Capacity Requirement Planning (CRP): A Complete UK Guide (2025)
It is Monday morning. Sales just closed a massive order for delivery in four weeks. Your gut says “yes” but your shop floor schedule screams “maybe.”
You know you have the raw materials. But do you have the machine hours? Do you have the staff availability? Or will this new order cause a bottleneck that delays every other shipment you have planned?
This is the reality for operations directors across the UK. Margins are tight. Energy costs are high. Guesswork is expensive.
This is where Capacity Requirement Planning (CRP) comes in. It replaces gut feelings with data. It tells you exactly how much work your facility can handle and allows you to balance demand against your actual production capabilities.
This guide covers everything you need to know to implement CRP effectively in 2025.
What is Capacity Requirement Planning (CRP)?
At its core, Capacity Requirement Planning is the process of determining how much work needs to be done (the load) and comparing it against the resources available to do it (the capacity).
The Chartered Institute of Procurement & Supply (CIPS) defines capacity management as the ability to balance demand from customers with the ability of the supply chain to meet that demand. CRP is the tactical tool used to achieve that balance on the factory floor.
CRP vs. MRP: The Vital Difference
Many managers confuse CRP with MRP (Material Requirements Planning). Here is the distinction:
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MRP answers the question: Do we have the materials?
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CRP answers the question: Do we have the time and space?
You might have enough steel to build 500 units (MRP says yes). But if your welding station can only process 50 units a day, you cannot deliver in a week. CRP highlights this discrepancy before it becomes a crisis.
CRP vs. Rough Cut Capacity Planning (RCCP)
Before diving into the detailed process, you must distinguish between the “rough” view and the “detailed” view.
Rough Cut Capacity Planning (RCCP) happens at a high level. It checks if you have enough total capacity to meet the master schedule. It usually looks months ahead.
CRP is detailed and immediate. It looks at individual work centres, specific machine efficiencies, and actual open orders. It is usually focused on the next few days or weeks.
| Feature | Rough Cut Capacity Planning (RCCP) | Capacity Requirement Planning (CRP) |
| Focus | Critical resources only | All work centres and routings |
| Horizon | Long-term (Months/Quarters) | Short-term (Days/Weeks) |
| Input Source | Master Production Schedule (MPS) | Planned & Open Orders (MRP) |
| Accuracy | Approximation | High Precision |
The CRP Process: 3 Steps to Optimise Production
Implementing CRP involves three logical steps. Most ERP software handles the calculations, but understanding the logic is vital for fixing errors.
1. Determine the Load
First, you calculate the total work required. This includes:
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Open Orders: Jobs already released to the shop floor.
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Planned Orders: Jobs that MRP has scheduled but not yet released.
You must factor in the setup time and the run time for every item.
2. Analyse Capacity
Next, you calculate what you can actually achieve. This is not just “8 hours per shift.” You must calculate Rated Capacity using this formula:
Rated Capacity = (Number of Machines) × (Utilisation Rate) × (Efficiency Rate)
If you have a machine that runs 8 hours but is only utilised 80% of the time and runs at 90% efficiency, your real capacity is not 8 hours. It is 5.76 hours. Ignoring these variables is the most common reason plans fail.
3. Resolve Imbalances
Finally, you compare Load vs. Capacity.
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Overload: You have more work than time. You need to authorise overtime, subcontract work, or move the delivery date.
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Underload: You have idle machines. You can pull future jobs forward or perform maintenance.
Finite Loading vs. Infinite Loading: Which Fits Your Business?
When setting up your CRP system, you will face a choice between two scheduling methods.
Infinite Loading
This method assumes you have unlimited capacity. It schedules all jobs exactly when they are needed, regardless of whether the machine is busy.
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Pro: It clearly shows exactly how much capacity you need to buy or hire to meet demand.
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Con: It creates unrealistic schedules that the shop floor cannot follow.
Finite Loading
This method recognises limits. If a machine is busy, the software schedules the next job to start only when the current one finishes.
