Resource Planning and Capacity

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SEF Reference Guide G26  |  Manufacturing OpEx Maturity Assessment

What it is

Resource planning answers one question with numbers instead of opinions: how many people and machines does this work need, and how does that compare to what we have? You take the demand for each type of work, multiply it by the time each step takes, and divide by the hours a person or machine actually gives you in a day. The answer is the number of people and machines each step needs. Compare it to what you have and you know where you are short, where you have room, and which resource limits the whole process.

The method is old and simple. Industrial engineers have sized crews this way since time study began, and planners know it as rough-cut capacity planning: checking a plan against the key resources before you commit to it. What makes it useful is doing it the same way every time, with honest standard times and honest available hours, and then acting on what it shows.

This guide is a companion tool, not a scored criterion. You reach for it when an assessment shows that the next step on constraint management, pull, S&OP, or cross training needs a capacity number. The SEF Resource Calculator workbook does the arithmetic. This guide explains the method so you can trust and defend the answer.

Why it matters

• Hiring and overtime decisions: you add people or shifts because the numbers say the work does not fit, not because a supervisor is loud or a week felt busy.
• Finding the constraint: the resource with the highest load is your candidate constraint (G11). You can see it before the floor shows it as WIP and overtime.
• Plans you can keep: the S&OP supply review (G20) can say “this plan needs 7 assemblers and we have 6” instead of “we will try.”
• Resourcing to takt: pull and flow (G13) only work when each step has enough capacity to keep pace with demand.
• Training priorities: comparing qualified people to the people the load needs (G16) shows which steps one absence would break.

Key terms

Term	Meaning
Resource pool	The people and machines one supervisor or area team assigns together. One calculator covers one resource pool.
Work type	A group of jobs that move through the same steps with similar times. Example: small, medium, and large repairs, or product families.
Standard time	The time one unit takes at a step when done to standard work (G06) by a trained person. Measured, not guessed. Entered as hours per unit.
Planning demand	The demand you size to: average demand, plus an allowance for variation, plus planned growth.
Workload	Hours of work a step or resource must do per day. Daily demand x standard time, summed over work types.
Available hours	Hours one person or one machine actually gives per day after breaks, meetings, downtime, and other losses.
Labor utilization	Share of a paid shift a person spends on the work being planned. SEF starts at 85%.
Equipment availability	Share of scheduled time a machine is up and able to run. Use the availability factor from OEE (G02) when you have it.
Batch equipment	A machine that processes several units in one cycle, such as an oven, washer, or test rack. Its workload is cycles, not units.
Needed	Workload divided by available hours. Rounded up to whole people or machines for staffing.
Load	Workload divided by the hours your current people or machines give. Over 100% means the work does not fit today.
Constraint	The resource with the highest load. It sets the output of the whole process (G11).
Takt	Available working time divided by demand (G13). At a step, the pace each unit must keep.
Planning period	Day or Week. Week plans an average week from weekly demand. Day plans one day, such as tomorrow’s firm plan. Results are per day either way.
Loan	Hours one area lends to another, agreed by both supervisors. Recorded as hours loaned out by the lender and hours loaned in by the borrower.

