Operations Management Theory: Reconciling Capacity And Demand

1643 words - 7 pages

Question 3:
Draw on appropriate Operations Management theory, concepts and frameworks to examine how your organization, or an organization with which you are familiar, reconciles capacity and demand.

Information technology services industry is a highly competitive cost based operation sector where availability of resources, tangible and intangible is key to successful projects. This makes a significant challenge to accurately reconcile capacity and demand. OpenText is a leader in providing enterprise content management solutions and we will analyse consulting services provided in the European market along with effect on demand with today’s changing economic environment.

Slack et al (2009, p.248) defines relationship between capacity and demand as:
"Capacity is the output that an operation (or single process) can deliver in a defined unit of time. Demand is the quantity of products and services that customers request from an operation or process at any point in time".

Managing capacity is an on-going effort in the industry by reducing cost through repeat business from existing customer and by engaging new potential customers; This while managing customer expectations and ensuring quality of service. Customer engagement and service delivery are key to OpenText’s economic competiveness in the market. Employee development and attracting highly skilled individuals to the organisation are essential in delivering quality service. When considering potential projects, OpenText need to know the resource availability to perform the tasks. This demand for resources is weighted against who is available (capacity) to determine if additional resources are required to meet the demand and if required what types of resources are needed. As a result the resource availability (capacity) planning is key to any project (demand) planning and delivery. This demand is based on existing and new proposals for OpenText. Demand elements like opportunity, project portfolio, engagements and projects are the items to be analysed to reconcile capacity with demand.

As a professional services organisation (PSO) OpenText require real time visibility into understanding the critical data so as to staff the team to required levels particularly when demand fluctuate with respect to changing customer needs and project requirements. OpenText employs regular staff to meet the core demand for technical and consulting requirements while development and delivery of projects is outsourced to multiple partners who host technical teams. OpenText use multiple outsourcing partners for delivery of service depending on the technology and industry involved. Based on the cost and availability these outsourced resources are sometimes shared between projects and across technologies. In order to reconcile capacity with demand OpenText needs to fully understand what the true capacity of internal resources is and that of its outsourcing partners and suppliers. To accomplish this, the...

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