordinating with suppliers to ensure timely restocking and meet elevated customer demand.

A data center company provides cloud computing services to clients, and often need to plan for expanding their data center infrastructure to accommodate growing customer demand for cloud services.

Capacity planning in data centers involves evaluating current server capacity, forecasting future demand for computing resources, and planning server expansions or upgrades as needed so that the data center can handle increased workloads and maintain service quality.

Now that we’ve examined practical planning of capacity examples let’s distinguish it from resource planning.

Capacity planning and resource planning are two essential components of effective organizational management.

While they share similarities, they have distinct focuses and objectives. Understanding the differences between these two is crucial for businesses to optimize their operations efficiently. 

Let’s dive into the distinctions:

Pro tip: We enjoy comparing concepts. If you’re unsure about the difference between a project manager and a business analyst, check out our comparison article .

After understanding the distinction between workforce capacity planning and resource planning, we can now explore different capacity planning strategies.

What are the capacity planning strategies?

Capacity planning is a dynamic process that involves making strategic decisions about how an organization should manage its resources to meet demand effectively. Businesses often adopt one of three primary capacity planning strategies: the lead, lag, or match. 

Let’s explore these strategies in detail and start with the lead strategy .

The lead strategy, also known as the proactive strategy, involves investing in additional resources, such as personnel, equipment, or facilities, before customer demand rises. 

It ensures an organization is well-prepared to meet future demand without delays or resource shortages, and is often used when an organization expects significant growth or has long resource acquisition or development lead times.

Example: A toy manufacturer uses the lead strategy by ramping production and hiring extra staff several months before the holiday season to meet increased product demand.

The lag strategy, also known as the reactive strategy, involves increasing capacity in response to increased demand. In this approach, organizations wait until they are certain that demand has grown before investing in additional resources. 

It is cost-effective but risks potential customer dissatisfaction due to delayed deliveries or resource shortages. It is used when organizations want to avoid the upfront costs of excess capacity and are confident in their ability to scale up when needed quickly.

Example: An e-commerce company using the lag strategy increases server capacity and hires customer support staff only after observing a consistent surge in website traffic during a sale event.

The match strategy aims to align capacity with demand as closely as possible in real time. Organizations continuously monitor demand and adjust resource capacity accordingly to maintain a balance.

It prioritizes resource optimization and efficiency and allows organizations to avoid overcapacity and undercapacity, reducing waste and ensuring that resources are used optimally.

Example: A call center employs the match strategy by using workforce management software to schedule agents in real time based on incoming call volumes, ensuring enough staff members to handle customer inquiries without overstaffing.

Now that we’ve covered various capacity planning strategies, let’s dive into a practical framework for building your resource capacity planning in five steps.

How to do capacity planning in 5 steps? [With capacity planning template]

Capacity planning is a systematic process that requires careful analysis and strategic decision-making to ensure optimal resource allocation. To create an effective capacity plan, follow these five practical steps:

In building capacity planning, you must define clear and specific project goals and objectives. This forms the foundation of your entire plan, guiding every subsequent decision and action. Here’s how to do it:

1. 1. Identify the purpose

Start by identifying the primary purpose of your plan. Are you looking to optimize resource utilization, prepare for growth, or ensure timely project delivery? 

Additionally, consider your overarching goals. Outline the high-level goals you want to achieve with your capacity planning efforts, such as reducing costs, meeting customer demand consistently, or improving resource efficiency.

1. 2. Set clear objectives

Define clear and measurable objectives that align with your goals. Use OKRs to be as clear as possible.

These objectives will serve as benchmarks for evaluating the success of your plan. Avoid vague objectives. Instead, specify outcomes like “reduce resource idle time by 20% within the next quarter.

1. 3. Involve stakeholders

Engage cross-functional teams, including operations, finance, sales, and other relevant departments, to gather input and insights. 

Their perspectives and feedback are invaluable in setting meaningful goals and objectives, which should align with your organization’s broader strategic goals and initiatives.

1.4. Document your goals

Create a statement that summarizes your goals and objectives in a clear, concise manner and serves as a reference point throughout the capacity planning process.

Pro tip: Struggling with documentation? Consider using AI to simplify content preparation. We offer a comprehensive ChatGPT prompts library for project managers. Take a look!

1.5. Review and validate

Share your defined goals and objectives with key stakeholders for validation. Their input can help refine and improve the clarity of your goals. Additionally, verify that your goals and objectives are realistic and achievable within your organization’s constraints, such as budget and resource availability.

In the second step of building your resource capacity planning, you’ll focus on gathering essential data and forecasting demand accurately.

2.1. Collect historical data

Gathering historical data is the first critical task. Identify and collect data on your organization’s resource utilization, past projects, and customer demand. 

These sources may include project reports, financial records, and customer orders, using timeframes such as daily, weekly, monthly, or seasonal data, depending on your organization’s industry and demand patterns. 

Pro tip: Consider using the various project management reports from our article to gather data effectively.

Ensure the data you collect is accurate and complete, correcting any discrepancies or missing information to maintain data integrity.

2.2. Forecast future demand 

Utilize statistical methods and forecasting models to estimate future demand for your products or services. Time-series analysis, trend analysis, and market research can be valuable tools in this step. 

Consider external market factors influencing demand, such as economic trends, industry developments, and competitive analysis. To gain more precise insights, segment your demand forecasts based on factors like product lines, customer segments, or geographic regions.

Based on the data, initiate the capacity forecasting process.

2.3. Create demand profiles

Analyze historical data to identify recurring demand patterns, including seasonality, trends, and cyclical variations. Develop multiple demand scenarios for various situations, such as best-case, worst-case, and most-likely scenarios.

2.4. Technology and tools

Leverage specialized software and tools ( like PPM Express as your capacity planner ) for data analysis and demand forecasting. 

Consider the application of machine learning algorithms and AI for advanced demand forecasting, especially when dealing with large and complex datasets. For instance, PPM Express utilizes AI insights into project managers’ day-to-day project management activities.

2.5. Data validation and documentation

Ensure that the forecasted demand aligns with historical data and market insights. Validate your forecasts through testing and comparison with actual outcomes. 

Maintain clear documentation of your data sources (including the resource breakdown structure , for instance), methodologies used for forecasting, and the assumptions behind your demand predictions for transparency and future reference.

In the third step of building effective capacity planning, you’ll assess your organization’s current capacity to gain insights into existing resource levels and potential bottlenecks.

3.1. Analyze resource availability

Begin by analyzing your existing resources, which include personnel, equipment, facilities, and technology. Assess the current capacity and utilization levels of these resources. Identify whether any resources are overutilized or underutilized. 