How to do it

1. Pick the scope. One resource pool (the people and machines one supervisor or area team assigns together), one planning horizon (usually the next 3 to 6 months), and one planning period. The workbook shows results per day. Set the planning period to Week to enter average weekly demand, or to Day to enter one day’s plan.
2. Group the work into work types. Use 3 to 10 types that move through the same steps with similar times. Too many types and nobody maintains it. Too few and the times hide real differences.
3. List the steps and the resource for each. Walk the process. For each step, name who or what does it: a people role (assembler, test tech) or a machine (paint booth, oven). A step that needs a person and a machine at the same time gets two entries, one for each, because each one can run out of capacity.
4. Set standard times. Hours per unit, by work type and step. Take them from time studies or standard work. Where you only have estimates, mark them and plan to time them; do not hire on estimates. For batch equipment, record the cycle time for one full batch and how many units a batch holds.
5. Set the demand. Average weekly demand by work type, from 6 to 12 months of history or the approved S&OP plan. Add the weekly standard deviation if you have it. When the planning period is Day, enter the demand for the day being planned instead, usually the firm plan with no standard deviation.
6. Set the planning rules. Hours per shift, shifts per day, days per week, labor utilization (start at 85%), equipment availability, planned growth, and the variation factor (0 plans to the average week; 1 covers about 84% of weeks; 1.65 covers about 95%).
7. Calculate. For each step: workload = sum of (daily planning demand x hours per unit). Divide by units per cycle for batch equipment. Add up the steps each resource covers. Needed = workload / available hours per person or machine. Round up for staffing.
8. Compare to what you have. Gap = current count, adjusted for any hours loaned in or out, minus needed. Load = workload / (current count x available hours + net hours loaned). SEF flags 90% and above as Tight, because a resource with no spare time cannot absorb variation, absences, or improvement work. The highest load is your candidate constraint.
9. Check skills coverage. For each people step, count people qualified at level 3 or 4 on the skills matrix (G16). Compare that to the people the load needs and to your coverage minimum (the G16 rule of three). A step can have enough heads and still fail because only one of them is qualified.
10. Decide and act. In order: confirm the constraint on the floor, exploit it (G11), fix losses at the step (TPM, SMED, standard work), level the load (G13), cross train to close coverage gaps, and only then add people, shifts, or equipment.
11. Keep it current. Re-run when demand, mix, or standard times change, and in every S&OP supply review. Note the date and assumptions on the sheet.

The formulas

Calculation	Formula
Planning demand	(average demand + variation factor x standard deviation) x (1 + growth), per week or per day as the planning period is set
Daily demand	planning demand / days worked per week (Week); planning demand as calculated, with no division (Day)
Step workload (hours per day)	sum over work types of (daily demand x hours per unit), divided by units per cycle for batch equipment
Hours one person gives per day	hours per shift x labor utilization
Hours one machine gives per day	hours per shift x shifts per day x equipment availability
Needed	resource workload / hours one person or machine gives per day
People per shift	needed people / shifts per day, rounded up
Net hours loaned	hours loaned in – hours loaned out, per day (weekly loans / days worked per week)
Load at current count	resource workload / (current count x hours available + net hours loaned)
Gap	current count + (net hours loaned / hours available) – needed (whole number)
Step takt (minutes per unit)	hours per shift x shifts x labor utilization x 60 / units through the step per day

Round up only at the resource level. If one role covers three steps, add the three workloads first, then round. Rounding each step separately overstates the people you need.

Firm plans and forecasts

Use the calculator at two horizons. Inside the frozen planning fence (G27), set the planning period to Day, enter the firm plan for the day with growth and the variation factor at 0, and record the loans the supervisors agree: this is the daily staffing decision, such as which area lends people to which. Outside the fence, enter expected demand with a variation factor of about 1: this sizes the flex capacity (cross-trained people, pre-approved overtime, spare machine time) you must hold because the plan will still move. The less stable the plan, the more flex capacity the second view will say you need. That is the cost of an unstable plan, and the reason to work on SO-4.

Worked example

An assembly and test area builds four work types and runs one 8 hour shift, 5 days a week. Labor utilization and equipment availability are both 85%, so one person or one machine gives 6.8 hours a day. The team plans for 10% growth and a variation factor of 1.

Work type	Avg weekly	Std dev	Planning daily demand
Standard unit, small	25	4	(25 + 4) x 1.10 / 5 = 6.38
Standard unit, medium	15	3	3.96
Large unit	6	2	1.76
Custom unit	2	1	0.66
Total	48		12.76

Assemblers do three steps: sub-assembly, main assembly, and final inspect and pack. Their combined workload is 40.6 hours a day. Divided by 6.8 hours per person, that is 5.97 assemblers, so 6. The area has 6. On paper it fits. In practice the load is 99.6%, which means any absence, rework, or new-hire training puts the area behind. That makes assembly the constraint and flags it Tight.

