The process of aligning production capacity with sales demand is referred to as capacity planning, and it is an important aspect of manufacturing.
Capacity planning in the FMCG industry is most commonly used to schedule manufacturing capacity to satisfy short- and medium-term demand for food and other perishable items, but it's also an important part of long-term strategic and organizational planning.
Formal capacity planning occurs only once a year in most businesses. While this isn't optimal, the cyclical nature of the process, which takes into account sales demand, production capacity, and material procurement, means that capacity planning can take several weeks.
Whether it’s for FMCG or the food industry, proper optimization of the food supply chain can drastically transform the supply chain.
Why is capacity planning Software important in the food supply chain?
Capacity planning in the supply chain is a secret weapon for factories because of the level of detail involved. With a good capacity planning strategy in place, team leaders can take on more tasks without worrying about whether or not their employees will have enough time to complete them.
The organization's production capacity is also developed at the same time with the help of the production capacity planning software. This allows them to effectively develop a strong system with trial-and-error and ensure highly optimized systems in the subsequent years.
How is Capacity Planning shaping the FMCG industry:
The FMCG industry consists of plenty of perishable goods which, true to its nature, need to be consumed fast. In such cases, it’s important that organizations have a strong & accurate capacity planning that can effectively ensure all FMCG production bottlenecks are taken care of.
Accurate demand planning and control assists FMCG players in achieving the following goals while meeting client demand:
- Improved inventory:
Effective inventory forecasting capabilities are combined with precision in capacity planning in the food supply chain. As a result, they can accurately assess the degree of consumer demand and, as a result, determine the volume of component parts required to effectively manufacture and supply orders.
Furthermore, having an accurate forecast helps reduce warehouse operations or container space needed and plan supply operational activities by preventing losses and reducing the time unused inventory sits around.
- Reduced costs:
Also, it aids in the cost reduction of numerous resources and important production tasks such as job allocation and management, raw material sourcing, transportation, and even some front-office/customer-facing responsibilities. Because forecasting and planning have an impact on the entire life cycle of products, having a more efficient and cost-effective production leads to a profitable FMCG firm.
- Efficient logistics:
Forecasting and planning accuracy allows FMCG companies to take another step forward by methodically examining their transportation strategy. It assists them in identifying places where they may improve efficiencies and minimize duplication.
How to set up a strong capacity planning ecosystem in the FMCG Industry?
Step 1: Determining FMCG requirements:
Determine how much capacity you'll need to meet demand as the initial stage in capacity planning. The production plan, master production schedule, or detailed materials plan determine capacity needs. These demand signals will show how many products must be created, and this information can be utilized to calculate how much capacity is needed to produce the goods.
Businesses can arrange their workload in this step by determining which resources are required to complete the task and how much of each resource's capacity will be utilized.
Step 2: Analyze current requirements:
Post understanding the requirements, compare and see whether you’re using AI in supply chain management in any way:
- Compare expected and actual outputs to evaluate resource performance.
- Examine how the system's various resources are being used.
- Examine the resource use for each job or item category to determine which ones are the most resource-intensive.
- Determine how much time each workload spends on each task. This reveals which resources account for the majority of response time for each task.
Step 3: Plan for the future:
Finally, after assessing your current capabilities, it's time to make future plans. Creating a future capacity plan will allow you to anticipate possible capacity bottlenecks and prevent the production system from becoming overburdened.
The utilization of 'What-If' scenarios can be used to combine demand estimates with actual demand to generate the best possible production plan and schedule, with enough time to resolve issues before they happen.
To conclude:
Capacity planning is an asset that can completely move the FMCG industry in the right direction. With less wastage of essential time-bound raw materials, proper planning of distribution and manufacturing, and a centralized system, capacity planning tools in the food supply chain is a true game-changer.
To safeguard yourself and efficiently implement capacity planning solutions in your supply chain, you can take the help of AI. It can help optimize and automate processes, cut costs, and reduce human error for effective capacity planning in the FMCG industry.
With new trends coming in the food industry, AI can monitor & track food delivery and goods at every stage. I.e, bringing complete transparency to your food supply chain. Over time, AI can help you save more than spent, giving you a larger chunk of profits and better management.
With the availability of new and improved AI-Powered capacity planning software in the FMCG industry, all planning systems will run on auto-pilot, giving managers more time to focus on, and invest in other areas.