3.2. Identify bottlenecks

Identify potential bottlenecks or resource constraints within your organization. These could be specific departments, processes, or equipment that limit your capacity to meet demand. Common bottlenecks include understaffed teams, outdated equipment, or inefficient workflows.

3.3. Evaluate lead times

Examine lead times associated with resource acquisition or development. Consider how long it takes to hire and onboard new employees, acquire new equipment, or expand facilities. Longer lead times may require proactive planning well in advance.

3.4. Utilize resource management software

Consider using specialized resource capacity planning software to streamline the assessment process. These tools can help you gather more efficient data on resource allocation, utilization rates, and lead times. They also provide visualization and reporting capabilities to identify capacity issues effectively.

Pro tip: PPM Express can assist you throughout the entire process of resource forecasting, planning, and management.

3.5. Cross-functional collaboration

The assessment process involves cross-functional teams, including department heads, operations managers, and IT specialists. Establish clear responsibility levels within the organization using the RACI framework . Their input and insights can provide a holistic view of current capacity and help identify areas for improvement.

3.6. Document findings

Document the findings of your capacity assessment. Create a concise report outlining resource utilization rates, identified bottlenecks, and lead time analyses. This documentation will be a valuable reference point when making resource allocation decisions in the subsequent steps.

In the fourth step of building your capacity planning, you’ll develop a comprehensive plan that effectively aligns your organization’s resources with anticipated demand.

4.1. Allocate resources efficiently

Allocate resources based on your demand forecasts and the insights gained from assessing your current capacity. This includes personnel, equipment, facilities, and technology. Ensure that resource allocation aligns with your organization’s goals and objectives, and consider both short-term and long-term resource needs.

4.2. Set a timeline

Create a timeline that outlines when and how you will implement changes to align capacity with demand. This timeline should include specific milestones and deadlines for resource allocation and adjustments. Be realistic in setting timeframes considering lead times for hiring, procurement, and facility expansion.

Pro tip: Use Gantt chart software to streamline the planning and implementation of project timelines. Check out our comprehensive list of Gantt chart software options.

4.3. Risk assessment

Conduct a risk assessment to identify potential risks and challenges associated with your capacity plan, considering scenarios such as unexpected resource shortages, changes in market conditions, or disruptions in the supply chain. Develop mitigation strategies to address these risks and ensure the plan’s resilience.

Pro tip: Use our risk assessment template so you don’t have to start from scratch.

4.4. Resource contingency plans

Develop contingency plans for resource allocation. These plans should outline actions to be taken in case of unexpected resource shortages or surpluses and help your organization respond swiftly to changing circumstances while maintaining operational efficiency.

Pro tip: Always factor in the likelihood of unexpected project scope expansion. Check out our article on scope creep .

4.5. Cross-functional collaboration

Collaborate with cross-functional teams, including operations, finance, and project management, to ensure your capacity planning aligns with broader organizational goals and initiatives. Their input can provide valuable insights and ensure buy-in from key stakeholders.

4.6. Regular review and reporting

Establish a process for regularly reviewing and reporting your capacity plan’s progress and effectiveness. Define key performance indicators (KPIs) to measure the plan’s success. Regular reviews help you promptly identify and address issues and make necessary plan adjustments.

Pro tip: If you’re handling more than three projects, consider using portfolio -oriented reports to grasp the “big picture”. Check out our article on PPM reports to get started quickly.

Why should you consider using a capacity planning template?

Capacity planning is a crucial process, but it can be complex and time-consuming. 

One effective way to streamline the preparation process and ensure consistency in your planning efforts is to use a capacity planning template (Excel-based). Here are some reasons why you should consider using one:

  • Time-saving: Team capacity planning templates provide a structured framework that can save you significant time. Instead of starting from scratch, you can leverage pre-designed templates to jumpstart your planning process.
  • Consistency: Templates help ensure that your capacity planning efforts remain consistent across projects and departments.
  • Accuracy: Many templates come with built-in formulas and calculations that help ensure accuracy in your capacity planning, reducing the risk of errors and miscalculations in resource allocation.
  • Customization: While templates provide a standardized starting point, they are often customizable to fit your organization’s unique resource requirements and planning processes.
  • Ease of communication: Using a template makes communicating your capacity planning strategies and findings easier for stakeholders. The visual representation of data in templates can enhance understanding and collaboration.

As you consider the benefits of using a capacity plan template, it’s worth noting that PPM Express offers a user-friendly and comprehensive capacity planning template designed to ease the preparation process, providing a ready-to-use framework incorporating best practices and industry standards.

Utilizing this resource capacity planning template allows you to streamline your planning efforts, improve accuracy, and ensure that your capacity planning aligns with your organization’s goals and objectives. 

The final step of building your capacity planning is the focus on ongoing monitoring, making necessary adjustments, and continuous improvement to ensure your plan remains effective and aligned with your organization’s evolving needs.

5.1. Implement the plan

Put your capacity planning into action based on your resource allocation decisions. This may involve hiring, training, procuring equipment, or expanding facilities. Ensure that the plan is executed according to the established timeline and milestones.

5.2. Continuous monitoring

Regularly monitor resource utilization and demand to track the performance of your capacity plan. Use Key Performance Indicators (KPIs) such as resource utilization rates, lead times, and customer satisfaction metrics to assess the effectiveness of your plan.

5.3. Iterate and improve

Based on the data gathered during continuous monitoring and changing market conditions, make iterative improvements to your capacity planning. Identify areas where resource allocation can be optimized further and adjust the plan accordingly. Learn from past capacity cycles and apply lessons learned to enhance future planning.

5.4. Proactive problem-solving

Be proactive in addressing issues and challenges that arise during plan implementation. Have predefined contingency plans if you encounter resource shortages, bottlenecks, or unexpected demand spikes as quick, informed decision-making is essential to maintaining operational efficiency.

After outlining the five-step process for building capacity planning and utilizing the capacity planning Excel template, let’s explore the best practices for its successful implementation.

Effective capacity planning is essential for businesses aiming to optimize resource utilization, meet customer demand, and maintain operational efficiency. To achieve these goals, consider the following best practices in workforce capacity planning:

  • Data-driven decisions: Utilize historical data for accurate forecasting and keep it up-to-date.
  • Collaboration: Involve various departments for a comprehensive view and foster open communication.

Pro tip: If you’re looking for ways to manage remote teams , check out our article on the topic.

  • Flexibility and scalability: Develop scalable solutions and maintain flexible resource pools.
  • Continuous monitoring: Track relevant KPIs and implement real-time monitoring systems.
  • Scenario planning: Use “what-if” analyses to develop contingency plans and address risks.
  • Technology adoption: Invest in advanced tools for efficient capacity planning and data analysis.
  • Regular review: Continuously review and optimize your capacity planning.
  • Clear documentation: Maintain transparent documentation of your planning process.

