Sample Strategic Capacity Planning Essay


 Strategic Capacity Planning

Strategic capacity planning involves determining the overall capacity, facilities, equipment, labor force size and the level of resources available that supports the competitive strategy of the company in the long run. Capacity is the amount of output a system is capable of achieving over a given period. It is the ability a company can hold or accommodate within a particular period. It requires flexibility to allow for increase and decrease in the production levels depending on the demand. Capacity planning is based on forecasted decisions. The Strategic capacity building also capacity management in information technology is concerned with estimating the storage of the computer software and hardware in connection the infrastructure resources required for future use. The assessment looks whether the resources can accommodate more users in future in case of an increase in the number of users. This estimate enables a company to plan to avoid losses and to make future decisions.

When coming up with an effective capacity planning one should consider the critical resources that are to be measured. This measurement is made based on the current knowledge about which resources are key to making future needs. This makes the forecast effective because it is built on what already exists.

Capacity planning is used to design capacity by looking at the output rate of the designed service. This helps in determining the profit that the service will add to the company. The other function is to ascertain the effectiveness of the service by looking at the end product after labor is deducted. This helps understand the exact output of the service on its own if it can run without interference with the other existing services.



This planning reduces the cases of excess capacity where the actual production is optimal for a company. This means that the company's supply is lower than the market demand. This can lead to the company losing market share or incurring extra costs. It also minimizes cases where they supply more than what the consumers need leading to loses which impact the company negatively. The planning makes the company balance its demand and supply.

When selecting a measure of capacity one should consider a measure that does not need frequent updating. Choosing a measure for each product will make it easier rather than choosing a comprehensive measure for all the products. One should also consider the availability of inputs because one measure cannot be used under all situations. It should be able to be tailored depending on the situation at hand.

An adequate capacity should have a provision for expansion of in the design of facilities. It should strive to have an output that is almost uniform to increase the capacity. As much as quantity is an important determinant of capacity, quality should also be key to avoid a decrease in the output rate due to the need of inspection. To achieve sufficient capacity adequate planning is required.

Based on the timeline, capacity planning can be classified into three categories which are a long, medium and short range. The term capacity depends on other capacities like the effective capacity and sustainable capacity. The medium capacity is the strategic planning undertaken by a company for two to three years. The short-term capacity is the planning carried out by an organization for a weekly or quarterly time frame.



Apple which is the giant software company has grown over the years which can be attributed to the application of strategic capacity planning. The company started as an idea of one man who is Steve Jobs. He teamed up with his friend Steve Wozniak and made their first Apple computer on April 1, 1976 (Santa Clara Historical Society, 2012). The company has grown from this to what many people all over the world use as a computer. The company has experienced several changes in the executives that run it in the process of its growth.

The company's strategic capacity planning has enabled it to keep the pace despite the constant growth of technology. Before 2007, there was no touch screen that people could use, Apple through its planning and its technology introduced their first iPhone (Copeland, 2010). The iPhone had remained to be the best and always in demand due to the planning carried out before it was introduced.

Apple has strategic groups which are planned to be in different places due to its popularity. This capacity planning necessitated the supply of their products globally. This strategy was developed based on their core products and their growing demand. The company through the strategic groups targets consumers by providing them with both physical assets and digital assets. This strategy helps Apple to stand out from other competitors.

Apple markets its products to both middle and upper- income people. This has made the company to be popular to almost all people. The company's products were limited in the age of 18-34 years, but they have come up with technology that appeals to people of all the ages. This strategy has helped in ensuring a bigger market.



Apple has the best supply chain management due to its capacity effectiveness. According to the Apple Supplier Responsibility report in 2012, the company has many audits that connect with the company which was an improvement after carrying out capacity planning. The company has many of their manufactures in China which is to ensure low cost of production and to ensure quality most of the LCD panel suppliers are from Korea. All this shows that the company has effective and efficient capacity planning which leads to its growth.

Apple's strategy is to reach the middle and the upper- class people. This has made them grow because they are the leader in innovation, but sometimes they may not be the first to produce the product. Many times they lower the prices to enable their customers to buy them, and they mass produce watch as the business peaks. This strategy has helped them to stand out from their competitors.

Apple’s organization structure clearly allows for centralized decision-making (Bajarin, 2011). This allows all the people in the company to be aware of what is going on in the company. They can give their views to the directors. The company interacts with their customers to understand their needs which helps in customer satisfaction.


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