Is your production line running at full capacity?

Many Supply Chain teams aim to run their production lines at full capacity. It is advisable only if the constraint is internal, that too in manufacturing. In all other cases, it is advisable to have surplus production capacity, called protective capacity.

What happens if the demand goes up beyond the original plan? Companies operating at full production capacity will lose the additional demand. Some companies try to compensate by keeping additional inventory buffers, which often leads to product obsolescence and loss of freshness.

If you are in such a situation, with plants running at full capacity, my suggestion would be to use TOC tools to release hidden capacity in the lines. If the protective capacity is less than 20%, the likely consequences are sales loss due to stockouts, and obsolescence cost due to inventory mismatch.