Pro tip: Creating documentation can be challenging. Consider using AI hints from our comprehensive ChatGPT prompts library for project managers.

Now that we’ve covered best practices let’s explore essential tools for effective capacity planning.

Currently, only 23% of project managers utilize resource management platforms for their projects. 

However, capacity planning involves intricate data analysis, forecasting, and resource allocation, and it can be significantly streamlined with the help of specialized capacity planning software that enhance the accuracy of planning and simplify the management of resources. 

Let’s dive deeper and explore some popular capacity planning tools used by organizations across various industries:

  • PPM Express: This comprehensive project, portfolio, and capacity management tool offers advanced capacity planning capabilities. It helps organizations optimize resource allocation and manage project portfolios efficiently. PPM Express provides resource allocation, demand forecasting, portfolio management , real-time analytics, and integration with popular tools like Microsoft Project , Jira, Smartsheet , Monday.com , and Azure DevOps .
  • Microsoft Excel: This versatile spreadsheet tool can be used as a basic capacity planning tool, especially for smaller organizations with simpler requirements. Excel provides customizable templates, data analysis functions, and easy-to-use graphs for visualizing data.

Pro tip: There are many powerful alternatives to Excel . Check out our article for a full list.

  • Microsoft Project: This project management software includes capacity planning features, making it suitable for organizations managing complex projects. It also provides resource allocation, resource scheduling , and portfolio management functionalities.
  • Smartsheet: This collaborative work management platform offers capacity planning templates and tools for project and resource management. Smartsheet provides real-time collaboration, Gantt charts, and resource allocation tracking.
  • Monday.com: This work operating system can be customized for capacity planning, resource allocation, and project tracking. Monday.com provides customizable boards, task management, collaboration tools, and integrations.

Are you seeking an advanced capacity planning tool to streamline resource management and portfolio optimization? 

Try PPM Express today as your capacity planner! 

It offers comprehensive features, including resource allocation, demand forecasting, real-time analytics, and seamless integration with popular project management tools. Unlock the full potential of your capacity planning efforts with PPM Express.

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  • Corporate Finance

What Is Capacity and How Does a Company Maximize Output?

business management capacity analysis

What Is Capacity?

Capacity is the maximum level of output that a company can sustain to make a product or provide a service. Planning for capacity requires management to accept limitations on the production process .

  • Depending on the business type, capacity can refer to a production process, human resources allocation, technical thresholds, or several other related concepts.

No system can operate at full capacity for a prolonged period; inefficiencies and delays make it impossible to reach a theoretical level of output over the long run.

Understanding Capacity

Capacity ties into the fact that all production operates within a relevant range. No piece of machinery or equipment can operate above the relevant range for very long. Assume, for example, ABC Manufacturing makes jeans, and that a commercial sewing machine can operate effectively when used between 1,500 and 2,000 hours a month.

Key Takeaways

  • Capacity is the maximum output level a company can sustain to provide its products or services.
  • Some larger or highly technical companies may hire specialized managers to manage capacity.

If the firm sees a spike in production, the machine can operate at more than 2,000 hours for a month, but the risk of a breakdown increases. Management has to plan production so that the machine can operate within a relevant range.

Capacity Level Differences

Capacity assumes a constant level of maximum output. This production level assumes no machine or equipment breakdowns and no stoppages due to employee vacations or absences. Since this level of capacity is not possible, companies should instead use practical capacity, which accounts for repair and maintenance on machines and employee scheduling.

How the Flow of Manufacturing Cost Works

Managers plan for production capacity by understanding the flow of costs through the manufacturing process. ABC, for example, purchases denim material and ships the material to the factory floor. Workers load the material into machines that cut and dye the denim. Another group of workers sews parts of the jeans by hand, and then the jeans are packaged and sent to a warehouse as inventory.

Capacity Managers

Sometimes, especially at larger companies or those with a highly technical focus, dedicated capacity managers who often have specialized education and training in logistics, handle capacity management.

A capacity manager might deal with external goods or services like outgoing and incoming freight; they might manage a more technical type of capacity, like knowing the output capacity of a computer network; or they could manage employees on hand at any given time for a large customer service provider. 

Factoring in Bottlenecks

A manager can maintain a high level of capacity by avoiding bottlenecks in the production process. A bottleneck is a point of congestion that slows the process, such as a delay in getting denim materials to the factory floor or producing flawed pairs of jeans due to poor employee training.

Any event that stops production increases costs and may delay a shipment of goods to a customer. Delays may mean the loss of a customer order and possibly the loss of future business from the client. Management can avoid bottlenecks by working with reliable vendors and properly training employees.

Every business should budget for sales and production levels and then review actual results to determine whether production is operating efficiently.

business management capacity analysis

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Home > Insights > Capability Model

  • Capability Model

By: Ciopages Staff Writer

Updated on: Feb 25, 2023

What is a Capability Model?

A Capability Model or a Business Capabilities Model is an integrated and comprehensive set of business capabilities. The capability model is a decomposition of what a business does and can do in a logical and granular grouping.  A business capability model is one of the critical business architecture deliverables and a bridge between business and IT, and a foundation for enterprise transformation.

However, if you are looking for a “Competency Model” – which is about soft skills or competencies, or a “Capability Maturity Model (CMM)” – which is a way to measure the maturity of the processes, those are distinct and different from a capability model in the business architecture realm.

Business architects and enterprise architects build business capability models as a part of the overall business architecture and enterprise architecture mandate.

A capability model is an integral part of the business architecture deliverables and is a significant component of BizBok (Business Architecture Book of Knowledge). A capability model is an essential part of the TOGAF framework (The Open Group Architecture Framework).

Capability Model within BizBok

So, that begs the question: What is a Business Capability?

A business capability is an elemental building block (or a Lego block) of what a business does or can do.  At its core, it is an abstraction of the underlying functionality and flows expressed as a noun form (some business architects use Gerunds as well, but we are not the grammar police.) An agglomeration of a  cluster of underlying business capabilities can manifest a product, a service, a platform, a business unit, a department, and of course, an enterprise.

Let’s also look at what is NOT a business capability:

Dissecting a Capability Model: Capability Model Example

A capability model (or business capabilities map or capabilities model) is a structurally sound and internally logical group of capabilities, which conforms to a MECE model (Mutually Exclusive, Collectively Exhaustive.)

Capability Model Example

For example, one can combine a bunch of underlying capabilities to manifest a “Sales” or a “Sales Management Capability.  As the picture below illustrates, “Sales” is an agglomeration of 7 level 2 capabilities:

  • Sales Planning and Forecasting
  • Territory Management
  • Lead and Opportunity Management
  • Customer Relationship Management
  • Quotes, Contracts, and Negotiations
  • Order Management

Why is a Capability Model Framework a swiss army knife in the enterprise toolkit?

