Report on the Capacity Management Strategy

Labour Deployment

It can be observed that labours are deployed in different activities such as analysing, designing, procuring, constructing, testing, training, distribution and others. As a result, it helps the organisation in ensuring better production and manufacture of the product (Turner, 2014). However, the business has to bear costs too in order to engage labour at different positions. Indulging cost on labours help in generating better productivity from them and improving the operational process to add value to the business.

Apart from that, different employment relations are also considered in their capacity strategy in order to enhance the operation of the business and gain valuable support from them. The different employment relations that are maintained by the operation are permanent employment, fixed term contracts, temporary employment contracts and internships (Krajewski, Malhotra and Ritzman, 2015). These employment relations are maintained in order to use their experience and skills for better capacity planning and improving the operation and business process. By doing so, it would help the business in meeting the demand of the customers and decreasing the impact of competitors. On the other hand, the employment relations would be effective in improving service level and products can be quickly delivered to the customers (Bozarth, and Handfield, 2015).

Apart from that, the employment relation changes with the change in season. During low seasonal period, the business works mostly with the permanent employees as income of the business is low during such period (Hill, Jones and Schilling, 2014). Therefore, engaging other employees would increase the costs. However, the interns are considered so that their skills can be developed and known which would help the business in gaining experienced and productive employees later (Stadtler, 2015). On the contrary, the business operation considers engaging temporary employees on contract during high peak season as during peak season there is high demand for the product (Anderson et al. 2015). Therefore, it helps to ease the operation of the business in dealing with the customers and producing required level of output.

Stock replenishment Cycle

According to Peng, Peng and Chen (2014), replenishment relates to the movement of stock or inventory from product storage locations or upstream to shipment locations or storage from where the products are delivered to the customers.  Therefore, in order to ensure a better stock replenishment, the business needs to engage key suppliers that can supply product in quick time without making huge gap between procurement and delivery. Moreover, it would be useful in retaining the customers and their demand will be effectively fulfilled (Fleischmann, Meyr and Wagner, 2015). The operation of the business will also improve and operation capacity will be no short of stock.

Apart from that, in order to prepare stock replenishment cycle, following steps have to be followed;

Up-to-date Inventory Data: The operational manager of the firm is engaged to maintain inventory data in the inventory management system or in computer system. It assists them to know the shortage in inventory level in the store or warehouse. Moreover, stock on hand is also known (Coombs, 2014). When it is known that there is requirement of stocks or replenish of stock products, then the suppliers of the firm are contacted. However, in order to reorder stock, lead time for the raw material or products have to be clearly understood beforehand otherwise it can lead to stock outs and customers may be disappointed as business would not be able to arrange product at right time (Dobrzykowski et al. 2014).

Inventory Classification: Further, the inventory has to be classified in order to make pre-arrangement of list of the products that are to be reordered or replenished. The items that are obsolete are no further re-ordered and the products that are very much in demand are preferred (Fehske et al. 2014). Therefore, whole inventory is classified so that lead time can be managed in receiving the stock and unpacking it for sale purpose.

Engage Suppliers:  The suppliers to which the business is associated are distributors and wholesalers. They are taken in account as they provide required resources such as raw materials, other products and also help in distribution of products to the retailers (Esmaeilikia et al. 2014). By engaging suppliers in right time the business able to acquire required materials in right time before they fall short. This helps in meeting the demand of the customers.

Apart from that, in order to understand the frequency of ordering, the business has to know the total orders that have been made over the period and their unique customers over the period (Mafakheri, and Nasiri, 2014). For instance, if total orders are 5000 and unique customers are 2000, then frequency of ordering will be 2.5 times. Therefore, the customers of the business order products 2.5 times in a given time frame.

