Assesses whether suppliers can meet the demand for goods or services without overextending their capabilities, ensuring optimal production capacity.

What it Measures ?

Checks how well suppliers are using their capacity.

Relevant StakeHolders 

Supplier Managers, Supply Chain Planners

In-depth Use Case / Real-world Example

A company that manufactures HVAC systems tracks Supplier Capacity Optimization to determine whether its suppliers can keep up with production needs. For example, if the company expects to order 500 components per month but the supplier can only handle 400 units without delays, the procurement team needs to adjust production schedules or find additional suppliers to meet demand. This KPI ensures that the company isn’t over-relying on any single supplier, avoiding potential production bottlenecks.