The capability-based view is:

  • Logical and intuitive,
  • Stable, and
  • Non-redundant yet comprehensive

A capability model provides a better way to:

  • Organize how we think about a business
  • Instill & track business strategy & performance
  • Communicate across disciplines (e.g., business & IT)
  • Gather requirements & develop evolution roadmaps

For example, if one wants to define what constitutes “CRM (Customer Relationship Management) Capability Model, one can look at the picture above and fathom that CRM comprises of the following capabilities:

  • Client Segmentation
  • Client Contact Details Management
  • Interaction Management, and History
  • Customer Analytics
  • Activity Planning and Meetings Management

Hence, if a company is keen on assessing their CRM capabilities and then decide on whether to replace or re-platform the CRM capabilities, the detailed composition of the CRM capabilities will come in handy. In particular to a) assess the current state b) envision future state capabilities c) conduct gap analysis d) define a transformation roadmap e) conduct a vendor analysis of competing CRM platforms.

Enterprise Business Capabilities Model

Category : Capability Models

Emerging Digital Technologies Assessment

Category : Accelerators

Finance Capability Model

How do we build a capability model.

We believe there are two viable approaches to building a capability model.

Create a capability model from scratch:

A cross-functional team of experts gathers together to define a capability model.  Typically, the capability modeling team will comprise of business architects, enterprise architects, process owners, product owners, functional specialists from areas like Human Resources, Finance and Accounting, Marketing and Sales, Operations et al.  Through a series of facilitated workshops – and countless hours in meeting rooms, gallons of caffeine, and innumerable arguments – the team comes up with a capability model.  We’ve seen this process take months or in some large companies around 18-24 months.

The advantage of creating a capability model from scratch is that it is home-grown and the process will be cathartic, and given the many rounds of consensus building, the business capabilities have a chance of getting used in real use cases across the enterprise.

As you can guess, we are not fans of this approach, and we have seen the time, energy, effort, and friction is not commensurate with the results.

Straw-model or Sample Reference Capability Model-based Approach:

A sample business capability model template helps accelerates capability mapping efforts by reducing the time, energy, and cost. We may be biased as CIOPages.com sells full-fledged business capability frameworks in functional areas as well as for various industries, but we are fans of a business capability model template approach wherein you retain, refine, reinforce, and are ready to go.

A sample/straw model-centric approach minimizes the effort, cuts down the time to completion, reduces friction, and allows the teams to focus on the 20% that may be important to the enterprise, rather than get bogged down by the 80% minutiae and peripheral capabilities that may not matter much.

Of course, you are under no obligation to buy our pre-built and customizable business capability models — instead, a few select groups of experts (perhaps with representation from business architecture, enterprise architecture, and a few business/IT leader who are familiar with the paradigm of business capability mapping to come together and create a draft business capability map.  Seeing something in front of them helps the rest of the team members to participate effectively and contribute to the evolution of the capability model to what the enterprise needs.  The capability model validation sessions will be more productive and fun (is fun the right word in an enterprise context?).

There are also sample capability models from Gartner or Forrester , even though you may want to examine the granularity of the models.

Where do we start to build a capability model?

Obviously, if you are not interested in starting with a sample or reference capability model – whether it is purchased from a vendor or an internal draft model developed by a small group of experts – and instead insist on building from scratch, here are a few starting pointers.

  • Begin with a value chain: A value chain (of Michael Porter fame) is a classic and well-respected framework which the top leadership is typically familiar. So, starting with a company value chain will be a great starting point.

For example, if you are a drug company, the value chain and the primary capabilities may look something like the following:

Capabilities of a Pharmaceutical Firm:

A sample set of primary capabilities for a Pharmaceutical company.

  • Research and Drug Discovery
  • Drug Development
  • Trials and Regulatory Approvals
  • Manufacturing
  • Distribution
  • Sales and Marketing

And there will be a lot of support capabilities that fill out the value chain.

Then you can decompose the value chain level capabilities into granular entities to create a holistic and integrated business capabilities map.

How low do you go?  Business Capabilities Model Granularity

We think that if we consider business capabilities to be Lego blocks or atomic building blocks, then the logical interpretation of that principle is to decompose to a deeper level of granularity.

We think capability models that stop at Level 1 are nothing but wall art – an excellent summation of “Oh! That’s what we do.”  If the model were to comprise of capabilities at Level 1, and Level 2, then we consider that a strategic picture and an executive level deliverable to have interesting conversations.

A capability map with up to Levels 3, 4, and 5 (as necessary) contains a lot of the execution detail which will be extremely valuable in operations optimization, transformation roadmap development, and IT enablement.

While one can start with Level 1 and 2 for gaining executive level support, we urge business architecture teams to forge ahead and decompose to a logical level of granularity for increasing the value-add from the capability mapping endeavors.

Is a capability model one and done?

Business capabilities, while more stable and long-term, do evolve, morph, or newly emerging.  So, a capability model is never done. It is continually changing and evolving. Even if the capability itself doesn’t change, the underlying maturity which a company wants to foster, or the way the capability is realized changes. Hence, business architects and other stewards of business capabilities maps should continuously strive to update and upgrade the artifact. Also, period re-assessments of capabilities – regarding the strategic importance, the level of maturity, and the desired target state – is an essential exercise.

What tools should we use to create and manage a capability model?

A capability model is a dynamic and living entity, and hence static tools to create and manage capabilities are not appropriate. Therefore, general purpose office productivity software doesn’t stand muster.  Using one of the many available capability modeling software tools is the way to go.

For executive consumption using data visualization tools – such as Tableau or Domo or equivalent – may help as well. Also, Excel for advanced data manipulations and PowerPoint for executive presentations may be acceptable. But the day-to-day management of capabilities should be within a specialized software.

After building a Business Capability Model: What comes next after creating a capability map?

Once you have a coherent and comprehensive business capabilities model, the next steps are as follows:

  • Capability definition
  • Goals and objectives of the capability
  • Current state capability assessment
  • Capability needs to reach the desired target state
  • Capability to Systems Footprint
  • Capabilities to Services Footprint (SOA services or Microservices)
  • Capability to Location Mapping
  • Capabilities to Roles Mapping
  • Capabilities to Data Mapping
  • Capabilities to IT product model mapping
  • And any others are per the needs of the enterprise
  • Align backlog and future needs to capabilities.
  • Use capabilities to develop functional level or business unit level or enterprise level transformation roadmaps.
  • Leverage capability models for vendor functionality and feature mapping.
  • Influence the modularity and granularity of SOA services or Microservices using capabilities as the driver.

