What are the Strategies for Managing Capacity and Demand?

STRATEGIES FOR MANAGING CAPACITY & DEMAND
The demand may be too high or too low. When demand is too high the capacity can be altered by:
i)      Stretching time, labour, facilities and equipments.
ii)     Cross train the employees.
iii)    Request over-time from employees.
iv)    Rent or share facilities.
v)     Hire part-time employees.
vi)    Subcontract or outsource service.

When the demand is too low, the capacity can be altered by:
i)      Performing maintenance, renovations.
ii)     Schedule vacations.
iii)    Schedule employee training.
iv)    Lay-off employees.
Customers’ Involvement: By converting certain operations to self-service like buffets at restaurant and fast food joints the firm can divert its own personnel to other functions. Self-service firm lose a certain measure of control over service quality  when the customers are asked to perform key functions.

Using Part-time Employees-, Part-time help can supplement regular employees when the peaks of activity are persistent and ‘ predictable. A ready part-time labour pool is available from college students and others who are interested In .supplementing their primary source of income. Another source is off duty personnel placed on stand-by. Hospitals and Airlines often pay their personnel to be on stand-by. They are there to be ready for work if needed.

Cross Training Employees: Some services consist of various operations. At times when one operation is busy the other operation may be idle. Cross training employees to do the tasks in various operations creates flexible capacity to meet demand. For an example, we see at supermarkets when the queues develop at the cash registers, the managers call on stockers to operate registers until the queues reduce. In the same way during slack periods some of the cashiers are busy stocking shelves.

Modify or Move Facilities and Equipments: Sometimes it may be possible to modify the existing capacity to meet the demand fluctuations. For an example, the new Boeing 777 aircraft is so flexible that it can be reconfigured within hours to accommodate extra numbers of seats allocated to one, two or three classes. Thus the plane can be quickly modified to match the demand arising from different market segments.

Sharing Capacity: A large investment in equipment and facilities exist in a service delivery system. At the time of under utilization, it may be possible to find other use for the capacity. An airline is a good example. At the small airports, airlines share the same baggage handling equipments, ground personnel etc. It is a common practice for some airlines to lease their aircraft to other airlines during the off season.

Stretch Existing Capacity: In order to match the demand th,~ riqtinn r-~7m~7irjtv of resources can be expanded. Under such circumstances no new resources are added but people, facilities and equipments are asked to work harder so that demand can be met.

Schedule ‘Down Time’ during low demand: If during the peak period, people, equipment  and facilities are being used at maximum capacity then it is necessary to schedule repairs, maintenance and renovations during off periods. For employees vacations and training can also be arranged during this period.