Capacity management

Capacity management refers to the act of ensuring a business maximizes its potential activities and production output—at all times, under all conditions. The capacity of a business measures how much companies can achieve, produce, or sell within a given time period. Consider the following examples:

- A call center can field 7,000 calls per week.
- A café can brew 800 cups of coffee per day.
- An automobile production line can assemble 250 trucks per month.
- A car service center can attend to 40 customers per hour.
- A restaurant has the seating capacity to accommodate 100 diners.

KEY TAKEAWAYS
Capacity management refers to the act of ensuring a business maximizes its potential activities and production output—at all times, under all conditions.
Companies must remain nimble enough to constantly meet expectations in a cost-effective manner.
Companies that poorly execute capacity management may experience diminished revenues due to unfulfilled orders, customer attrition, and decreased market share.

Understanding Capacity Management
Since capacity can change due to changing conditions or external influences — including seasonal demand, industry changes, and unexpected macroeconomic events — companies must remain nimble enough to constantly meet expectations in a cost-effective manner. For example, raw material resources may need to be adjusted, depending on demand and the business's current on-hand inventory.

Implementing capacity management may entail working overtime, outsourcing business operations, purchasing additional equipment, and leasing or selling commercial property.