What Is Productive Capacity And What Is Its Importance To The Company

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The productive capacity of a company is a key indicator to analyze the operational flow of any company. But because it is an indicator that is directly related to the revenue and profitability of the business, many think that the higher the productive capacity, the better. However, this concept can be misleading - since normally the ideal productive capacity will be the one that is able to better match the level of production with the market demand, generating the lowest possible cost. What is productive capacity? Productive capacity is the maximum amount of products and services that a company is able to produce in a given period. That is, it is an indicator that represents the ratio between the operational speed of the company and the balance resulting from its activity in products and services.

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How to analyze the productive capacity of a company?

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There are different ways of classifying and analyzing the productive capacity of a company. The main ones are: Installed productive capacity Corresponds to the total productive capacity that the company has, according to its infrastructure. Installed capacity considers the maximum productive potential of the company, where all the factors of production (machines, inputs, raw material, employees) would be fully functioning - without interruptions, losses, faults or other unforeseen events. It is a hypothetical indicator, which serves as a reference for strategic decision making. Productive capacity available Tell us what productive capacity is available to the company at the right moment. That is, the calculation takes into account only the assets and inputs that can come into operation effectively at that moment. The available capacity also does not consider the losses, shortages or shutdowns for any reason. Effective productive capacity Represents the level of production that the comp...
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