Linkages to Match Organizational Strategy

Planning Demand (fixed high capacity strategy)

  • The organizational strategy is to meet demand to the maximum extent possible by providing the necessary capacity to meet peak demand at any time.
  • Ensuring that capacity will be available requires a focus on planning demand, especially in terms of long-term planning.
  • Such a strategy could be pursued if the costs of maintaining excess capacity are considered less than that of losing business.

Communicating Demand (highly variable capacity strategy)

  • The organizational strategy is to match supply to demand as closely as possible by being flexible enough to increase or reduce capacity spontaneously as demand changes.
  • Matching strategies such as these require a focus on communications so that the changes in supply can be proactive rather than reactive.
  • Such strategies may employ a great deal of contract work, outsourcing, and flexible work scheduling.

Influencing Demand (moderately variable capacity strategy)

  • The organizational strategy is to level production and carefully manage demand to meet optimal capacity.
  • The focus is on influencing demand so that there is little need to change capacity.
  • Sometimes this process is called demand shaping because it involves convincing customers to buy certain models based on excess inventory.
  • Demand is influenced by carefully scheduling delivery of products and services and timing promotions to operational requirements.

Managing and Prioritizing Demand (fixed average capacity strategy)

  • The organizational strategy is to control demand to the maximum extent possible through scheduling, promotions, queues, and rationing.
  • The focus is on managing and prioritizing demand because fixed average capacity will be by definition result in periods of insufficient supply.
  • This strategy could be beneficial for products or services that require development and retention of expert personnel or other expensive resources.

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