According to McKinsey, companies can expect supply chain disruptions costing them nearly half of one year’s profits to occur every decade. The key to navigating this disruption and building a resilient enterprise isn't just about weathering the storm — it's about anticipating the weather. This is where rough cut capacity planning (RCCP) evolves from a simple operational check to a critical strategic advantage.
This post will guide you through the essentials of modern RCCP. We will explore what it is, the significant challenges supply chain leaders face in today's environment, and the best practices required to transform your capacity planning from a liability into a competitive differentiator.
What is rough cut capacity planning?
At its core, RCCP is a crucial process used in the medium-to-long term to validate the feasibility of a company's master production schedule (MPS) against its available capacity. Think of it as a high-level reality check. Before you commit to producing a certain volume of goods, RCCP asks: "Do we realistically have the resources — like labor, machine hours, and critical materials — to make this plan happen?"
Traditionally, this process involves using S&OP data to create a high-level model of capacity. It helps identify potential bottlenecks and resource shortages far enough in advance to allow for adjustments, such as scheduling overtime, shifting production between facilities, or modifying the master schedule. This proactive step is designed to prevent costly last-minute scrambles and ensure that strategic goals are aligned with operational reality.
Why traditional rough cut capacity planning fails
While the concept of RCCP is sound, its traditional execution is cracking under the pressure of modern supply chain complexities. Many organizations are struggling to get meaningful value from their RCCP efforts for several key reasons:
- Pervasive data silos: Effective RCCP requires a unified view of demand, supply, and production data. Yet, in most companies, this information is fragmented across disconnected spreadsheets, legacy systems, and different departments. Without a single source of truth, planners are working with incomplete or outdated information, making any capacity plan suspect from the start.
- Static, spreadsheet-driven processes: The reliance on spreadsheets is perhaps the biggest handicap. While familiar, spreadsheets are static, error-prone, and woefully inadequate for dynamic planning. They cannot handle the complexity of modern supply chains, model interdependencies, or allow for the rapid, multi-dimensional scenario analysis needed to respond to market shifts.
- Inability to keep pace with volatility: Today's supply chains are in a constant state of flux, rocked by everything from geopolitical events and trade policy changes to sudden demand spikes and logistics crises. A plan that was viable last quarter — or even last week — may be irrelevant today. Traditional RCCP, often performed as a periodic, batch-based exercise, simply cannot provide the real-time visibility and agility required to navigate this new normal.
- Lack of collaboration and alignment: Capacity planning is not just a supply chain function. It has direct implications for finance, sales, and marketing. However, without a common platform to share data and assumptions, these functions remain misaligned. Sales may run promotions that the supply chain cannot support, or finance may set revenue targets that are detached from production capacity, leading to internal friction, missed targets, and poor customer outcomes.
Best practices for optimized rough cut capacity planning
To overcome these challenges and build a truly resilient planning process, leaders must adopt a new set of best practices fueled by modern technology and a collaborative mindset.
| Best practice | Description |
|---|---|
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1. Integrate planning horizontally and vertically |
Your RCCP process should not exist in a vacuum. It must be tightly integrated with your S&OP, financial planning, and long-range strategic planning. This creates a "golden thread" that connects high-level business objectives with tactical and operational execution, ensuring everyone is working toward the same goals with the same set of numbers. |
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2. Establish a single source of truth |
Break down data silos by unifying all relevant information onto a single, cloud-based platform. This provides all stakeholders — from demand planners to financial analysts — with a real-time, consistent view of demand, supply, and capacity. This foundational step is essential for building trust in the numbers and enabling data-driven decisions. |
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3. Embrace dynamic scenario modeling |
The ability to ask "what if?" is a superpower in today's volatile world. Your RCCP process must support rapid, sophisticated scenario planning. What happens if a key supplier is disrupted? What is the impact of a 20% surge in demand for a specific product line? What's the most profitable way to resolve a bottleneck? A modern planning tool allows you to model these scenarios in real time, compare their outcomes, and choose the optimal path forward. |
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4. Foster cross-functional collaboration |
Make capacity planning a team sport. Utilize a platform that allows sales, marketing, finance, and supply chain teams to collaborate seamlessly. When everyone can see the impact of their decisions on the broader business and work from a shared, live model, you unlock new levels of alignment and agility. |
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5. Proactively identify and resolve constraints |
Instead of waiting for bottlenecks to bring production to a halt, your RCCP process should help you see them coming weeks or months in advance. By visualizing load vs. capacity across all your critical resources, you can proactively make strategic decisions, such as investing in new equipment, cross-training employees, or adjusting your product mix to maximize throughput and profitability. |
An intelligent, out-of-the-box approach
Implementing these best practices may seem daunting, but it doesn't have to be. The most effective way to elevate your planning capabilities is by leveraging a dedicated, intelligent solution built for the complexities of the modern world.
The Anaplan Rough Cut Capacity Planning application provides an intelligent, out-of-the-box approach to mastering your capacity challenges. It is designed to empower supply chain leaders to make proactive, data-driven decisions by connecting your S&OP and long-range planning on a single, unified platform. With Anaplan, you can effortlessly balance demand and supply, instantly identify capacity constraints across your critical resources, and run unlimited “what-if” scenarios to understand the financial and operational trade-offs of any decision.
This powerful application enables you to move beyond the limitations of spreadsheets and legacy tools, fostering the cross-functional collaboration and strategic alignment necessary to build a resilient, agile, and profitable enterprise.