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Pro: It produces a realistic, achievable schedule.
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Con: It pushes delivery dates out, which sales teams often dislike.
Manager’s Note:
Most UK SMEs start with Infinite Loading to see the sheer scale of their bottlenecks. Once they understand the problem, they switch to Finite Loading to generate work-to-lists for their operators.
The “Human Factor” in UK Operations Management
Algorithms are perfect. People are not.
A common mistake in British manufacturing is trusting the software too much. Your CRP might say you have 40 hours of welding capacity. But if your lead welder is off sick and the apprentice operates at 50% speed, your plan is wrong.
Soft Skills in Shop Floor Control
Effective operations management requires building buffers for human unpredictability.
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Skills Matrices: Ensure you know exactly who can operate which Work Centre.
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Shift Patterns: Account for UK Working Time Regulations and mandatory breaks.
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Union Agreements: Be aware of restrictions on overtime or role changes.
UK Manufacturing Challenges in 2025: Why CRP Matters Now
The landscape for UK industry has shifted. Relying on “we’ve always done it this way” is dangerous in the current economic climate.
Energy Cost Management
With industrial energy prices remaining volatile, running machines inefficiently is a cash drain. Smart manufacturers use CRP to group energy-intensive jobs. They schedule heavy loads during off-peak electricity tariff windows.
Supply Chain & Labour Shortages
According to recent data from The Access Group, labour shortages continue to plague UK manufacturing. You cannot easily hire temporary staff to fix an overload. CRP gives you the visibility to spot labour gaps weeks in advance, giving you time to train existing staff or negotiate delivery dates.
Similarly, the UK government’s focus on industrial efficiency (as outlined in broader industrial strategies) pushes for “smarter” production. Digital planning tools are no longer optional for businesses that want to survive supply chain drags.
Benefits of Effective Capacity Requirement Planning
Getting this right delivers measurable ROI.
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Reduced Inventory: You stop building parts that just sit in a queue waiting for a machine. This lowers your WIP (Work in Progress) costs.
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Delivery Reliability: You stop promising dates you cannot keep. Your “On-Time-In-Full” (OTIF) scores improve, which builds trust with customers.
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Cost Reduction: You avoid expensive last-minute emergency measures like overnight shipping or triple-time weekend shifts.
FAQs
What are the inputs to capacity requirement planning?
The main inputs are planned orders (from MRP), open shop orders, routing sheets (process steps), and work centre data (capacity limits).
What is the difference between CRP and MRP?
MRP calculates material requirements (what to buy). CRP calculates resource requirements (time and machinery).
Why is capacity planning important in operations management?
It prevents bottlenecks, ensures realistic delivery dates, and maximises the utilisation of expensive machinery and labour.
What are the 3 types of capacity planning?
The three levels are Resource Requirements Planning (Long-term), Rough Cut Capacity Planning (Medium-term), and Capacity Requirements Planning (Short-term/Detailed).
How do you calculate capacity requirements?
Multiply the number of units required by the standard time per unit (setup time + run time) for each work centre.
What is infinite loading in CRP?
Infinite loading schedules work without regarding capacity limits, useful for identifying total load.
What software is best for CRP in the UK?
Most modern ERP systems include CRP modules. Popular choices for UK SMEs include SAP Business One, Microsoft Dynamics 365, and Sage X3.
How does CRP affect inventory levels?
It reduces Work in Progress (WIP) by ensuring materials are not released to the shop floor until the machinery is actually ready to process them.
Conclusion
Capacity Requirement Planning is the bridge between the promises your sales team makes and the reality your production team delivers.
In a challenging UK market, you cannot afford to have expensive machinery sitting idle or paid staff waiting for work. Nor can you afford the reputational damage of missing delivery deadlines.
Tools and software help, but discipline makes it work. Accurate routings, realistic time estimates, and honest data entry are the fuel that makes CRP run.
Struggling to balance your load?
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