Anticipating capacity constraints in an industrial company is an essential but delicate exercise, and one that is rarely properly carried out and equipped.
What is RCCP?
According to ASCM, RCCP (Rough Cut Capacity Planning) is the process of converting the master production schedule into key resource requirements, usually in terms of manpower, machinery, warehouse space, supplier capacity and sometimes money. Each key resource is usually compared with available or demonstrated capacity.
Why conduct a RCCP?
Capacity in an industrial company requires investment in equipment, buildings, skilled personnel and so on. Significantly increasing or decreasing capacity therefore requires a lengthy decision-making and implementation process. If you haven’t anticipated capacity requirements in good time, you run the risk of living with your existing constraints for quite some time. Many companies and industries have struggled for a long time to cope with the post-covid rebound.
When it comes to making important business decisions – whether to invest in new equipment, downsize or close a site – these decisions need to be backed up by data. This is often where the problem lies. By definition, we’re talking about the future, so there’s uncertainty about volume assumptions. But there is also often uncertainty about the demonstrated capacities to be considered, about the modeling of routings, set-up times, etc. – in other words, on the capabilities of the industrial operating model.
An effective load/capacity projection process will therefore require you to model the company’s resources and routings, at least for critical resources, and to work on demand and capacity scenarios.
How to conduct the RCCP?
The RCCP process is an integral part of S&OP – it integrates demand assumptions (forecast sets), capacity assumptions and inventory projections – and translates production requirements into workloads by period. As its name suggests (“rough cut” literally means “draft”), the intention is not to plan precisely the use of all the company’s resources by period. The intention is to identify in good time the decisions that need to be made concerning the company’s critical resources.
Historically, this has been done on the basis of simplified macro-routings, rather than detailed operating routings, for reasons of processing time. Not to mention the fact that in many companies, S&OP and RCCP are processed in Excel or via BI – simplifications are therefore often necessary.
Finite or infinite capacity?
We can calculate the RCCP at infinite capacity. This will then enable us to identify the real capacity requirements to meet unconstrained demand projections.
For example, on the resource below, we anticipate difficulties over the first three months, but after that our capacity should meet demand.
However, it is clear that our plan above is not feasible. In this case, we can instead establish the projection by setting finite capacity on a selection of constrained resources, such as the one below.
The question then is: as this resource is fully loaded, are we meeting demand? By comparing constrained and unconstrained plans, we can see how far ahead or behind we must be, and the impact of constraints on lead times and stock levels of manufactured products
Internal or external?
The RCCP can be used not only to project internal capacity requirements, but also to project the workloads of key suppliers and subcontractors. At one time, companies paid little attention to the capacity of their suppliers. Developments over the last few years have shown just how crucial reserving capacity and smoothing out the workload of key suppliers is for controlling lead times and limiting risks
Complex flows.
Some companies have simple flows – for example, a set of bottling, flanging and packaging lines. In this case, RCCP can be a fairly straightforward process.
On the other hand, when it comes to complex, job-shop-type manufacturing, with deep BOMs and long routings calling on shared resources – as found in the aerospace industry, for example – it’s a different story. It is therefore necessary to use a modeling approach that is relevant to these industrial resources
RCCP in a multi-site environment.
If you have an industrial network in which products may be manufactured at several sites, a platform that can aggregate S&OP data from each site, as well as RCCP, is essential. This will enable you not only to easily identify balancing options, but also to aggregate load/capacity balances at company or regional level, and thus support investment decisions at company level rather than on a site-by-site basis
RCCP in Intuiflow – connecting strategy and operations
When developing the RCCP in Intuiflow, our concern was to implement a logic that would enable strategy and operations to be linked coherently. All too often, we see companies developing an S&OP that is disconnected from reality on the ground. You fine-tune a plan, a load/capacity balance, but when you put it into action, the reality is quite different.
That’s why Intuiflow :
- RCCP and scheduling use the same engine, the same definitions of resources, planning logics, lead-time shifts, queues, stock projection, etc., and are based on the same principles.
- Just as scheduling will call on alternative routings, or even WO routings, so S&OP forecast orders will call on default routings.
- The RCCP is updated on an ongoing basis – usually once a day – rather than once a month during the S&OP cycle.
- The RCCP horizon can be up to 3 years out, of which the first periods are consistent with actual scheduling.
- The calculation can be carried out at infinite capacity, or by positioning certain key resources at finite capacity – comparing the two makes it possible to measure the impact.
- RCCP operates in multisite mode, enabling load balancing between plants.
- Demonstrated capacities are measured as part of the scheduling module, and are used to position realistic capacities.
- Several scenarios can be evaluated.
- Integrated BI technology enables scenario results to be analyzed both in aggregate – for example, by resource type, across all sites – and in detail.
Let us know, in your company, how mature is your RCCP process?
