CAPACITY MANAGEMENT

Capacity Management



Capacity Management

Introduction

Managing organizational capacity is one of the most underestimated, and, therefore, poorly performed, activities in organizational management. The capacity of an organization represents its ability to perform work. This capacity manifests itself in many ways including space, labor, equipment, technology and materials (Sharma 2010, p.99). We often underestimate the importance of capacity management because we fail to understand it in its entirety. The issue of capacity management is of particular relevance of large multinational companies like Toyota. Toyota is bringing its innovations to the increase in productivity and response of the market, and this is all part of the company's obsession with what its president called "the critic of the speed. This paper will first explore the fundamental concepts of capacity management and then provides a detailed critique of capacity management as it relates to Toyota. The paper also proposes few capacity management recommendations for Toyota whose implementation can further enhance the operations at the company. Toyota is selected as the case for capacity management for reasons of wider access to the knowledge of operations management in the company as well as a high interest for exploring the automotive industry.

Capacity Management

Capacity management involves managing the amount of what the organization has and uses to perform work. An organization will, therefore, use its space as offices, production facilities, warehouses, and in other ways to house work that will be done (Bhasin and Burcher, 2006, p. 98). Its labor or people perform the tasks associated with completing work. Its equipment often performs tasks that are either nor humanly possible or that are much more efficient if automated. Robots, for example, can operate in very hazardous environments in which humans would not consider working (Krafcik, 1988, p. 52). Huge stamping machines can create precise replications of automobile fenders that humans would not be able to create, given time and precision constraints. Its computer technology facilitates analysis and decision making that requires the information that it creates or collects. Computer technology is also used as a medium to perform repetitive data-oriented transactions. Finally, an organization uses its purchased material capacity to meet anticipated demand from its customers.

Capacity was also applied to information systems and networks to represent the number of transactions or users that can be supported. Systems had the capacity to support only so many concurrent users or so many transactions per unit time and were incapable of handling more.

However, an organization's capacity is much larger than that considered. By these definitions, required to engage in activities such as selling the work that will be processed by the machines, purchasing the materials that will be used to support the machines, and practically all of the other functions associated with operating the organization (Brennan 2011, p.43). Building capacity is often necessary to house the labor capacity, equipment capacity, information technology capacity, and material capacity. Organizations buy materials in anticipation of demand. These materials provide the organization with the capacity to produce its products quickly (Lee 2002, ...