The Role of Capacity Management in Strategic Manufacturing Decision Making

There has been little research focused on identifying the position and role of capacity management in strategic manufacturing decision making. This research presents the findings of a major investigation into the role of capacity management in the Australian wine industry. This industry was chosen because it has a major focus on growth which is putting substantial demands on its capacity management. The research found that advanced process technology is being used as part of a strategy for increasing capacity in this industry. Capacity management was identified as the third most important area of manufacturing process decision making, after plant and equipment and quality assurance. It was also found that supply dependability and product cost/price were the most important competitive priorities for wine production, after product quality. All three of these were found to be directly influenced by the level of capacity management. An ANOVA determined that there were 32 categories of wine producers for which there were significant differences in the importance of capacity management (P<0.05). The relative importance ranking of capacity management varied between the most and fourth most important out of the 23 decision areas identified for the 32 categories of wine producer identified. A factor analysis determined that capacity management is related to production planning and control, quality control and assurance and plant and equipment in terms of its strategic positioning in the manufacturing decision making process. All four were found to form part of the manufacturing decision making process, but were not part of the strategic business decision making process.