The cure oven holds 8 units per 2 hour cycle. Its workload is 12.76 x 2 / 8 = 3.19 hours a day, a load of 47%. Counting it per unit (2 hours each) would have shown 25.5 hours and a false need for four ovens. This is why batch equipment is entered by cycle.

The skills matrix shows kitting, painting, and test setup each need one person and have only one or two qualified. They can be staffed, but they are Thin: one absence stops the step. The decision is to cross train one assembler on test setup and one on painting before hiring, and to time the main assembly step, which carries half of the assembler hours.

Multiple areas and shared resources

A plant with several areas needs more than one calculator. Three rules keep the numbers honest.

• One calculator per resource pool. A resource pool is the people and machines one supervisor or area team assigns together. Do not build one calculator per product line: product lines share people and machines, so each calculator would see only part of the load. Do not build one master for the whole plant: it gets too big to keep current, and it hides which supervisor owns each decision.
• A shared resource lives with the area that owns and schedules it. If the machining saw also cuts blanks for welding, the saw stays in the machining calculator and welding’s demand on it is added there as extra work types. Where a support group runs shared resources for every area (a quality lab, forklift drivers, a paint line), give that group its own shared-services calculator.
• Occasional cover stays in the home area. A person who sometimes helps another area is counted once, in the area they belong to. The help is recorded as a loan, not as a second head.

Loans. When two supervisors agree that one area lends hours to another, both record it on the Resources tab. The lending area enters the hours under Hours loaned out, the borrowing area enters the same hours under Hours loaned in, and each names the other under Loan with. Loaned-in hours add capacity and loaned-out hours remove it, so load becomes workload / (current count x hours available + hours loaned in – hours loaned out). In the worked example, if machining lends a cross-trained person to assembly for 8 hours a week, available assembler hours rise from 40.8 to 42.4 a day and the load falls from 99.6% to 95.8%. Assembly is still Tight. A loan buys time; it does not fix a constraint, so step 10 still applies.

Plant Summary. Each calculator has an Area Summary tab with one row: people needed and on hand, people spare or short after loans, hours loaned in and out, and the area’s constraint. Paste each area’s row into the SEF Plant Summary workbook. It adds the areas together, names the highest load in the plant, and runs two checks: every hour loaned out was loaned in somewhere (the loans balance), and every area used the same planning period. Out of balance means one supervisor recorded a loan the other did not. The worked example in the Plant Summary has three areas: machining has people to spare and lends 13.6 hours a week to shipping, while assembly and shipping are both Tight. Run the roll-up for the S&OP supply review (G20) and whenever supervisors agree loans for the coming day or week.

Where it fits in the maturity path

Criterion	Where the calculator helps	What it adds
FL-1 Constraint Management (G11)	Level 1 to 2: “run a load versus capacity check on the main steps”	Names the candidate constraint from data, so the team agrees on one.
FL-3 Pull Systems (G13)	Level 2 to 3 and 4 to 5: calculate takt, resource each step to it	Shows whether each step can keep pace with takt before flow or kanban is attempted.
SO-3 S&OP (G20)	Level 1 to 2: the supply review checks capacity	Turns the demand plan by family into people and machine needs for the executive decision.
PE-2 Job Skills (G16)	Level 3 to 4 and 4 to 5: set coverage targets for every job	Sets each step’s coverage target from the load, not from habit.
SO-4 Plan Stability (G27)	Level 3 to 4: match capacity decisions to their fence	Shows the flex capacity an unstable plan costs, and staffs the frozen plan day to day.

