Abstract
We shall devote this chapter to conveying some essential ideas about capacity analysis. In the previous chapter, we introduced the six action variables for Operations and gave an overview of each one. Nonetheless, we have tiptoed over capacity, for the simple reason that I believe it is worth a full chapter. I do not know how to perform operational analysis without delving into capacity. Using the latter I can tackle a company’s entire operations layer. Without it, I am lost. In this chapter I introduce capacity analysis as an essential way of looking for operational efficiency. I go back to KISS for this chapter’s approach.
Capacity is one of the variables introduced in the previous chapter and managing it is worth a chapter of its own. Chapter 5 contains a management focus to delve into this variable and unmask it in all of its splendor.
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Notes
- 1.
This may sound like a declaration of love in a corny soap opera, but nonetheless it is true. I am lost without capacity analysis.
- 2.
Focus, focus; an overwhelming need. Steve Jobs made it one of his mantras and I agree totally. Digressing is synonymous with unproductivity.
- 3.
Let us be honest with ourselves; may he who has not cut costs cast the first stone! But we must also be aware that what we have been doing is really a folly (a highfalutin word for stupidity, but it fits!) that may kill our flame red and take us along undesired paths. Please forget cost-cutting and use this chapter to be proactive and stay five minutes ahead.
- 4.
I know, I know. I am not taking into account set-up time for surgery. But I want it to look like this to simplify matters. Remember dear reader: KISS!
- 5.
Let us leave things there for now. In due course we shall see how even so queues will arise, but the variability in arrivals is not the same every hour, e.g., at 8:30 a.m. nobody shows up, while 36 do at 12. Bear with me, we shall address this point shortly. For now we are dealing with capacity analysis using averages.
- 6.
FTE, or full-time equivalent, is the way to calculate the number of people assigned to workstations who have working days of less than 8 hours. Thus two people who work a four-hour day have an FTE of one person.
- 7.
Or let them do it with their iPhones, or give them an iPhone, but a stopwatch is cheaper.
- 8.
In my opinion firing is a personal failure. You have to be very careful when hiring, and have everything sorted out, but hiring is done for a person to add value in the medium term. Firing may be down to not knowing how to properly manage adapting the person to their tasks. Everybody is good at what they’re good at, and a bad fit for a job often leads to firing.
- 9.
I do not recommend this, the idea is to drive the company to achieve what the strategy is after, and that is defined by the strategic mix.
- 10.
Bear with me; in two ticks I shall explain the term using the Ecosaúde example.
- 11.
Remember what we said in the previous chapter about nurses’ jobs in the United States.
- 12.
Due to its frequent use in recent years, not because it adds value.
- 13.
And you will give your staff a method for understanding the logic behind the situation and being able to act consistently. Once you get used to it, you will see that life is impossible without doing capacity analyses.
- 14.
An EMBA student of mine at our sister school in Portugal, the AESE. This book, as the reader will see, is a compilation of my students’ experiences. Twenty-five years of teaching is long enough for many former students to have become leading lights in their companies.
- 15.
My Portuguese students are very polite and always address me as, “Professor.” Latin Americans call me “Maestra,” whereas here in Spain I am simply Beatriz.
- 16.
Beatriz and Pedro are the owners. Pedro is an EMBA student at AESE, while Beatriz has been working on improving her service with me and the Operations Professor at AESE, Jorge R. Machado.
- 17.
They do not add up to 100 because she worked them out based on real consumption figures, and these leave out idleness rates.
- 18.
Consultants use the plain English term “as is” for what is actually the case and “to be” for what we want to have. I find these two terms very explicit and they help to understand the difference between what we have and what we want.
- 19.
I shall not delve into describing how to perform process analysis, because I assume it is well known. If the reader gets stuck, use the search terms “analysis” and “process design” on Google and the applicable techniques will come up. Or, if you wish, refer to one of our previous books.
- 20.
The Manual has been thought up as a step-by-step guide. To unlock capacity is a painstaking task that needs a guide and checklist to tackle it. The Manual’s purpose is to help every reader as they go, to implement systematically everything set out in the book’s first part.
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Muñoz-Seca, B. (2017). Cost-Cutting Does Not Lead to Efficiency, but Efficiency Does Lead to Cost-Cutting. In: How to Make Things Happen. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-54786-2_5
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