Capacity Planning is Foundational
I am also asked if Capacity Planning is about budgeting for the staff needed to handle the work. Capacity Planning is a term that has been used for any one of those disciplines.
When I mention the term “Capacity Planning,” I am often asked if I am talking about forecasting work demand or deriving the staffing that is required to handle that work. I am also asked if Capacity Planning is about budgeting for the staff needed to handle the work. Capacity Planning is a term that has been used for any one of those disciplines.
The reality is that Capacity Planning is about ALL of those things. A Capacity Planning Model is about designing a model that ties all of those things together.
Why does this interest me?
Nothing happens without good Capacity Planning. That’s not a flippant statement. If we can’t accurately predict (within a reasonable margin of error) how much work is going to need to be handled, then we cannot calculate how many staff we will need to handle that work. If we get the staffing wrong then we will either provide a bad service (which means less customers will buy from us) or we pay more staff than we need. In those scenarios, we either lose revenue (due to less customers) or we spend more money than we need to (increased cost to serve). So, good Capacity Planning to a business is as important as good nutrition is to the body.
Because of this, budgeting is closely linked to forecasting and staffing. Finance should be a part of the process, not a reactive measurement of how much money was spent after it has already been spent.
A good Capacity Planning Model will:
- Accurately predict the future demand for work within the organisation (within a reasonable margin of error) AND
- Accurately predict the level of staffing that will be needed to handle that work to deliver the service levels expected AND
- Manage the budgetary constraints on the organisation to accommodate the needs of the work to be delivered and the cost of staff.
Capacity Planning Models should deliver multi-year forecasts that align demand, staff, service level expectations and operational changes to the tolerances of budgetary growth.
Most organisations do not connect Finance to their Capacity Planning capability. They should if their CFOs want to stop reacting to the consequences of over- and under-spend.
What are the core components of a Capacity Planning Model for a service organisation?
- Demand Volume Forecasting
- Resource Management
- Labour Force Planning
- Location Strategy
- Budgetary Controls
REMIS’ Capacity Planning design and methodology encompasses all of these components, which together allows its clients to organise its operations to deliver excellent customer experiences at lean cost. It allows its clients to realistically improve its CX over time by forward planning its budget cycles to accommodate those improvements in a proactive, measured and achievable way.