Question 165 - CSCP discussion

On-time delivery performance in the supply chain can best be improved by aligning required capacity with demonstrated capacity. Here's a detailed explanation:

Understanding Capacity Types:

Demonstrated Capacity: The actual capacity that has been achieved over a period, reflecting the real-world production output.

Rated Capacity: The theoretical maximum output that a facility or process can achieve under ideal conditions.

Budgeted Capacity: The capacity that is planned for based on forecasts and budgets.

Theoretical Capacity: The absolute maximum output without any downtime or inefficiencies.

Relevance of Demonstrated Capacity: Aligning required capacity with demonstrated capacity is crucial because demonstrated capacity provides a realistic measure of what can be consistently achieved. It accounts for actual performance, including any inefficiencies, maintenance, and other factors that impact production.

Improving On-Time Delivery:

Capacity Planning: Use demonstrated capacity data to plan and schedule production activities. This helps in setting realistic timelines and avoiding overcommitment.

Resource Allocation: Allocate resources based on what has been demonstrated to be achievable, ensuring that the production schedule is feasible.

Continuous Improvement: Monitor and analyze demonstrated capacity over time to identify areas for improvement and implement changes to enhance efficiency and output.

Benefits: By using demonstrated capacity, companies can make more accurate production schedules, reduce the risk of delays, and improve the reliability of on-time deliveries, thereby enhancing customer satisfaction.

Stevenson, W. J. (2018). Operations Management.

Jacobs, F. R., & Chase, R. B. (2018). Operations and Supply Chain Management.