Nestle Capacity Planning
Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, design capacity is the maximum amount of work that an organization is capable of completing in a given period. Examples of this is the seasonality of products. Capacity is the total maximum level of output a business can produce in a given period. This allows a business to meet the level of demand for a product. Capacity utilisation is the actual output per annum.
Capacity planning is composed of three individual stages, which are briefly elaborated below:-
Level Capacity Plan
This particular stage is committed to controlling and monitors the individual level of stock with the company. The mechanisms as part of the stage are planned for maintaining the same degree of production capacity for the company regardless of the demand. With the help of the activities adopted in the certain stage, the company aims to stabilise the employment, lowering the cost of unit, and higher utilisation of processes (Park, Ungson, and Cosgrove 2015). However, level capacity planning induces the company the need for production storage and inventory, rather than the falling sales. Therefore, Nestle should need to consider the “shelf-life” factor critically to control the situation efficiently when the production exceeds the demand. On the other hand, Nestle deals with the food products, which are non-durable goods. Based on the understanding, it is evident, that the certain stage of planning also brings some vital challenges for Nestle other than the identified benefits.
Chase Demand Plan
Demand chase plan is exactly opposite to the level capacity planning. Chase demand related planning process deals with the products that cannot be stored and should be sold immediately. The food and beverage product sold by the company is the effective example of such type of goods (Mahalder 2014). As part of this particular planning, the production process is controlled by the company to produce the equal number of goods as demanded by the target market. The particular approaches as part of the identified planning are introduced by Nestle under some certain conditions, especially during the picks and falls of demand in the identified market at a given period. Some of the critical measures embraced by Nestle during the period are:
• Reduction or extension of working days
• Recruiting human capital on a part-time basis
• Developing a full-time employment or laying off extra staffs
Demand Management –
Another useful stage in the planning process of Nestle is developing the demand management mechanism for dealing with the fluctuations commendably. Some of the well-known benefits of identified functions as part of the specific planning are a reduction of cost associated with the business process, improvement of services, advanced utilisation of company’s resources and capacities, and ultimately contributing to the increase of profits. The planning process is majorly developed by transferring the demands of the customers from more condensed stages to more relaxed phases (Vachani and Post 2012). The company comprehensively does the identified practice thorough creating the alternative products, providing discounts, or offering new outputs to the customers. One of the most compelling examples of the individual approach is cutting the price of an individual food product of the company to increase the client demands and purchasing power in the summer time. Thus, the stored products of the company can be sold to the identified market consumers successfully.
From the overall information, it can be proposed that the selection of appropriate planning and control process influences the achievement of short or long-term goals requires the company analyse and determine the consequences of the activities.
Nestle Capacity Planning