Supply Chain Capabilities Model

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Blog > Big Data > What is Capacity Management?

What is Capacity Management? What Capacity Management Means and How It Helps Align IT Resources with Business Goals

What is Capacity Management?

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What, exactly, is capacity management, and why is it important? We explain in today’s post.

What is capacity management?

The primary goal of capacity management is to ensure that IT resources are rightsized to meet current and future business requirements in a cost-effective manner.

One of its more common definitions is provided for in the ITIL framework and further divides the process into three sub-processes:

  • Business Capacity Management
  • Service Capacity Management
  • Component Capacity Management

Top-down, bottom-up approach

When teaching people in a practitioner-level course, we typically teach the three sub-processes in a “top-down, bottom-up” approach. What does that mean?

  • Top-down: Business needs drive the creation of services, which leads to the purchase of components that have the computing power and other resources that make Information Technology solutions a reality at their company.
  • Bottom-up: When monitoring and analyzing the infrastructure, start with the components. Ensure each of these are right-sized and appropriate for the job. They underpin services – are those meeting SLAs? The services keep the business running – are the forecasts accurate and do the services and components have to be upgraded or further rightsized to optimize IT spend?

Conceptually, it sounds pretty straight-forward, but how exactly are these concepts put into practice in a modern data center?

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Components of capacity management

The activities that support the capacity management process are crucial to the success and maturity of the process. Some of these are done on an ongoing basis, some daily, some weekly, and some at a longer, regular interval. Some are ad-hoc, based on current (or future) needs or requirements. Let’s look at those:

  • Monitoring – Keeping an eye on the performance and throughput or load on a server, cluster, or data center is extremely important. Not having enough headroom can cause performance issues. Having too much headroom can create larger-than-necessary bills for hardware, software, power, etc.
  • Analysis – Taking that measurement and monitoring data and drilling down to see the potential impact of changes in demand. As more and more data become available, having the tools needed to find the right data and make sense of it is very important.
  • Tuning – Determining the most efficient use of existing infrastructure should not be taken lightly. A lot of organizations have over-configured significant parts of the environment while under-configuring others. Simply reallocating resources could improve performance while keeping spend at current levels.
  • Demand Management  – Understanding the relationship of current and future demand and how the existing (or new) infrastructure can handle this is incredibly important. Predictive analytics can provide decision support to IT management. Also, moving non-critical workloads to quieter periods can delay purchase of additional hardware (and all the licenses and other costs that go with it).
  • Capacity Planning – Determining the requirements for resources required over some future time. This can be done by predictive analysis, modeling, benchmarking, or other techniques – all of which have varying costs and levels of effectiveness.

Capacity management information system (CMIS)

The centerpiece of a mature and effective capacity management process is the capacity management information system, or CMIS.

The CMIS allows for easy access to capacity and performance data for reporting, analysis, predictive modeling and trending, troubleshooting (Incident and Problem Management). Syncsort Capacity Management brings metrics from across your enterprise into one place for a real-time 360-degree view of your infrastructure.

For a look at how to increase return on investment by optimizing existing IT resources, read our eBook: ROI Strategies for IT Executives

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Learn what business process analysis (BPA) is and the types, methods and steps for small-to-medium enterprises (SMEs) to consider.

Business process analysis (BPA) is an approach to analyzing business operation processes. It is a detailed, multi-step examination of each part of a process to identify what is working well in your current process, what needs to be improved and how any necessary improvements can best be made. There are different business process analysis methods, but all apply the underlying principle that optimized systems generate better overall business results. 

Common desired outcomes of BPA are greater cost savings, increased revenue and better business engagement. For instance, you might use BPA to analyze customer engagement and where there are downturns, blocks or unexpectedly low conversions. Business process analysis can also reveal what in your business operations or policies creates low employee engagement.

Business process analysis (BPA) vs. business analysis (BA): What’s the difference?

There might be a little confusion about the difference between business process analysis (BPA) and business analysis (BA). These are related areas of business process management but are not the same. BPA focuses on specific process analysis and business process modeling. BA, on the other hand, is applied to the greater business operation landscape. BA focuses on the analysis of other areas, such as financial forecasting, cost analysis, budgets, hiring and cuts. 

Benefits of business process analysis

The overarching benefit of business process analysis (BPA) is optimized, daily functionality across your business operations that strategically aligns with your business goals and decision making. 

For SME businesses, BPA can create the following improvements:

  • Increase efficiency in existing processes: BPA increases time-to-value for product applications. It also lowers time in operational cycles for workflows, such as employee onboarding and customer or patient in-take processes.
  • Reveal capacity issues: In any process, resources can be limited. BPA identifies where the capacity limit lies, how it affects the process and how to improve it. This is a strong consideration for scaling. For instance, digital tools and platforms you currently use may limit current organizational needs and workflows . BPA can help you identify changes you need to make that are specifically aligned to your organization’s growth.
  • Clarify policies and rules: As organizations move to more remote work and greater adoption of digital devices , a common misalignment exists in security and device usage. The analysis can identify a path for faster IT approval processes and uniformity in security policy enforcement.
  • Create better governance practices: Risk management is increasing as a priority for businesses. Compliance is a costly endeavor for organizations to maintain, and it is even more costly to address when issues arise. Business process analysis can reveal where compliance measures have faltered. For example, your organization may be out of compliance in the frequency you audit application security measures. BPA can set an improvement plan in place that considers resources and compliance needs to ensure a process can be executed — and sustained. 
  • Identify cost savings: BPA reveals redundancies in tasks and labor. Organizations that have moved to digital document workflows are a good example how reduced human error and time in searching for documents creates cost savings.
  • Solve for bottlenecks: Bottlenecks occur when channels for communication, development and execution are siloed. A business process analysis can expose communication gaps and resolve approval process obstructions.
  • Optimize deployment and release processes: Efficient processes create smoother releases and deployments.
  • Improve integration and adoption processes: Similarly, adopting new technology across an enterprise or department is a monumental process. BPA sets processes in place that can include useful training programs and workflow visuals that support higher adoption rates.
  • Strengthen company culture: A better process in any area is a housecleaning of sorts. The improvements breathe new life into employee experience on a daily basis. The result is better morale and better engagement for internal processes. For customers, optimized processes — such as a better website or customer service experience — increases engagement and positive perception of your business. 

Methods of business process analysis

There are two predominant philosophies that guide business process analysis (BPA) methodology: 

  • Six Sigma approach
  • Lean Six Sigma

Six Sigma is a five- to seven-step methodology that most businesses today use to analyze efficiencies and restraints. Lean Six Sigma differs slightly in that it is a combination of the Six Sigma approach and Lean philosophy. It’s a collaborative approach that focuses on eliminating tasks and resources that don’t provide defined value.

