PROCESS AND CAPACITY DESIGN

Ronel E. Cachero

The objective of organization is to provide service and product, which satisfy customer
and create value for them. A product and service designed is based on the customer feedback and
requirement of the market. Process design is where the product is broken down into parts, which
further can be helpful in the actual manufacturing process.
A product, for example, has attractive packaging to provide the right aesthetics plus has
function and features, which provide value to customers. Process design ensures that there is
smooth and continuous relationship between required output and all the intermediate process.
For example, manufacturing of Air-Conditioners, process design has to be such that
maximum supply is achieved during the hot months of summer when demand of the product is at
the highest. So people, process and machines need to align to give continuous production
throughout the year as to satisfy seasonal demand.
A successful process design has to take into account the appropriateness of the process to
overall organization objective. Process design requires a broad view of the whole organization
and should not have a myopic outlook. And the process should deliver customer value with
constant involvement of the management at various stages.
In order to achieve a good process design, effective process strategy is required, which
deals with a singular line items required to manufacture the end product. Effective process
strategy deals with raw material procurement, customer participation, technology investment,
etc.
Over a period of time process design has undergone change and new concepts like
Flexible Manufacturing Systems have been developed, which delivers efficient and effective
production design and analysis.
Based on the nature of product and service production or conversion process can be
divided into two broad categories, continuous production (assembly line, oil refinery) and
intermittent production (job work, service).
Production process for both manufacturing industry and service industry can be classified
into broad categories based on standardization of product or service. It can range from single
project assignment like a building or bridge (manufacturing) to interior design (service) and mass
production project like a car (manufacturing) to a fast-food joint (Services).

Managers should recognize the broader effects capacity decisions have on the entire
organization. Common strategies include leading capacity, where capacity is increased to meet
expected demand, and following capacity, where companies wait for demand increases before
expanding capabilities. A third approach is tracking capacity which adds incremental capacity
over time to meet demand.
Finally, the two most useful functions of capacity planning are design capacity and
effective capacity. Design capacity refers to the maximum designed service capacity or output
rate and the effective capacity is the design capacity minus personal and other allowances. These
two functions of capacity can be used to find the efficiency and utilization.
Capacity refers to a system's potential for producing goods or delivering services over a
specified time interval. Capacity planning involves long-term and short term considerations.
Long-term considerations relate to the overall level of capacity; short-term considerations relate
to variations in capacity requirements due to seasonal, random, and irregular fluctuations in
demand.
Excess capacity arises when actual production is less than what is achievable or optimal
for a firm. This often means that the demand in the market for the product is below what the firm
could potentially supply to the market. Excess capacity is inefficient and will cause
manufacturers to incur extra costs or lose market share. Capacity can be broken down in two
categories: Design Capacity and Effective Capacity: refers to the maximum designed service
capacity or output rate. Effective capacity is design capacity minus personal and other
allowances. Product and service factors effect capacity tremendously.
Capacity is the ability of a systems potential for producing goods or delivering services
over a specific time interval. The capacity decisions within a company are very important
because they help determine the limit of output and provide a major insight to determining
operating costs. Basic decisions about capacity often have long term consequences and this
chapter explains the ramifications of those choices. When considering capacity planning within a
company, three key inputs should be considered. The three inputs are the kind of capacity to be
determined, how much of the products will be needed, and when will the product be needed.
The most important concept of capacity planning is to find a medium between long term
supply and capabilities of an organization and the predicted level of long term demand.
Organizations also have to plan for actual changes in capacity, changes in consumer wants and
demand, technology and even the environment. When evaluating alternatives in capacity
planning, managers have to consider qualitative and quantitative aspects of the business. These
aspects involve economic factors, public opinions, personal preferences of managers.