The former Juve boss feels the signings made are not good enough.
"This is Year Zero for the Bianconeri," Capello told GR Parlamento radio.
"Some players did not deliver what was expected of them. It will be an important experience for President Andrea Agnelli and next season he will begin again.
"The trouble with the current squad is there are some good players and others who are very good, but the general level of quality has to be improved.
"When there is a reformation, it is better to introduce at least a couple of quality players at a time."
Gigi Del Neri complained at the lack of options amid an injury crisis, but Capello has other ideas.
"I always told clubs: I don't want seven players. I want two good ones," continued the former Juventus and Milan Coach.
"Milan have signed Zlatan Ibrahimovic and Robinho. Finally, I told Adriano Galliani, you have signed two excellent players. You need men who can make the difference and not just make up the numbers."