Strategies to increase production capability

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

We’ve outlined some strategies to help you build capability.

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 considering forming a partnership, consider your strengths and weaknesses compared with those of your potential partners. The ideal partnership leverages 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.
• Support, motivation and another business owner to share the ups and downs of being in business.
• Access to resources such as specialized staff, finance and technology.

Strategic alliances can be a powerful way to enhance your production capabilities by leveraging complementary strengths and resources, ultimately driving growth and efficiency in your business.

Improve employee capability

If you need to increase output, conduct a time/efficiency study and identify any employees who have the capacity to take on more work or cut processes or tasks that are not required. It’s best to do this before you add to your team.

Start by auditing your needs and then identify which vital skills are missing. This will form the basis of new job descriptions. Clarify that you:

• Have the right mix of skills within your business.
• Know which employees are directly contributing to output, and which are overhead.
• Consider any employees who no longer align with your future objectives, who you might need to make redundant, or who you might need to change their role to contribute to output.
• Improving employee capability through targeted assessments and role optimization will help your team to operate at its full potential, aligning skills with business needs to maximize productivity before expanding your workforce.

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 that 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. They could even be competitors if they are far enough away.
• Secure potential finance 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 broader funding options, such as angel investors or other businesses that may be interested in investing.

Reviewing your internal needs and exploring strategic collaborations, finance options, and partnerships can provide the flexibility and resources required to improve production capacity.

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 include additional machinery, more people, larger or more storage locations, etc. Talk to your accountant and to us 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 eliminating these limiting factors.

This includes:

• Streamlining systems and processes such as properly delegating work, using technology to set work, ditching unnecessary 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.

Reviewing and optimizing internal processes by eliminating inefficiencies and leveraging staff insights can significantly improve production capacity, allowing your business to achieve more with the same resources.

Next steps

• Assess your current production capacity and identify areas where strategic alliances or partnerships could provide the resources or expertise needed to expand efficiently.
• Conduct a thorough audit of your workforce to ensure you have the right skills and resources in place to optimize employee performance before considering new hires.
• Explore internal options, such as subcontracting or forming clusters with local businesses to handle overflow, while also securing potential financing or investment to support future growth.
• Invest in the right tools, machinery, and locations, and build a reliable network of contractors and suppliers to ensure you can meet demand without compromising quality or efficiency.

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.