A Capacity Planning Template is a great tool to improve the efficiency of your business. It will help you identify new opportunities to grow as a company and increase your ROI (Return On Investment) while keeping your staff morale high.

It will be most useful for project managers who have to deal with multiple projects, giving them a chance to complete several of them simultaneously. Capacity planning also will work on reducing costs and maximizing the benefit you get from many resources. 

Let's dive directly into what capacity planning is, how it works, its many benefits, and some great free templates that will help your way out.

The goal of capacity planning is to offset two usual problems: an environment with excess capacity and insufficient resources. Capacity planning provides a framework for working out how long each project will take, the staff and skills required to complete it, and whether you can deliver those projects cost-effectively.

Now, to effectively make “capacity planning” work for your project, there are a few steps to follow.

Measure

The first thing you have to do is to measure your resource capacity. Check how many deliveries you can make in a certain period, how many orders a truck can carry at the same time, etc. 

Answering these questions as accurately as possible is vital because the rest of your plan will be based on those numbers.

Analyze

Once you have those measurements, spend time analyzing the information and defining whether you have excess or insufficient capacity or are fully utilizing all available resources. 

Formulate

The last step is to formulate a plan with all the information you have gathered. You can calculate how much it will cost to fund a new project and check whether you can hire new full-time employees or if it is better to bring seasonal part-time workers. 

You can also calculate the return on investment for adding assembly lines to your production facilities or upgrading a piece of machinery. This stage will help you see the likely outcomes for various options, and make the best decision around them.

There are three types of capacity planning, which ultimately focus on achieving the same goal.

All revolves around ensuring you have enough of three major resources for the long and short term, planning everything weeks, months, or years in advance.

Product Capacity Planning

Product capacity planning involves the number of materials and products needed to meet demand. It becomes more relevant in product-based businesses like manufacturing and eCommerce.

In manufacturing, product capacity planning revolves around raw material management to make sure you have everything required to create your product. 

When discussing retail or eCommerce, this strategic planning would be concerned with securing the products you need from suppliers and meeting customer demand. It could require forecasting seasonal demand or evergreen demand for products. 

Workforce Capacity Planning

With workforce capacity planning, you want to make sure you have enough workforce to deliver your products. It will give you insight into whether you have the right amount of staff to meet demand and if the staff is skilled enough.

A workforce capacity plan could discover that you are falling short on staff, giving you the time and information that you need to recruit more people. Or, on the contrary, you have too many, and you might need to reduce the number or redeploy them elsewhere in the company.

Remember that it is not only about numbers but also about noticing that you have the right people in the right place and doing so without burning your staff. 

Tool Capacity Planning

Tool capacity planning will ensure you have the required tools and equipment to deliver your future work. From vehicles to specialized machinery and computers, it concerns anything you need to bring the service or product that you offer to customers.

There are three capacity planning strategies, or methodologies, behind your resource planning. In order to choose the right capacity planning strategy, you will need to consider the kind of business you are running, the level of risk you can bear, and the lifecycle of your products.

Lag Strategy

Lag strategy planning checks you have enough resources to meet true demand (excludes forecasted). It is a conservative capacity planning method that makes sure your costs are as low as possible. 

A potential downside of this resource planning strategy is that it can create a delay or lag in delivering services and products to customers. If you get a sudden increase in demand or you arrange with a large new client who wants fast turnaround times, this strategic capacity planning could prevent you from meeting customer demand on due dates.

Lead Strategy

Lead strategy planning will check your capacity and if you have enough resources to meet your demand forecasts. 

It is riskier than the lag strategy as it deals with projected numbers. Suppose you hire new employees and receive less number of orders than the ones you were predicting. In that case, you might lose money by paying more workers than you need. 

The main benefit of lead capacity planning is that if you have a sudden uptick in orders, you will be ready to keep all of your customers happy, meeting due dates.

Match Strategy

One could consider match strategy planning to be a middle ground between lead and lag strategy. 

Using match strategy, you do capacity management more frequently as you will closely monitor projected demand, true demand, and market trends and shifts. With this information, you can adjust your project management to meet demand in increments.

Match strategy planning will offer more flexibility and less risk than lead strategy and can scale more than lag strategy planning.

As one might use both terms interchangeably, they don’t mean the same. There is an important difference between the two:

• Capacity Planning checks the capacity of the whole workplace or department.
• Resource Planning evaluates the capacity of a specific resource.

Capacity planning is more strategic. It will take an organization or a department-wide overview of each project and see everything needed to deliver them. Meanwhile, Resource Planning appears to be more tactical as it looks at tasks within projects and the availability of certain resources to complete them. 

In this context, when we talk about "resources," it mostly means "human resources." Resource planning relates to planning the capacity of an employee needed to fulfill tasks within projects. On the other hand, Capacity Planning will check the capacity requirements of your whole team before delivering all of your projects.