You’ll gain a sense of how a business process analysis is executed when you consider the detailed-nature intrinsic to every step.

In general, BPA follows this structure:

  • Define: Start by identifying the processes you want to analyze. Typically, these are where you see problems first. Process analysis can start with (and also include) process diagrams for each step. Analysts begin with as-is processes and look at formal and informal processes, such as documented processes and processes specific to an organization’s culture.
  • Measure: Next, review how the process functions against defined metrics. This step is also at the root of helping to create improved KPI metrics. If those are well-defined first, a business will measure processes against the KPIs. KPIs include efficiency versus effectiveness indicators, quality, productivity, profitability and value indicators. They also include competitive and capacity indicators. For instance, customer engagement workflows might be measured by quality and effectiveness versus efficiency metrics.
  • Analyze: There are several types of analysis techniques, and each one serves a different purpose. Business process analysts might run a value analysis, a gap analysis or root cause analysis (RCA). These are extensive analytical methods that each include their own set of steps. A gap analysis reveals what’s missing in the process. A value analysis conveys what is of value within the process — and what is waste, as a result. A root cause analysis applies certain “why” questions and methods that help you to work backward to the root cause of the problem in a process. 
  • Improve: Business process managers collaborate with analysts to create and execute plans that improve problem areas. Improvements may mean re-mapping a process, increasing resources or shifting communication approaches and channels. Again, this can be a detailed step that can apply a variety of improvement methods.
  • Control: After such a significant analysis, controlling the new standards and processes is the final step. Decision-makers can use the analysis to then manage resources, responsibilities, hiring processes, IT, administrative and executive processes. Stakeholders also monitor these changes and set time markers for future analysis.

When to implement business process analysis

If you’ve recently adopted new technology that’s being underutilized, or if you have recurring turnover in one area of your business, business process analysis (BPA) is a useful tool to uncover the reasons for these outcomes and then to set process improvements in place. 

Your business goals determine where and how you implement business process analysis. Organizations that value employee and company-wide problem-solving and process improvement as a core part of their culture set a foundation for better morale, lower turnover and better customer experience. So, whether you apply business process analysis tools informally, or you formally audit processes quarterly or annually, it should be a fundamental part of your business function.

Business process analysis begins with analyzing as-is processes. Business process mapping is a common tool used in BPA. It is an important visual resource and document to draw upon for your analysis. Using the documentation and insights gained from the analysis, your organization can then create a business process improvement plan. Business improvement plans will typically generate new business process models, using flowcharts, with improved process flows.

Keep in mind, business process analysis relates solely to your business operation processes. It is not the method of analyzing areas of business that aren’t specifically process-related. Process analysis in business is its own defined discipline. It is a guide for optimizing every operational area of your business.

Examples of BPA include the following:

  • Reviewing employee on-boarding to align with business culture and better engagement.
  • Analyzing marketing processes to reconcile whether metrics and paths align with key performance indicators (KPI), such as how well customers are converting or how many qualified leads are engaging with your business.
  • Uncovering where inefficiencies exist in technology adoption processes.

Tools of business process analysis  

In process analysis, analysts use diagrams to define input and output points, tasks sequences and what processes are sub-processes nested under main processes.

Analysts also use software to map and create workflows. This includes software that automates business process analysis (BPA) and enables organizations to apply end-to-end process modeling to map when a process starts and determine when it ends.

Process modeling and process mapping tools are integral to BPA. Organizations use business process model notation (BPMN) diagramming and supplier, input, process, output, customer (SIPOC) model diagramming as two workflow solutions for better operations. These visual tools are an excellent way to show changes in a process. They can be used as a “before and after” visual guide to train employees, for instance, or to map every process improvement back to your key business goals. 

Who oversees business process analysis?  

You might be wondering at this point, who in an organization is responsible for BPA, given roles, resources and skill sets?

Certainly, resources can be limited for SMEs. Working with an outside business analyst consultant might be the most viable route.

At the enterprise level, businesses employ business process analysts and process architects to perform business process analysis. These are different terms for similar roles. Both of these roles might work with business architects or work with executives and division leads. 

In addition, business process analysis relies on the expertise of subject matter experts. These might include a number of employees, stakeholders and consultants, such as analysts, data scientists, quants, IT, administrators and employees who are closely aligned to a process. 

Automation and BPA 

Currently, hyperautomation is considered one of the highest priorities across enterprise businesses. Gartner has forecasted that the industry will reach $600 billion by 2022 . Hyperautomation steadily decreases the amount of human intervention for a fully automated, responsive process — or a smart process.

Your organization may want to consider specific questions to move toward automated processes: 

  • What key areas do you seek to automate and why?
  • Are there more common manual errors or misapplied policies? 
  • Where are there costly and high-volume processes? 
  • Has the organization determined obvious process problems? 
  • What creates customer dissatisfaction?

Business process analysis (BPA) can help your organization create a documented, mapped path to integrating automated processes and moving toward a goal of hyperautomation. As an example, moving from a hybrid to fully automated customer chatbot support is one way service centers lower costs and optimize customer support with hyperautomation.

How small-to-medium enterprises (SMEs) can apply BPA

How do SMEs best apply business process analysis (BPA) to start?

First, target mission-critical processes with the highest business impact. Then, consider mapping a process for automation. 

Next, standardize automation documentation — as well as process documentation — across departments and your organization.

For instance, IT can use BPA to map the process for software security protocols for various roles, which enables your organization to better manage onboarding and scaling as a result.

Business process analysis and IBM 

IBM provides process templates for project-based process analysis that are based on BPMN diagramming. Process mapping is integral to an optimal automation strategy.

Learn how IBM Business Automation workflows enable your business to mine process data to gain critical insights and automate digital workflows on-premises or in the cloud.

Download IBM Process Management for Dummies as a resource to learn the basics of process management to drive competitive practices and processes.

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A look at black-owned businesses in the u.s..

The owner of Marcus Book Store, the oldest Black-owned bookstore in the U.S., talks with her employee about a shop display in Oakland, California, in December 2021. (Amy Osborne/The Washington Post via Getty Images)

More than one-in-five Black adults in the United States say owning a business is essential to financial success, according to a September 2023 Pew Research Center survey . While Black-owned businesses have grown significantly in the U.S. in recent years, they still make up a small share of overall firms and revenue, according to our analysis of federal data.

Pew Research Center conducted this analysis to examine the characteristics of Black-owned businesses in the United States. The analysis relies primarily on data from the 2022  Annual Business Survey  (ABS), conducted by the U.S. Census Bureau and the National Science Foundation’s National Center for Science and Engineering Statistics.