Further, for knowing the time in order to reorder, the business understands the time between the purchases. Therefore, 365 days is divided by frequency of ordering. For instance, if frequency of ordering is 2.5, then 365 will be divided by 2.5 which will provide 146 days. Therefore, the business needs to reorder the product every’ after 146 days. On the other hand, the lead times can be also managed from order to delivery. For instance, if the business assumes that the demand will be 20 units each day and business lead time is 40 days, then the lead time between order and delivery will be 800 units (Rushton, Croucher and Baker, 2014).

Appropriateness of the capacity strategy

The lead strategy used by the manufacturing operation is appropriate in figuring out their capacity in order to fill the shifting demands for their products. As a result, it is useful in not letting to face inefficiency in their operation and capacity. Apart from that, it can also be mentioned that resources are efficiently utilized after adopting lead strategy into their operation (Cigolini et al. 2014). The business is able to know the lower down the time between acquiring unfinished products and delivery of finished products to the consumers or retailers or wholesalers. However, the existing or earlier operational system was not that appropriate as manufacturing operation was not able to correctly forecast the requirements of raw materials or products requirement in right time. Due to that, the manufacturing operation was not able to open long for the customers. Moreover, the demands of the consumers were not able to fulfil on the right time.  It likely increases the chance of shifting of customers to other available alternatives. Therefore, it hit the manufacturing operation which impacts on the earnings and image of the company. It has been seen that due to problem in the operation and capacity strategy, an Alice boot manufacture firm in UK suffered decline in customers to approx 14% in a particular period (Slack, 2015). As a result, of that the firm has to make necessary adjustments to their trading hours and improving capacity zone.

Chart 1: Change in Customer demand due to ineffective operational system

Further, it can be mentioned that the situation that aroused in the form of opening business for short hours, over staffs and under stock can be remedied. In order to resolve the trading hour issue, the business needs to decrease lead time by forecasting the required product requirements before the sale out of last item from the store shelf. It will help in arranging the product all the time which will make customers to buy the products from the stores and moreover, the business can be able to fulfil the demand of the consumers.

On the other hand, in case of over staff, the manufacturing operation has to incur staff on temporary or contract basis so that they can be called during the peak season or hours where the demand is high. As a result, the operation can assign significant roles to staffs such as dealing with procuring materials and products from suppliers, monitoring available of products or items in the business for sale, time for re-ordering, etc. Therefore, it will help the business in effectively managing the lead time and ensuring better operation internally (Krajewski, Malhotra and Ritzman, 2015). Moreover, the business would be successful in meeting the demand of customers on regular intervals without falling short of stocks.

Furthermore, the issue of under stock can also be sorted out by keeping record of stocks in inventory management system. It is effective in tracking the level of stocks available in the business. As a result of that, the manufacturing operation would know beforehand the requirements of stocks for the purpose of production and distribution of product and services to the customers. Moreover, the risk of loss can also be minimised due to effect of under stock.

Apart from that, due to under position of resources such as set up times or machine clean time, the manufacturing operation can face several consequences. Due to such issue, the business would find problem in production of product in due time. On the other hand, the cost of operation would increase as the business would have to incur more time in cleaning machine which will further increase the lead time between production and delivery of products to the final users or distributors of products (Hill, Jones and Schilling, 2014). Furthermore, due to shortage of resources, the manufacturing operation would result to wastage in order to produce goods for meeting the increasing demands which will too add the costs on the business.

However, it can be mentioned that employment types that has been engaged by the manufacturing operation is appropriately placed. The operation would be able to enhance their operation and the issues and problem in lead time can be solved. On the other hand, the manufacturing operation should not indulge more contract employees as it will increase the costs which can impact on the earning of the business (Anderson et al. 2015). Apart from that, it can be discussed that employing lead capacity strategy is effective and efficient along with economical. It will help the manufacturing operation in lowering down the stock-out costs be decreasing lead time. Therefore, the manufacturing operation would be able to arrange the required materials in right time and thus fulfilling the demand of the consumers. Moreover, the increasing demand of the buyers can be effectively managed and waste in production can be efficiently managed. Thus, the manufacturing would be able to generate high value with least cost.

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