Foundations of capacity analysis and supply chain design

The importance of capacity analysis in the supply chain of any major corporation cannot be overstated. Any systems integrator (whose core competency is assembling the final product) is reliant upon its suppliers to provide good parts on time in order to meet production schedules and satisfy customer demand. This is of particular importance with Lean manufacturing systems and ‘just in time’ delivery systems. It is also of critical importance due to the observed ‘bullwhip’ effect and supply chain disruptions that still occur during the post-COVID-19 era. It is not uncommon to find that more than 80 per cent of the piece parts required for end item fabrication come from the supply chain. In addition, production schedules often follow a steep ramp for emerging technologies. Ensuring that your supply chain has the required amount of ramped capacity is critical to the success of the overall enterprise (inclusive of prime contractor, supplier, sub-tier suppliers). Fundamental concepts will be presented and demonstrated in examples. This paper will discuss supplier capacity analysis not only from a capacity modelling and simulation standpoint, but also some of the intricacies and interactions associated with supply chain design, business case analysis, lean manufacturing principles, supermarket inventories, human capacity considerations, hidden factory effects1 and the realised manufacturing yield impact on supplier capacity.