A chain is only as strong as its weakest link, and there will always be a weakest link. This doesn’t mean you should just give up and accept that the chain will break. Instead, you should be aware that you need to continually replace the weak links if you want to strengthen the chain. It will never be perfect, but it will always be improving.
Overview: What is a capacity constraint resource?
A capacity constraint resource (CCR) is the weakest link in a particular process. There are a number of resources that can limit overall production capacity in a business setting, including employees, available supplies or equipment capabilities. This constraint is effectively a bottleneck for the other factors involved.
3 drawbacks of capacity constraint resources
Every company has a CCR on every single one of their processes, so they are not something to be feared. However, mismanaged and unaddressed constraints can cause serious problems for companies of any size.
1. Prevents goal achievement
Consistently failing to address resource limitations that constrain capacity will prevent you from reaching progressive goals. You may be able to maintain the status quo indefinitely, but this isn’t a strong vision for a company. Ambitious goals are essential for growth, which is what makes the difference between thriving and dying.
2. They can’t be ignored
Capacity constraints don’t just resolve on their own. The people in charge must take deliberate action to identify, understand and address these issues. This kind of critical thinking and analysis isn’t just a one-time thing. This is something leaders need to do consistently as their company grows and matures.
3. Frustrates employees
Depending on the situation, CCRs can cause serious morale problems among the workforce. If faulty equipment or insufficient labor are constraining capacity, this may make workers feel that their leadership doesn’t understand or care about the situation.
Why are capacity constraint resources important to understand?
Capacity constraint resources are important to understand because overcoming them is the key to growing, improving and scaling any kind of business. In some ways, the entire field of business management revolves around overcoming a series of bottlenecks to reach greater goals.
1. There are many types
There are many different kinds of capacity constraint resources. For example, a market constraint is a situation where the company has already dominated the market for a particular product, which means they need to expand their geographic or demographic audience to achieve further growth. In contrast, a supply constraint is a resource that has limited availability compared to other resources required to complete a process or produce a particular item.
2. They aren’t always obvious
Some CCRs are easy to identify. Production managers know what supplies they have in inventory and how difficult it is to get more. However, some resources aren’t as apparent, which means research and analysis is required. For example, it’s not always easy to tell if there’s a shortage in personnel quantity versus quality when labor is the key constraint.
3. Solutions require creativity
Overcoming bottlenecks isn’t always a matter of getting more of the constraining resource. Sometimes this isn’t a physical or financial possibility for the company. Breaking through this glass ceiling on growth can require creativity and out-of-the-box thinking that demands a thorough working knowledge of the process and issues in question.
An industry example of a capacity constraint resource
A real estate renovation company generates income by fixing up properties in poor condition then selling them for more than the initial cost. They have ample equipment and contractors at their disposal, but only have enough capital to buy a handful of properties at the same time. They have to wait until they sell some of their refurbished houses before they can invest in more properties. This situation is a cash constraint because available capital is the bottleneck for all other business operations.
3 best practices when thinking about capacity constraint resources
There are a lot of ways to think about capacity constraints and many ways to address them. Don’t expect to find an easy, cookie-cutter solution to every one, but there are a few best practices to make the process easier.
1. Tailor each solution
Solutions to a capacity constraint must be tailored to the specific need. It’s tempting to just throw money or manpower at a problem and hope it goes away. However, this is inefficient and often ineffective. A good solution will address the primary constraint on a process in a sustainable way.
2. Establish strategic constraints
Every process in the world has a single capacity restraint that meters progress. You can never design a process that doesn’t have a weakest link, but you can control what your weakest link is in order to bring stability to your business. Customer demand or market constraints are often ideal strategic constraints because they grow organically and don’t typically fluctuate significantly on a short-term basis.
3. Stabilize other potential constraints
When examining a process or organization for CCRs, leaders should also identify other potential constraints that could become the next bottleneck on the process. This lets you start planning and preparing for likely outcomes after you overcome the immediate challenge.
Frequently Asked Questions (FAQ) about capacity constraint resources
1. What is the difference between a bottleneck and capacity constraint resource?
All capacity constraint resources are bottlenecks, but not all bottlenecks are capacity constraints. A process can have multiple bottlenecks. However, every process always has one single bottleneck that constrains all the others.
2. What are capacity constrained processes?
A capacity constrained process is the limiting factor on demand being met. Essentially, this means there is more demand for a product or service than there is the ability to produce or deliver it. This can happen when there is a sudden explosion in demand for a unique or niche product or service.
3. What causes capacity constraints?
While there are dozens of factors that contribute to specific constraints, capacity constraints have always existed and will always exist. There will always be a limiting factor in any particular process.
Breaking one constraint at a time
Capacity constraint resources are inevitable, predictable and beatable. The key to approaching bottlenecks in your business is to be patient, methodical and consistent. You need to accept that there are specific factors limiting your processes and there are solutions to these factors. Solutions aren’t always immediate or easy, but patient analysis, careful planning and consistent execution will keep you moving forward.