Summary: It should come as no surprise that aligning capacity to demand is a requirement for profitable operations. Whether you see demand increasing or decreasing, you need to adjust your capacity plan accordingly. Seize the opportunity to position yourself for long-term success through analysis, optimization of business processes, and the adoption of an AI strategy that leverages the expertise of your people.
Has it been a few years since you’ve looked closely at your business processes and enabling technology? Or has demand changed substantially since you last did an analysis? If so, you may be missing opportunities for significant improvements.
Keeping capacity aligned to demand involves making reliable forecasts and long-term planning. Sometimes keeping up with changes in demand can feel like a roller coaster, and responses become knee-jerk. The business-as-usual response to demand fluxes is to adjust staffing and maybe tinker with scheduling inside workforce management tools. However, it also pays to take a fresh look at the people, processes and other resources that determine capacity as a raw number and the important performance characteristics that emerge from system design.
Align processes to demand
When demand is increasing, you may immediately think your current capacity, or team sizes, will be inadequate to keep up. It's true: the most wonderful problem to have is demand growing faster than you anticipated. However, before looking at team sizes, it may be more critical to review your business processes and whether they can be improved or scaled to meet the demand.
In fact, that was the problem recently facing one of our clients. Their business processes evolved organically as they grew from a mere seedling to a healthy business, and eventually no longer made sense with larger volumes. Even if you start with a highly optimized workflow that you spent considerable time developing, as demand grows and time passes, even the best designed process can become a burden. Either way, there is potential for significant improvement with a close analysis from a fresh set of eyes.
On the other hand, when demand is decreasing, you may project it to be less in the upcoming year than it has been in the past. This change in demand could be temporary, such as in a recession. Or it may have peaked as the market matured or even pulled back a little as new competitors entered the market. This change in the business requires a clear strategy to stay competitive and improve profitability. A redesign of business processes to meet demand leveraging the experience of your staff may surprise you with happier employees, lower costs, and improved service levels. Solid operations strategy and superior execution is paramount in a maturing market.
Connecting strategy with operations and technology
Whether demand is increasing or decreasing, it is important to begin with a reconciliation between the various stakeholders. The ultimate goal is to have a strategic view of your approach for capacity planning and process re-engineering, beginning with the business strategy, which provides you with a north star. Senior management has invested time and capital into charting a course to a profitable future. Other functions critical to execution – notably operations and technology – must bring their hard-won experience to the table and develop an execution plan that is aligned with the business strategy and informed by their expertise. Strategy is, after all, largely something that emerges from the choices made on the ground.
The connection between business strategy and operational reality can become weak over time. It doesn't necessarily mean your team is guilty of bad management; instead this happens over time as urgent customer needs are prioritized over executing ”less urgent” tasks from the three--year plan. This strategic debt can pile up over time, which is why any process re-engineering project should start from an understanding of the broader strategic context, rather than just the context provided by the current process.
The details of your process and the metrics that separate good from great are highly dependent on your business. However, it is broadly true that most businesses depend on some technology, and that technology can be critical to the performance of the process. Looking to the future, the technology used by top companies will include artificial intelligence (AI).
To execute any process reengineering project today without looking at how AI can help would be an incredible waste. Conversely, it is also a waste of capital to invest in an AI project without first taking a hard look at strategy. We’ll have more to say about that in an upcoming article.
Clarsynt helps companies grow and scale by operating more efficiently through the creation and implementation of operations and AI strategies. We’re management consultants with 40+ years of combined experience in operations and technology. Get in touch with us!