The survey – conducted annually since 2017 – includes all non-farm U.S. firms with paid employees and receipts of $1,000 or more in 2021. Firms are defined as businesses “consisting of one or more domestic establishments under its ownership or control.” Majority business ownership is characterized in the survey as having 51% or more of the stock or equity in the firm. The Census Bureau counts multiracial firm owners under all racial categories they identify with; Hispanic firm owners may be of any race. Read more about the ABS methodology .

A bar chart showing that about 3% of U.S. businesses were Black-or African American-owned in 2021.

In 2021, there were 161,031 U.S. firms with majority Black or African American ownership , up from 124,004 in 2017, according to the latest estimates from the Annual Business Survey  (ABS), conducted by the U.S. Census Bureau and the National Science Foundation. Black-owned firms’ gross revenue soared by 43% during this timespan, from an estimated $127.9 billion in 2017 to $183.3 billion in 2021.

Despite this growth, majority Black-owned businesses made up only about 3% of all U.S. firms that were classifiable by the race and ethnicity of their owners in 2021. And they accounted for just 1% of gross revenue from all classifiable companies that year. By comparison, in 2021, roughly 14% of all Americans were Black.

As has  long been the case , White majority-owned businesses made up the greatest share of classifiable firms (85%) and their revenue (93%) in 2021. About one-in-ten classifiable firms (11%) were majority-owned by Asian Americans, and no more than 7% had majority ownership by someone from another racial and ethnic group.

The Annual Business Survey classifies businesses as “majority Black- or African American-owned” if a Black owner has at least 51% equity in the firm. The same standard holds for business owners of other racial and ethnic backgrounds. The U.S. Census Bureau counts multiracial firm owners under all racial categories they identify with; Hispanic firm owners may be of any race. 

Not all U.S. businesses are classifiable by the race or ethnicity of their owners. In 2021, about 4% of all businesses in the U.S. were  not  classifiable by the race and ethnicity of their owners – though these firms accounted for 61% of total revenue. Ownership and revenue figures in this analysis are based on the roughly 5.7 million firms that  were  classifiable by the race and ethnicity of their owners in 2021, most of which are smaller businesses.

How many workers do Black-owned businesses employ?

Black or African American majority-owned firms provided income for roughly 1.4 million workers in 2021. Their annual payrolls were estimated at $53.6 billion.

Still, most Black-owned firms tend to be smaller businesses. Two-thirds had fewer than 10 employees in 2021 ; 13% had 10 to 49 employees and just 3% had 50 or more. Another 16% reported having no employees. (The ABS determines employment size by the number of paid workers during the March 12 pay period.)

What’s the most common sector for Black-owned businesses?

By far, health care and social assistance. About 45,000 of the roughly 161,000 U.S. companies with majority Black or African American ownership, or 28% of the total, were part of this sector in 2021.

Looked at a different way, 7% of  all  classifiable U.S. businesses in the health care and social assistance sector were majority Black-owned that year .

A chart showing that health care and social assistance is the most common sector among Black-or African American-owned businesses.

Other common sectors that year included:

  • Professional, scientific and technical services (comprising 14% of all Black-owned businesses)
  • Administrative and support and waste management and remediation services (8%)
  • Transportation and warehousing (8%)
  • Retail trade (6%)
  • Construction (6%)

Where are Black-owned businesses located?

A map showing that Black- or African American-owned businesses made up greatest share of firms in District of Columbia, Georgia and Maryland in 2021.

Most Black or African American majority-owned businesses (87%) are located in urban areas. Just 5% are in rural areas – that is, places with fewer than 2,500 inhabitants, under  the Census Bureau’s definition .

Some of the most populous states also have the greatest number of Black majority-owned businesses. Florida had 18,502 such businesses in 2021, California had 15,014 and Georgia had 14,394.

Black majority-owned businesses made up the greatest  share  of all classifiable firms in the District of Columbia (15%), Georgia and Maryland (8% each).

Who are Black business owners?

  • They’re more likely to be men than women. Some 53% of Black-owned firms in 2021 had men as their majority owners, while 39% had women majority owners. Another 8% had equal male-female ownership. The gender gap is larger among classifiable U.S. firms overall: 63% were majority-owned by men in 2021, 22% were majority-owned by women and 14% had equal male-female ownership.
  • They tend to be middle-aged. Roughly half (49%) of Black or African American business owners who reported their age group were ages 35 t0 54 in 2021. Another 28% were 55 to 64, and just 7% were younger than 35.
  • A majority have a college degree. Among owners who reported their highest level of education completed, 27% had a bachelor’s degree and 34% had a graduate or professional degree in 2021.

What motivates Black entrepreneurs?

When asked to choose from a list of reasons why they opened their firm, about nine-in-ten Black or African American majority owners who responded said an important reason was the opportunity for greater income; a desire to be their own boss; or wanting the best avenue for their ideas, goods and services. Balancing work and family life (88%) and having flexible hours (85%) were also commonly cited.

For most Black or African American majority owners, their business is their primary source of income . Seven-in-ten of those who reported income information in 2021 said this was the case.

Note: This is an update of a post originally published on Feb. 21, 2023.

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8 facts about Black Americans and the news

Key facts about the nation’s 47.9 million black americans, facts about the u.s. black population, african immigrants in u.s. more religious than other black americans, and more likely to be catholic, across religious groups, a majority of black americans say opposing racism is an essential part of their faith, most popular.

About Pew Research Center Pew Research Center is a nonpartisan fact tank that informs the public about the issues, attitudes and trends shaping the world. It conducts public opinion polling, demographic research, media content analysis and other empirical social science research. Pew Research Center does not take policy positions. It is a subsidiary of The Pew Charitable Trusts .

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  1. 5 Examples of Capacity Analysis

    Capacity analysis is the process of modeling the capacity of infrastructure, facilities, processes, services and machines. Capacity is the maximum output of an item based on its design or constraints such as available resources. The following are illustrative examples. Production Line Modeling the throughput of a production line.

  2. Capacity Management: Definition, Process, and Examples

    Capacity management helps in cost optimization during the whole process. Also Read | Cost Benefit Analysis . Examples of Capacity Management . Different organizations have different criteria for capacity management. The capacity of a business depends on the type of the products, services, and duties delivered by the organization.

  3. What is Business Capacity & How to Manage It

    Business capacity is a measure of the amount of work that can be accomplished by a business within a fixed amount of time. It's measured in terms of the number of resources or staff members that are available to complete a project within a certain period. By doing capacity management, you can ensure that projects stay on track and the work is ...

  4. Capacity Analysis in Operations Management

    Capacity Analysis is the process of identifying the available capacity for your organization which includes the available inventory holding capacity, machine capacity, labor capacity, etc. It also aims to identify how capacity utilization can be optimized to increase the total available capacity of the operations.

