TOCICO

All key decisions in an organization involve deep considerations on two major areas: 1. Sales/Throughput. What should the organization sell? Who are the potential clients? How to reach the clients? What price should the organization charge? 2. Capacity and its impact on OE (and I). What capabilities are required, and how much capacity of those capabilities have to be maintained? How much excess capacity is required? How much capacity can be purchased in a hurry? While the focus of management has to be, first of all, on generating throughput, the impact on OE cannot, and should not, be ignored. Managing the capacity is a critical element in supporting the competitive edge of the organization. Problem is that the behavior of capacity, and its immediate impact on OE and profitability, are quite different than sales. One noted difference is that capacity does not behave in a linear way. More, measuring capacity can be easily viewed as complex, due to the many variables that impact the performance. Timing issues are especially tricky as capacity is usually required before the sale, and it needs to be in line with the market timing expectations. On top of all the above capacity is highly impacted by the fluctuations of the demand, and it is also vulnerable to fluctuations within the operational system. Coming with an overall concept of dealing with capacity issues, especially for decision making, is the subject of this presentation. It'll include a discussion on the various complexities in measuring capacity, how that capacity can be utilized in reality, the behavior of the cost of capacity and the emphasis on TWO levels of protective capacity.