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Strategies to increase production capability

Watching your business grow is exciting. But to meet the demands of increased growth, it’s likely at some time you’ll need to increase your production capacity. It might mean that you need to take on more staff, update your equipment or expand your facilities which can mean an outlay of cash, so it’s important to make this decision carefully.

Strategies to help you build capability include:

Strategic alliances

Forming a business relationship with a partner, or partners, may provide you with a number of advantages. You may be able to access technologies or patented processes owned by the other partner. Additionally, you may be able to access their distribution network.

If you are thinking of forming a partnership, consider your strengths and weaknesses compared with your potential partners. The ideal partnership takes advantage of your core competencies, while strengthening weaker areas of your business.

Well-chosen partnerships can provide advantages such as:

  • Sharing the risk and commitment
  • Complementary skills
  • Access to your partner’s distribution networks to gain market share faster than if you go it alone
  • Access to resources such as specialized staff, finance and technology
  • Support, motivation and another business owner to share the ups and downs of being in business.

Internal needs review

Decide if any changes inside your business will actually solve the production capacity issue. For example:

  • Form clusters of businesses located in your area and industry who will benefit from being in the same sector
  • Sub-contract if you don’t have the capacity to deliver on your own with other businesses you can work with to handle the overload. Possibly even competitors if they are far enough away
  • Secure potential financing even if you don’t need to scale immediately, as it’s better to sort out possible credit lines in advance for peace of mind
  • Explore wider funding options such as angel investors or other businesses who may want to invest

Make an investment

If you know that the sudden increase in business is long term and sustainable, then you need to sit down with your advisers and make the decision that you’ll need to expand capacity. This could be additional machinery (or bigger/faster), more people, bigger or more locations for storage, etc. Talk to your bank manager and accountant to identify funding and the length of payback.

Make the most of your network

Identify third party contractors or other companies that could take up extra slack to increase your capacity at any time. Having a number of other people or businesses that you can contract to will also help you assess the demand before you employ extra staff or invest in large pieces of capital.

Review supplier efficiency

Often suppliers can be the problem slowing you down, if you have to wait for them to deliver, or they can only partially deliver. If this happens, try and find a supplier that also has the capacity to supply all your needs as you grow.

Review your internal processes

It’s possible you could increase capacity by being more efficient. Often businesses can produce more by identifying what’s wasting time or output and then eliminate these limiting factors.

This includes:

  • Streamlining systems and processes such as properly delegating work, using technology to set work, ditching un-necessary tasks and making sure staff are working efficiently by conducting a time in motion study
  • Asking staff in the front line what they think they could do to speed up/reduce wastage. Often they’ll know.

Summary

Don’t be afraid to expand your operations if there’s enough demand to justify it. You’ve heard the old saying – you have to spend money to make money – and this is especially true of spending to increase your production capacity if you’re getting the kind of orders that require a larger operation.

Make all the internal capacity improvements checks first, become as efficient as possible, and then scale up.