Just when you thought it couldn’t get any better, all those impenetrable questions in the very first instalment will finally be answered – in a manner of speaking.
If it isn’t already obvious by now, effective capacity management in a service environment is very much a question of how good you are at flexing capacity plus a smattering of workload management. In textbook terms we need to “chase” demand and in most cases (certainly in the short to medium term) this is about creating a flexible workforce.
I can’t think of a situation I’ve been in where finding capacity quickly wasn’t a good thing. So here are a few options to turn your constraints into the pot of gold at the end of the capacity rainbow.
I’ve broken this into two sections:
- Levers you can pull i.e. the decisions you can make
- Enabling factors i.e. things that will impact the effectiveness of your capacity management endeavours.
Levers You Can Pull
In simple terms the basic building blocks for flexible capacity are driven by the resource choices you make. Typically your options are to get the right mix of Full Time, Part Time and Temporary resources, add a dash of flexi-time, overtime, shift scheduling, leave management, loaning and borrowing and inevitably, but certainly not preferably, the occasional exhortation to “crank it up a bit” i.e. work harder/faster. I tend to break these down into 4 “buckets” plus two extra buckets which are really about adjusting the overall workload for the team:
- Creating a Flexible Base: The first task is to review the demand profiles (see previous post) for your team and create a “base” team template. When you look at the demand profiles, it should be obvious that applying a flat capacity model e.g. 10 full-time equivalent’s day-in, day-out, really doesn’t work. The main lever you use here is the mix of Full Time and Part Time staff adjusted for shift schedules. This becomes your “base” plan – note you need to do the exercise for all of the time periods.
- Simple Flexing: With a base plan in place, it’s still likely that you will need to make adjustments, which is where the other levers come into play, such as leave management, loaning and borrowing resources from other teams, flexi-time and overtime. Don’t be afraid of overtime, it is sometimes the most cost effective way of meeting demand, but be mindful of pulling this lever too frequently and/or too hard.
- Handling One-Off Spikes: Many teams have to deal with one-off spikes in demand. If you know when the spike is coming, you can hire temporary employees/contractors or even use a third party organisation. If you get hit unexpectedly with a spike, you will need to combine a range of actions including prioritising work, adjusting service specifications.
- Managing Individual Differences: Occasionally you can ask the team to work harder – if there is sufficient trust and the team see the need, they will typically respond. However, increasing individual productivity is one of the outcomes of managing capacity effectively. Tracking an individual’s productivity variability and working with them to smooth this out settling towards the upper quartile of what they have shown they are capable of will deliver a significant boost. Every team member is different and working closely with each one, recognising their needs, their current capability, how their home and work environment is making them feel, making sure they have enough to keep them busy but not overly stretched is at the heart of effective capacity management. People drive productivity not machines! Leaders who do this well are true alchemists.
- Adjusting the Workload – Diverted Time:Besides core work, for a team to operate effectively, there are other activities that are required to be performed. These have the effect of shrinking available capacity and are typically referred to as diverted activities. They include things such as 1-1 conversations, team meetings, training, continuous improvement activity etc. They are essential, but not time critical and so they can be scheduled to help smooth out the core work peaks and troughs.
- Adjusting the Workload – WIP: Where service levels allow the luxury of being able to hold work-in-progress from one day to the next, the ability to run down WIP in quiet times and run up WIP in busy times is another lever available. The impact on service levels does need to be borne in mind and keeping WIP within a nominated range is essential to delivery consistency for the customer.
With these levers at your disposal, you have all the tools you need to manage the capacity of your team effectively. Unfortunately, the relative success of your actions will depend on whether other aspects of your operating environment are set to enable success. There’s no time in this post to cover them in any detail, but the more items you can tick off below, the better the outcomes will be. The enabling factors are grouped into three categories:
- Capacity Management Toolkit
- People & Structure
Capacity Management Toolkit
- Capacity Management System: for one or two teams you can build a system in Excel, but anything more significant requires an industrialised system (to help with all of the number crunching amongst other things) and there are lots of vendors out there ready to help!
- Operating Rhythm: Effective capacity management is about establishing an operating rhythm around forecasting, planning, controlling and reviewing over the relevant time horizons. It takes discipline, but without a stable operating rhythm, you’re wasting your time.
- Visual Management: Unfortunately, most service operations’ work is buried deep in computer systems. You need to make the state of play visible to the whole team – the simpler the better.
- Outlook Matrix: One aspect many leaders struggle with is where the demand v capacity mismatch varies by time horizon. The outlook matrix is a great tool to help manage any perceived inconsistencies.
People & Structure
- Organisational Alignment: natural evolution in many large organisations leaves a disparate legacy. This may be in the way teams and work are named or co-dependent teams in different Divisions have different objectives. A large part of the prize comes from finding complementary teams doing similar work with leaders focussed on the same objectives and willing to share.
- Consolidation: small, fragmented teams separated by the tyranny of distance make this very hard to do. Physically co-locate and consolidate teams where possible. Where physical consolidation is not possible, run the like teams as a single virtual unit.
- Skills Matrix & Cross-Skilling: An ability to loan and borrow is dependent on being able to x-skill team members (not everyone!), which requires you to call like tasks by the same name and use the same skills matrix.
- SWAT Teams: A very powerful approach, where base teams are set to the minimum and a small group of the most talented, motivated and x-skilled resources are grouped together and assigned based on the peaks and troughs across teams.
- Active Management: Getting the most out of the team is not a “set and forget” task. It requires active management throughout the day, week, month and year.
- Continuous Improvement Backlog: There will always be times when you have excess capacity on hand. Having a prioritised list of continuous improvement activities for people to work on during these times ensures the time is put to productive use.
- Stable Production Environment: Managing capacity effectively is extraordinarily difficult if the core production systems are not stable. If the team does suffer significant periods of downtime, make sure there is a good CI Backlog as per #1 above.
- Line Balancing: Capacity is typically lost when the production stages are not balanced. In a service environment this is usually a question of allocating more or less resource to each stage of production e.g. if Task A takes 10 mins, and Task B takes 5 mins you need twice as many people working on Task A.
- Bottlenecks: Every process has a bottleneck, but this will drive capacity leakage upstream and downstream from the bottleneck. Focus on bottleneck management techniques to manage the impact.
- Runners, Repeaters, Strangers: A very effective technique for triaging and assigning work at the front of a process to speed up throughput and ensure effective resource allocation of resources based on skills and experience.
Armed with this type of toolkit, finding 15-25% or more capacity is not uncommon and typically (with the possible exception of stabilising the production environment and implementing a capacity management system) can be handled within the business-as-usual operating budget.
One final question is how to measure your success. A useful tool here is the “Range Response Curve”. This compares the time required to absorb a shift in capacity (positive or negative) with progressively larger shifts. For example most teams can accommodate a 2-3% change in demand the same day or at the very least by the following day. Ask the same team to take on double the amount of work and the time required blows out – new premises will be required, additional staff hired, potentially a new platform may need to be built etc. Precisely how long it takes to accommodate these shifts is an indication of flexibility. Drawing an As-Is and a To-Be curve is a great way to measure the increase in flexibility and responsiveness and is particularly useful not just for long term planning but also for business continuity planning.
One final, final point for teams providing service on a “best endeavours” basis, adopting the practices covered in these posts will make “best endeavours” a thing of the past and allow you to be far more specific in the service expectations you set for your customers and give your team far greater degree of confidence that they can meet these expectations.
So there we have it – The Alchemist’s Tale. Sorry this last post was pretty long, but if you’ve got this far, hopefully you found it useful.
Time now to relax and hope it was all a dream.