Intel is a company for whom capacity planning is of utmost importance.
And Intel are very sophisticated in how they approach
capacity planning and can be thought of as being best in class.
Let me also say that I'm drawing from
the "Operations Strategy" text book of Beckman and
Rosenfield in discussing this Intel example.
Intel use a 60-month planning horizon
so they're planning the future about five years in the future.
But they break the planning horizon into
three different levels of production build plan looking at from zero to nine months,
an extended build plan looking at from nine months to
24 months and a long-range plan looking at from nine months to 16 months,
and these different levels are making different decisions.
The long-range plan in essence to
the strategic capacity plan is looking at the development of new fabrication facilities.
So how much capacity?
When to build a facility?
Where to build a fabrication facility?
Same for new assembly and test sites and also for
negotiation of outsourcing or subcontracting arrangements.
The extended build plan is more tactical in
nature and this essentially decides looking at nine to 24 months,
what products are going to be built in what facilities
and other subcontracting arrangements that have been put in place,
what options to exercise from those subcontracting arrangements.
In the near term was the production build plan.
In essence, how many wafers to start producing per week in terms of
production scheduling and the allocation of production to
specific facilities and assembly and test routing decisions.
Couple of key things here.
There's a connection in all these plans.
The long-range plan sets constraints on
the extended build plan and
the extended build plan sets constraints on the production build plan.
This creates a connection between
all three plans and also trade-offs in all three plans.
Importantly, to manage those connections and trade-offs,
all three planning teams are part of
one overall capacity planning team at Intel to help resolve and manage those trade-offs.