A few years back there was a publication that centered around the discussion of an individual’s “margin” or a person’s capacity to complete and handle certain tasks or responsibilities. The book became all the rage because people wanted to assign special meaning to it. For example, it sparked the common refrains, “I have to protect my margin, I only have so much margin, my margin will be lost if I don’t do this or that!”
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Know Your Limits
While the core of the margin argument relates to an individual’s ability to handle demands, growth requirements and scaling their efforts, the overarching question remains the same, How much can any of us legitimately handle before we reach capacity or burnout? In organizations, this very same question should be posed if they want to achieve success or continue to grow. Which leads us to the topic of capacity management.
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Capacity Management
Capacity Management is defined as the management of the limits of an organization’s resources, such as its labor force, manufacturing capabilities, technology, raw materials, and inventory. The capacity of a production unit is its ability to produce or do what the customer requires. Often capacity management is only associated with information technology (IT), but it goes beyond those limitations. The primary goal is to ensure that capacity meets current and future business requirements in a cost-effective manner.
Growth Opportunities
Determining future growth opportunity has everything to do with an organization’s capacity. In most instances, for growth to occur, an organization’s processes need to be scalable. An accurate assessment must be made of current resources to determine their viability for expansion. Let’s take a look at a few questions that reveal that viability for expansion:
(1) Can growth be sustained at current capacity levels?
(2) How can capacity be increased, if necessary?
(3) What are the costs associated with maintaining or increasing capacity levels?
Smart Growth Decisions
Better top-level decisions can be made with adequate knowledge of the organization’s infrastructure. Furthermore, proper capacity management will help to mitigate risk and improve business flexibility in both the long and short term of the company’s efforts. At the end of the day capacity management is an ongoing process that keeps the focus on future growth.
Point of Clarity Quote:
“Your friends will believe in your potential, your enemies will make you live up to it.”
-Tim Fargo
