How Do You Do Demand Versus Capacity Long-Range Planning?

A: LONG-TERM CAPACITY STRATEGIES involve a range of assumptions and predictions about product demand, technological innovations, and the shifting competitive landscape. The forecasted growth and variability in demand, in combination with the confidence in those predictions, are core parameters. For example, when demand is more uncertain (e.g., during a new product launch), a larger “buffer” should be available. Pay attention not just to how much capacity is needed but also to what type is required and how it will be measured. Workforce capabilities often are more important when determining plant capacity than facility size or equipment output. Timing for adding/reducing capacity, and by how much, also needs to be considered. Is the strategy to stay well ahead of demand and never run short or maximize utilization and bring new capacity on just-in-time? While delaying expansion can clarify the capacity picture, the risk and impact of falling short (compared with having underutilized plants) should be weighed carefully.

SANDRA POOLE
Sandra is a former EVP of technical and commercial operations at ImmunoGen and SVP, biologics manufacturing at Genzyme.