The Fundamentals of Capacity and Demand Management

Strategic Portfolio Management
Mathilde Hoeg
Digital Communications Manager
Peter Bruun
Product Owner, Team Planner & Time for Teams

Capacity management is one of the big headaches in any organization – without it, things simply can’t run. So, finding the right capacity management solution is paramount to delivering results.

In this blog post, we cover the fundamentals of capacity and demand management as well as the common pitfalls and strategies to avoid them.

The definition of Capacity Management

Capacity Management is the process that aims to balance the demand for resources with capacity - that is, it is the process of ensuring that the right people are there to do the work when needed in the present and in the future.

In current running projects, there are great gains in optimizing the allocation of people working on it and maybe their access to physical resources such as demo projects or lab equipment.

There are also always new projects or initiatives starting up, and these projects might require some of the same resources.

Capacity isn’t just about people. At Projectum we work with three types of capacity management:

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Managing current projects to completion while also ensuring the successful beginning of new projects – along with unforeseen events like job changes and time off – is what makes balancing capacity and demand tricky.

Solving the issues of capacity management

Balancing capacity and demand is difficult because it depends on so many separate factors. But the consequences can be enormous, from delays to wasted raw materials to expensive idling machines, there are huge financial gains from managing capacity optimally. There is also the human aspect that people perform better when they have time and space to do good work.

Let’s look at some of the issues and how to solve them.

Improve your demand forecasting

Demand forecasting is tricky – essentially all forecasting comes down to qualified guesses. However, it’s important to get as close as possible to the actual result. Over-estimating how many hours you need, can lead to too much capacity that you don’t have any work for. Underestimating can lead to delays, missed opportunities, and potential loss of business.

So, it makes sense to try and get it right.

You can make this better by looking at a number of factors:

  • Current market trends
  • Trends within your organization and customer base
  • Risk analysis
  • Historical data
  • Stakeholder management

Retain your resources when possible

Ensuring the right amount of resources is available at the right time can be tricky – especially when there’s fluctuation in demand. This affects people, materials, and equipment.  Do we have what we need, and can we get it in time?

Training new people is expensive, so it’s always better to work to retain your employees. Of course, this means there needs to be work for them to do – continually.

With resource management tools, you can visualize timelines for different capacities and identify dependencies, bottlenecks, or gaps that can be filled with better planning. This allows you to space out the hours of employees and use their skills where it makes the most sense.

Clean up your resource management processes

A lot of organizations don’t have a good process for handling resource capacity management. The process in one department may be completely different from another department, making it difficult to get the full picture of what’s allocated where and making it virtually impossible to share resources across the organization.

Good resource capacity management solutions can help in creating a good, streamlined process while always providing real-time data-driven insights into capacity allocation.

In Team Planner, we allow for customization depending on the organization and industry that ensures the best process for resource allocation and overview.

Fluctuation is inevitable

Different seasons or world events can put pressure on the supply chains. This could lead to longer lead times and potential disruptions without much opportunity to mitigate.

Deciding how much buffer you have in your organization isn’t easy, but it is possible and will allow some flexibility.

If you have good processes and a solution that provides insight into your allocation, it becomes easier to judge how to use suddenly available resources, such as starting new initiatives, conducting training sessions, or doing research in times when there is unforeseen pressure on initiatives.

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Mathilde Hoeg
Digital Communications Manager

With a background in IT and Project Management, the one thing that really stuck is her love for communication. She helps tell the Projectum story, sharing how our products can improve processes in your organization.

Peter Bruun
Product Owner, Team Planner & Time for Teams

Peter Bruun is Product owner of Team Planner, Projectum’s Resource Management solution that helps organizations keep track of resource and demand capacity management. With almost 10 years of experience, he enjoys a good challenge; uncovering the unique issues an organization faces and finding the right solution for them.

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