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Tell-tale signs of a real capacity shortage are easy to spot.
Many supply chain teams often complain about shortage of production capacity. They cite evidence like product shortage, poor OTIF, delay in fulfilling customer orders, etc. While some of these may be the result of capacity shortage, there could be other reasons for their occurrence as well.
If you are facing a capacity shortage and want to know whether it’s a real one, look at your finished goods inventory. If the capacity is really short, your finished goods should be running hand-to-mouth and flow at a rapid pace from the factory till the consumers.
If you have high inventory of finished goods, either in the factory or in the distribution system, you don’t really have a capacity shortage.
In fact, excess inventory is a clear indication of excess capacity!