Before you begin your capacity plan, you need to know how much work any of your resources can take at any time. This includes the availability of staff and what they are capable of. 

This information will be key to avoiding resource clashes, and you will be able to build project plans that you can stick to. Then, you should follow several steps that you will see right below.

Calculate Capacity

Look at your team. Don’t assume that every hour is available for project tasks. Account for daily activities like emails and attending meetings. And be prepared to address holidays, days off due to sickness, etc. 

Estimate the realistic amount of time you have for project work across the different people in your team.

Check Staff Skills

Not only do you need to check your staff availability, you also need to know their abilities and skills, understand the strengths and level of expertise of all available resources and their weaknesses. 

This will let you select the right person for each project task so as to understand the "supply" side of capacity planning.

Meet Project Requirements

Now you need to work out what projects your team will be working on. 

For a lag strategy, you should look at your current projects and make a realistic critical path for all of them.

If you will use a lead strategy, check future projects and forecast their projected resource requirements as well. It will give you the “demand” side of the capacity planning equation.

Create Visibility

With the supply and demand side already acknowledged, you can start evaluating if you have enough capacity to finish your projects. Project managers need a way to look at all the requirements and available resources in order to match them up. 

If there isn't enough capacity to deliver certain projects, managers would have to make some decisions like delaying or declining a particular project, recruiting more employees, etc.

Allocate Resources

When you know your available resources, business priorities, and project requirements, you can look where to allocate resources correctly. 

As it is an ongoing and dynamic process, when things might change, your plan will have to adjust. If you are employing a match strategy for capacity planning, you will need to review your allocations and forecast frequently to match the demand as accurately as possible.

An effective capacity planning process will ensure that your supply chain is always able to meet demand. It will help you scale your business effectively, meet due dates, and increase your bottom line.

Fewer Stock-Outs

Customers don't want to wait for anything. Capacity planning will help you to avoid stock-outs, improve profitability, and minimize customer churn. Ultimately, the more you do it, the better you will understand your unique demand. 

Employing your capacity planning tools correctly will help you see how demand fluctuates during each season and how it is affected by particular events. You will use this insight as a guide for supply chain management and overall decision-making. 

An Increase in Delivery Capacity

Customers not only want their products delivered to their doors, but they also want quick turnaround times. This means that the delivery process must be operating at maximum efficiency. 

Delivery capacity has become an essential element for many businesses. And capacity planning ensures that you have the necessary number of workers available to deliver products whenever needed, keeping your company competitive.

It Identifies Inefficiencies

You can lose sight of some limitations when struggling to patch a supply chain. You need to ask yourself, "what is the maximum capacity of this particular resource." 

Taking a moment to evaluate available capacity and requirements, you will gain insight into what factors might limit capacity, and you will be able to spot bottlenecks.

Facilitates Risk Management

An effective capacity planning process is a roadmap for your business. It will help understand their strengths and weaknesses. It will improve your decision-making about how fast you could scale your business, when would be better to launch a new product, and when is the appropriate time to hire new workers. 

Capacity planning will also prepare you to overcome sudden obstacles, allowing you to make smart adjustments quickly. No matter how much planning you do, you need to be able to respond immediately when an unexpected challenge arises.

With this all-inclusive capacity planning template package, you will be able to anticipate resource requirements for a project and make sure that resources that require a specific set of skills are readily available. 

This dashboard will help you to adequately forecast project requirements, so you avoid poor capacity planning and allocate resources correctly, completing your work successfully.

You can download it for free from the Smartsheet website.

Simple Capacity Planning Template

With this comprehensive template, you will be able to estimate demand, determine capacity, and take the correct course of action. 

It includes an "Estimate Demand" section, where you can edit fields for the team or employees' hours needed per week. It also includes a "Determine Capacity" section, where you can enter figures to define the resulting recommended action. And you will see a "Recommended Action" section that automatically calculates to give you real-time insight into your capacity needs.

You can download this Excel spreadsheet from Smartsheet.com, too.

Human Resource Capacity Planning Template

It is an excellent template for tracking each team member's workload. Whether a new client comes on board or a current one comes with additional work, you want to know who will be available to take on new work. It also helps to avoid overburdening your team members.

You can download it from the Toggl website.

Resource Allocation Template

This template will help you track if a specific resource is available to work on another project. You can use it to complement the previous template and avoid scheduling on dates when the resources aren't available. It is important to know when a certain employee is available to take on a specific task.

You can download it for free from Toggl.com.

Team Capacity Planning Template

In this template, you can write down all the tasks and subtasks with their resource details. The template will create bar graphs that forecast your team's current resource allocation and capacity planning. 

This tool is designed to assist you in managing and planning your team's demand, as well as the project required skilled resources for evolving projects.

You can download this template for free from Smartsheet.com.