Evidence to look for

Document

• A current capacity calculation with its date, demand source, and assumptions written down.
• Standard times with their source (time study, standard work, estimate) and date.
• The utilization and availability figures used, and where they came from.
• Staffing or capital decisions that cite the calculation.
• Where areas share people: loans recorded by both supervisors, and a Plant Summary whose loans balance.

Observation

• Does the resource with the highest calculated load have the most WIP in front of it and the most overtime? If not, the data or the times are wrong.
• Are people at a “spare capacity” step actually idle, or doing work nobody counted?
• Is batch equipment running full batches, or partial ones that waste capacity?

Statement (questions to ask and who to ask)

• Plant manager: “How did you decide how many people this area needs? When did you last check?”
• Supervisor: “Which step falls behind first when someone calls in sick?”
• Planner: “Where do the standard times come from? When were they last measured?”
• S&OP lead: “How does the supply review test whether the plan can be staffed?”

Management report

• Load by resource, trended monthly.
• Overtime hours by area against calculated load.
• Planned versus actual output at the constraint.
• Coverage status by step from the skills matrix.

Common pitfalls

• Guessed standard times. The calculation is only as good as the times. Estimates are fine to find where to look; they are not fine for hiring.
• Utilization at 100%. Nobody works every paid minute. Sizing to 100% builds a plan that is late on day one.
• Planning to the average week. If you must ship each week’s demand that week, half the weeks will be over capacity. Use the variation factor or level the load.
• Counting batch equipment per unit. It makes ovens and washers look like the constraint when they are not.
• Rounding each step. It inflates headcount. Round once per resource.
• Counting a borrowed person twice. Help from another area is a loan recorded by both areas, not an extra head in the area being helped.
• Heads without skills. A step with enough people but one qualified person is one absence from stopping.
• Hiring before exploiting. Adding people at a step whose losses were never attacked buys capacity you already own.
• Set once and forgotten. Demand and mix change. A calculation more than a quarter old is a guess.

Template

The SEF Resource Calculator workbook does this math. It has tabs for Settings, Resources (including hours loaned in and out), Routing (demand and hours per unit), Results (needed, gap, load, constraint), Skills Coverage, and Area Summary. A separate SEF Plant Summary workbook rolls several areas up into one view. Ask your SEF facilitator for a blank copy or the worked example. If you build your own, keep this structure.

Settings

Item	Value
Area or process
Planning period (Day or Week)
Days worked per week
Hours per shift
Shifts per day
Labor utilization (%)
Equipment availability (%)
Demand growth (%)
Variation factor
Coverage minimum (qualified people per step)

Routing (one row per work type, one column per step and resource)

Work type	Avg demand per period	Std dev per period	Step 1 hours per unit (resource)	Step 2 hours per unit (resource)	Step 3 hours per unit (resource)

Results (one row per resource)

Resource	Type	Workload hours per day	Hours available	Needed	Current	Net hours loaned	Gap	Load	Status

First 30 days

• Week 1: Pick the area. List work types, steps, and the resource for each step. Pull 6 to 12 months of demand by work type.
• Week 2: Collect standard times. Time the steps that carry the most hours first. Mark every estimate.
• Week 3: Run the calculation. Walk the floor to check that the highest-load resource is where WIP and overtime actually are. Fix the data where it disagrees.
• Week 4: Score skills coverage against the load. Agree actions in this order: exploit the constraint, close coverage gaps, then add capacity. Put the review on the S&OP calendar.

Further reading

• Eliyahu M. Goldratt and Jeff Cox, The Goal (North River Press, 1984). Why the constraint sets the output of the whole system.
• Mike Rother and Rick Harris, Creating Continuous Flow (Lean Enterprise Institute, 2001). Balancing operator work to takt and calculating the operators a cell needs.
• Mike Rother and John Shook, Learning to See (Lean Enterprise Institute, 1998). Takt, cycle times, and resourcing in value stream design.
• ASCM (APICS), Supply Chain Dictionary, entry for rough-cut capacity planning. The planning-side name for this check.