Hint of the Month - April 2024

What is the relation between Capacity Management and Demand Management?

 

 

Capacity and demand are managed as two sides of a balance. The purpose is to keep capacity of resouces available to deliver products and services as sufficient and efficient as possible in light of the predicted demand. There is a mutual effect between the two sides, while demand imply how much resources are needed to fulfill this demand, the capacity limitations of available and attainable resources will imply how much demand the business is ready to receive and fulfill. Capacity management involves resource planning and management, supplier management, supply chain management, inventory management, and other relevant processes. Demand management involves market research, customer relationship management, product  and services planning and development, and other relevant processes. Shortage of resources will lead to loss of business opportunities due to unfulfilled demand, while excess of resources will lead to extra costs of acquisition and storage of resources not utilized due to less demand.