Productive Capacity: key to companies’ competitiveness
Posted: Sun Feb 02, 2025 6:45 am
We know that every business has its production capacity , whether it is an industry, a restaurant or even a service company. Even if there is no product being manufactured, there is a service provided or delivered in some way.
Thus, and in a very simplified way, we can say that productive capacity is related to the maximum quantity of goods or services that a system can deliver under a given condition.
It can also be applied to a machine, an operator or a work center.
The level of capacity is closely linked to the resources that the system has to carry out such activity. It is a set of factors, which can be: people, facilities, tools, structures and technologies.
When a company analyzes its production capacity , it can make assertive bangladesh whatsapp list financial projections, in addition to ensuring that it will have all the capacity and resources necessary to provide the product or service it is offering on the market. This way, it is possible to achieve greater precision in sales and allow for the necessary inventory.
Continue reading and find out everything about this subject that is so important for the health of companies so that they become increasingly competitive in the market!
sesame hr logo
Improve the results of your employees and your business with Sesame RH
Eliminate mechanical tasks, save time and increase productivity. Business intelligence for your Human Resources that transforms your team's experience.
Free trial
What is productive capacity and examples?
As already mentioned in the previous topic, productive capacity refers to the maximum quantity of goods or services that a company or system produces in a given period, given the restrictions on resources such as labor, equipment and raw materials.
That said, it is time to understand the different types of production capacity for managing resources and meeting competitive market demands.
Next, we will talk about the four main types of productive capacity :
Theoretical or maximum capacity
It is the maximum productive capacity that a company reaches under ideal conditions, that is, without taking into account interruptions such as maintenance, breaks for workers and other inefficiencies. This capacity is called theoretical because, in practice, reaching 100% of this capacity is practically impossible.
Effective capacity
It takes into account the realities of the production environment, such as equipment maintenance, shift changes and several other variables that affect production output. It is a much more realistic indicator of what the company can produce under normal operating conditions.
Peak capacity
This capacity can only be achieved when demand is very high and the company needs to produce far beyond its effective capacity.
As such, it usually involves overtime, additional shifts or the use of backup equipment. This is a situation that is temporary and not sustainable in the long term.
Minimum or idle capacity
It is directly linked to the minimum production quantity. In other words, it is the minimum production that still allows the operation to be economically possible. It should be noted that operating below this capacity for long periods can lead to the business becoming unsustainable, making it financially unviable.
When these four types of production capabilities are understood, it enables managers to plan and make more informed decisions, adjusting resources according to business needs and market conditions.
It is essential for any company to know its capacity, as this ensures that there is no excess or underutilization in its production. Since a product that is stopped or left over certainly means a loss for the company.
BR - INBOUND - Template - Checklist employee productivity
How important is it to have good production capacity management?
Managers have an obligation to know the operational efficiency of their company if they intend to improve its management, as knowing exactly its production capacity brings several benefits.
We list below, above all, the main benefits that your company will obtain by knowing its production capacity , let's see.
Helps in making more assertive decisions
Maintains optimal stock levels, avoiding excess and lack of materials and products
Thus, and in a very simplified way, we can say that productive capacity is related to the maximum quantity of goods or services that a system can deliver under a given condition.
It can also be applied to a machine, an operator or a work center.
The level of capacity is closely linked to the resources that the system has to carry out such activity. It is a set of factors, which can be: people, facilities, tools, structures and technologies.
When a company analyzes its production capacity , it can make assertive bangladesh whatsapp list financial projections, in addition to ensuring that it will have all the capacity and resources necessary to provide the product or service it is offering on the market. This way, it is possible to achieve greater precision in sales and allow for the necessary inventory.
Continue reading and find out everything about this subject that is so important for the health of companies so that they become increasingly competitive in the market!
sesame hr logo
Improve the results of your employees and your business with Sesame RH
Eliminate mechanical tasks, save time and increase productivity. Business intelligence for your Human Resources that transforms your team's experience.
Free trial
What is productive capacity and examples?
As already mentioned in the previous topic, productive capacity refers to the maximum quantity of goods or services that a company or system produces in a given period, given the restrictions on resources such as labor, equipment and raw materials.
That said, it is time to understand the different types of production capacity for managing resources and meeting competitive market demands.
Next, we will talk about the four main types of productive capacity :
Theoretical or maximum capacity
It is the maximum productive capacity that a company reaches under ideal conditions, that is, without taking into account interruptions such as maintenance, breaks for workers and other inefficiencies. This capacity is called theoretical because, in practice, reaching 100% of this capacity is practically impossible.
Effective capacity
It takes into account the realities of the production environment, such as equipment maintenance, shift changes and several other variables that affect production output. It is a much more realistic indicator of what the company can produce under normal operating conditions.
Peak capacity
This capacity can only be achieved when demand is very high and the company needs to produce far beyond its effective capacity.
As such, it usually involves overtime, additional shifts or the use of backup equipment. This is a situation that is temporary and not sustainable in the long term.
Minimum or idle capacity
It is directly linked to the minimum production quantity. In other words, it is the minimum production that still allows the operation to be economically possible. It should be noted that operating below this capacity for long periods can lead to the business becoming unsustainable, making it financially unviable.
When these four types of production capabilities are understood, it enables managers to plan and make more informed decisions, adjusting resources according to business needs and market conditions.
It is essential for any company to know its capacity, as this ensures that there is no excess or underutilization in its production. Since a product that is stopped or left over certainly means a loss for the company.
BR - INBOUND - Template - Checklist employee productivity
How important is it to have good production capacity management?
Managers have an obligation to know the operational efficiency of their company if they intend to improve its management, as knowing exactly its production capacity brings several benefits.
We list below, above all, the main benefits that your company will obtain by knowing its production capacity , let's see.
Helps in making more assertive decisions
Maintains optimal stock levels, avoiding excess and lack of materials and products