What is Nonproductive Capacity?

Nonproductive capacity is that amount of production capacity that is temporarily not usable. The amount of resulting downtime can have a number of causes, such as:

The time required to set up a new production run
The time required for scheduled maintenance
The time required for unscheduled maintenance
The time lost due to the production of units that had to be scrapped or reworked

How to Manage Nonproductive Capacity

There are many places in which nonproductive capacity can arise within a business, but only a few areas in which it should be closely managed. The key considerations are as follows:

Management at the bottleneck operation. Non-productive capacity is primarily an issue for a bottleneck operation. A bottleneck is restricting the total amount of throughput that a business can generate, which directly impacts its profits. In this one area, it makes sense to focus intently on minimizing the amount of nonproductive capacity with such techniques as overstaffing, running three shifts, and keeping maintenance staff nearby to deal with unexpected repair issues.
Management at a non-bottleneck operation. By definition, a non-bottleneck operation has too much capacity for the demand being placed on it. Therefore, it makes little sense to closely manage nonproductive capacity in these areas, unless doing so will reduce the operating expenses being incurred.