Production
Production is where strategic intent becomes physical reality. The decisions you make here determine how many units of each product will be built, how efficiently they will be manufactured, and how much capacity your company will have for growth in future rounds. If Research and Development defines the product and Marketing defines the demand, Production is the engine that ensures supply meets that demand without waste or shortage.
At its core, Production is about balance. Every unit you build consumes resources—labor, materials, and cash. Too few units, and you experience stockouts, missing sales and forcing customers into the arms of competitors. Too many units, and you tie up capital in unsold inventory, pay steep carrying costs, and risk an emergency loan. The role of the Production department is to keep this balance as close to perfect as possible, guided by the forecasts provided by Marketing.
Capacity and automation are the two long-term levers of Production. Capacity represents the number of units your factories can build each year. Automation reflects how much of that work is done by machines versus people, with higher automation reducing labor costs but increasing the time it takes for products to be updated in R&D. These investments require millions of dollars and take a full year to take effect, which means Production decisions are not just about the present round but about shaping the company’s capabilities for the future.
Every production schedule begins with a forecast. Marketing predicts how many units will sell, and Production must build enough to cover that number plus a modest buffer. This is where cross-department coordination becomes critical. If Marketing inflates forecasts, Production overbuilds, leading to costly inventories. If Marketing is too conservative, Production underbuilds, leading to stockouts. Successful teams learn to communicate across these departments, adjusting numbers iteratively until the schedules align with both demand and financial reality.
Another role of Production is to manage plant utilization. Factories are most efficient when operating near, but not at, full capacity, the sweet spot is between 120 and 180 percent of firs-shift capacity. Operating at 200 percent of first-shift capacity is possible, but not ideal. Conversely, letting capacity sit idle represents wasted investment. Teams must therefore watch utilization closely, selling capacity if it is no longer needed or adding it when demand outgrows current facilities.
Finally, Production is inseparably linked with Finance. Every unit you build consumes cash today, even if it sells later. Large production schedules can drain working capital, forcing you to borrow or issue stock to cover expenses. Likewise, every investment in new capacity or automation is an immediate hit to cash. The best Production decisions are therefore those that not only meet demand but also fit within the financial structure of the company.
In summary, Production is the operational core of Capsim. It translates forecasts into physical output, manages the efficiency of factories through capacity and automation, balances the risks of over- and underbuilding, and directly shapes the company’s cash flow. Done well, it creates a seamless link between Marketing’s promises and Finance’s expectations. Done poorly, it traps the company in cycles of excess inventory, missed sales, and financial strain.