Managing Demand and Capacity

Sometimes in business, a service organization may experience variations in demand and capacity. In some instances, demand may exceed the maximum capacity, the optimum capacity, or it may be below the optimum capability. Besides, demand and supply may be well balanced at the level of optimum capacity. Therefore, if an organization is to meet its customers’ needs and supply the demand through an optimum capacity, it must find ways of managing both the demand and the capacity. This paper will examine a service organization specializing in communication services. It will explain three strategies that the organization can use to manage demand and three to manage capacity.

One strategy for managing demand is leaving demand to find its levels. An organization takes no action and let demand take its course naturally (Chand 1). Consequently, customers get to know when they can access service and when they cannot access it. For instance, a communication organization uses a network. Thus, there will be times when an organization will have low capacity and high demand because it cannot control a network’s strength. In such a case, the organization can only let demand find its natural course.

Secondly, the organization can manage demand by taking active steps in influencing it. It can do this by reducing demand in peak periods and increasing it when it has excess capacity. In that case, it can use prices to influence it. The last strategy is forecasting demand. Forecasting gives close to the right estimation of how many customers are likely to pop out at a particular season. By this, it can be able to estimate its supply to ensure optimum production capacity. For instance, there may be more customers for a communication organization during the day than at night.

Onto the capacity, the first strategy is using a centralized platform to track employees’ competency. It will be easier to allocate duties to the right employees with the right skills for that duty (Mansinghka and Gupta 2). As a result, the employees will be able to efficiently use the resources because they are already professional, thus managing capacity. For instance, employing people with excellent communication skills and using the telecommunication machines effectively can maximize services, and optimum capacity will be achieved.

Secondly, an organization can schedule daily work shifts.  It is an essential strategy for organizations facing low capacity and excess demand (Bordoloi et al. 310). For instance, in the telephone service organization, some employees may be scheduled at night and others during the day. It will lead to the organization meeting customers’ demands.

Lastly, capacity can be improved by considering working conditions. In especially instances where the capacity is low and demand is high, an organization can employ new technology and reduce risks within the working environment. It will, in turn, increase capacity in services because the conditions are favorable.

To sum up, finding ways to manage both demand and capacity meets customers’ needs. Also, it is a way of avoiding the fall down of a business. Letting demand find its levels naturally, forecasting, and influencing it through prices are strategies to manage demand. Capacity can also be managed by using a centralized platform to track competency, schedule daily work shifts, and improve working conditions.

Works Cited

Bordoloi, Sanjeev, et al. Service Management: Operations, Strategy, Information Technology. 2018.

Chand, S. “Strategies for Managing Demand of Services.” Your Article Library, 8 Apr. 2014, www.yourarticlelibrary.com/company/service-management/strategies-for-managing-demand-of-services/34185.

Mansinghka, A., and A. Gupta. “Waiting for the Redirection…” Waiting for the Redirection.., 22 Oct. 2020, www.saviom.com/blog/5-best-practices-better-capacity-management/.