Strategic Capacity Management Is More Important Than Ever

Capacity management lies at the heart of a company’s strategy. It prevents unnecessary costs from excess resources or understaffing. Organizations that manage capacity effectively are able to respond quickly to market changes or unforeseen circumstances. While the need for a balanced capacity plan may seem obvious, in practice we often see organizations failing to look far enough ahead, leaving them vulnerable in cases of rapid growth or stagnation. By streamlining processes and identifying bottlenecks, organizations can also maximize productivity. Effective capacity management ensures that customers are served on time and according to their needs, leading to higher customer satisfaction and loyalty. Another key benefit is reducing workload, which helps lower the risk of employee turnover.

Effective capacity management requires a view across different time horizons. A distinction is made between long-term plans (where will the organization be in five years?), the medium term (what can be expected in the coming year?), and the short term (what is happening on a weekly basis? Are there factors such as weather that influence capacity deployment?). It is essential to develop plans for all of these scenarios, taking strategic dependencies into account. Many organizations tend to focus primarily on today’s bottlenecks, whereas capacity management calls for forward-looking and anticipating future challenges and requirements. In short, capacity management is not a luxury, but a necessity for any organization aiming to excel in today’s dynamic environment. By looking ahead, building in flexibility, and focusing on the needs of both customers and employees, organizations can create a strong and agile foundation for the future. At the strategic level, capacity management is closely tied to Human Resource Planning (HRP) and should ideally be anchored within the HR department.

A logistics division of a large international client of Boer & Croon experienced explosive growth over the past decade, expanding from zero to nearly one thousand employees. Ambitious plans were in place for further international expansion and new warehouses. In such a scenario, the urgent question arises: how do you structure organizational capacity to support this growth and adequately equip departments? Inevitably, bottlenecks emerge in situations where staff can no longer keep up with the workload.

Our focus was on thorough analysis, uncovering the core of the problems, and then implementing targeted solutions. In the analysis phase, the emphasis was on categorizing activities (proactive vs. reactive, plannable vs. unplannable, seasonal vs. non-seasonal) to gain insight into workload and the ideal mix of tasks per employee and per department. Based on strategic initiatives and expected growth, a five-year plan was then developed outlining the required FTEs per role. This plan was closely aligned with the finance department. The long-term plan provided a clear picture of the capacity required over time.

A car repair company saw that its internal capacity was not expanding quickly enough to keep up with a growing market. Factors such as the rising number of cars on the road, deteriorating road conditions, and the increasing complexity of modern vehicles contributed to this challenge. As demand rose, waiting times exceeded the company’s targets.

A key part of the solution was increasing workforce flexibility through training. By adjusting the internal training program, a greater percentage of employees became capable of performing all tasks, significantly boosting staff deployability across jobs (+30%). This created a more versatile workforce that could absorb fluctuations in demand more effectively. Adjustments were also made to vacation policy to prevent too many employees from taking time off simultaneously during peak periods. By introducing maximum leave limits in these periods, substantial capacity gains were achieved without the need for additional hires.

Another important improvement was standardizing the manual scheduling process for new mechanics. This reduced the time planners spent on individual exceptions and allowed them to focus more on optimizing schedules.

An innovative approach to improving customer satisfaction was proactively reaching out to clients. Customers were given the option to indicate whether they wished to be helped sooner. When gaps appeared in the schedule, these customers were contacted to see if they could come in at that time. The success rate of this approach rose from 5% to 34%, representing a significant boost in customer service. Overall, the measures reduced average customer waiting time by 70%.