What is the primary purpose of capacity planning in supply chains?

The primary purpose of capacity planning in supply chains is to determine production capacity. This involves assessing the production capabilities of a facility or system to meet the expected demand for products. Capacity planning ensures that there is enough production capacity to satisfy customer demand without overcommitting resources or causing delays. It helps organizations optimize their operations by aligning their production capabilities with market demands, thus enabling them to meet customer needs effectively while managing costs.

Effective capacity planning can lead to improved efficiency, enhanced supply chain responsiveness, and better allocation of resources. When done appropriately, it allows companies to anticipate capacity shortages or surpluses and to make informed decisions regarding investments in production facilities, equipment, and labor. It is crucial in ensuring that there are adequate resources available during peak demand periods and helps in avoiding waste associated with excess capacity.