  5. Capacity Management: Definition in Business and Strategies

    Capacity management refers to the act of ensuring a business maximizes its potential activities and production output—at all times, under all conditions. The capacity of a business measures...

  6. Business Capability Analysis: How to analyze capabilities

    Capstera defines business capability analysis as the assessment of individual business capabilities and an integrated set of enterprise business capabilities models to evaluate their strategic importance, business process maturity, resource adequacy, level of IT support, and cost factors.

  7. How to Perform a Manufacturing Capacity Analysis

    The process of capacity analysis is the difference between potential capacity and the actual output a company currently achieves. By collecting production data, manufacturers can identify what process, equipment, or function needs to be changed to increase capacity.

  8. The Beginner's Guide to Capacity Planning for 2024 & Beyond

    Three types of capacity planning. 1. Workforce capacity planning. Workforce capacity planning is about making sure you have enough workforce to deliver your future workload. It provides an insight into whether you have the right number of staff - with the right skills and in the right job roles - to meet demand.

  9. Capacity analysis for business decision-making: a general formulation

    Production and service capabilities are variables that influence decision-making in business management. Capacity management has become a tool that interrelates the company and countries with the ...

  10. Capacity Analysis: Sample Problems

    Three examples of capacity analysis are provided. Calculations for cycle time, manufacturing lead times, capacities, labor cost, labor content, and utilization are performed for three different types of processes: a bread-making process with two independent lines; a croissant-making process involving two parallel dependent lines, one for making the dough and one for mixing the filling; and an ...

  11. Ultimate Guide to Capacity Planning

    Gimarc says, "In the perfect world, capacity planners work with their business partners to predict the impact of business demand on the availability and scalability of their digital infrastructure, and then determine the most cost-effective way to optimize service delivery and meet SLAs.

  12. Capacity Planning Metrics: Tracking Your Capacity Management

    1. Performance Metrics Capacity Utilization: This metric assesses how much of the total available capacity is used. In manufacturing, this relates to product output. In professional services agencies, it denotes the ratio of billable hours to total workable hours.

  13. What Is Capacity Planning? Definition, Methodologies, Benefits

    The capacity planning process is crucial in project management knowledge areas such as: Production capacity, strategy planning, and project planning go hand in hand. Planning is the task of scheduling the team members so that the work gets completed on time. Capacity management is not a set procedure.

  14. Capacity Analysis: Sample Problems

    Three examples of capacity analysis are provided. Calculations for cycle time, manufacturing lead times, capacities, labor cost, labor content, and utilization are performed for three different types of processes: a bread-making process with two independent lines; a croissant-making process involving two parallel dependent lines, one for making the dough and one for mixing the filling; and an ...

  15. What Is Capacity Planning in Project Management? The Full Guide

    Step 1: Define your goals and objectives Step 2: Gather data and forecast demand Step 3: Assess current capacity Step 4: Develop a capacity plan Step 5: Monitor, adjust, and improve What are the capacity planning best practices? What are the capacity planning tools? Let's get started with fundamentals. What is capacity planning?

  16. 10.6 Business Capability Analysis

    3.4 Plan Business Analysis Information Management. 3.5 Identify Business Analysis Performance Improvements. 4. Elicitation and Collaboration. keyboard_arrow_down. Introduction. 4.1 Prepare for Elicitation. 4.2 Conduct Elicitation. 4.3 Confirm Elicitation Results.

  17. What Is Capacity and How Does a Company Maximize Output?

    Capacity is the maximum output level a company can sustain to provide its products or services. Depending on the business type, capacity can refer to a production process, human resources...

  18. A Small Business Guide to Capacity Planning

    In project management, capacity is the maximum amount of work an organization can complete within a typical work schedule. The capacity planning process balances supply with demand and involves ...

  19. 46 Examples of Management Analysis

    Management analysis is the process of formulating meaning that is relevant to the direction and control of organizations. This includes analysis of strategy, costs, projects, return on investment, operations, problems, decisions, competition, markets, customer needs and user experience. ... Capacity Planning Guide » ... A list of business ...

  20. Capability Model: In-depth overview of business capability mapping

    A capability model (or business capabilities map or capabilities model) is a structurally sound and internally logical group of capabilities, which conforms to a MECE model (Mutually Exclusive, Collectively Exhaustive.) For example, one can combine a bunch of underlying capabilities to manifest a "Sales" or a "Sales Management Capability.

  21. What is Capacity Management? Explaining What It Means

    The primary goal of capacity management is to ensure that IT resources are rightsized to meet current and future business requirements in a cost-effective manner. One of its more common definitions is provided for in the ITIL framework and further divides the process into three sub-processes: Business Capacity Management Service Capacity Management

  22. What is Business Process Analysis?

    Learn what business process analysis (BPA) is and the types, methods and steps for small-to-medium enterprises (SMEs) to consider. Business process analysis (BPA) is an approach to analyzing business operation processes. It is a detailed, multi-step examination of each part of a process to identify what is working well in your current process ...

  23. Capacity Management

    Capacity management refers to the strategy applied by businesses to maximize production efficiency owing to the overall demand for a product or service in the market.

  24. 5 Capacity Planning Report Examples

    Check out these 5 essential capacity planning reports centering around resource excellence, that'll help you think about resourcing smarter. 1. Capacity Versus Demand Forecasting Reports. Capacity management analyzes your resource capacity in advance. The capacity planning reports within intuitive resource management solutions like Saviom ...

  25. Management with a Major in International Business (B.S.B.A.)

    A major in International Business (IB) provides students with the tools to succeed in today's global environment. The business arena where the College's graduates will be working is no longer local, regional, or national. It is international and requires an understanding and sensitivity to different cultures and business environments. The program embraces three different levels of analysis ...

  26. Business Analyst Job Description (With Examples)

    Here is a well-written business analyst job description example along with some tips on how to draft your own job description to attract top candidates.

  27. A look at Black-owned businesses in the U.S.

    Pew Research Center conducted this analysis to examine the characteristics of Black-owned businesses in the United States. The analysis relies primarily on data from the 2022 Annual Business Survey (ABS), conducted by the U.S. Census Bureau and the National Science Foundation's National Center for Science and Engineering Statistics.. The survey - conducted annually since 2017 - includes ...

  28. Stochastic analysis for bearing capacity computation of twin strip

    HIGHLIGHT; Random heterogeneous variability of φ on the interaction of the twin foundations on both unreinforced and geogrid-reinforced sand was investigated.. For twin footings on unreinforced dense sand, Scr/B changes from 1.25 to somewhere between 1.25 and 1.5 by increasing COV φ, while on the unreinforced loose sand, S cr /B = 1 remains constant, irrespective of COV φ values.