ATP (Available to Promise)
- Determining available inventory
- Basic Available to Promise Calculation
- Commutative Available to Promise Method
ATP is an important concept in supply chain management, meaning to quote an available quantity and a delivery date for an order from a customer. There are various methods and levels of determining the quantity and delivery date depending on circumstances.
Available-to-promise (ATP) is a business function that provides a response to customer order inquiries, based on resource availability. It generates available quantities of the requested product, and delivery due dates. Therefore, ATP supports order promising and fulfillment, aiming to manage demand and match it to production plans.
Available-to-promise functions are IT-enabled and usually integrated in enterprise management software packages. However, ATP execution may need to be adjusted for the way a certain company operates.
ATP is defined to check item availability in the future based in supply and demand information and various accumulation and consumption criteria.
ATP functions can be executed in real time, driven by each individual order, or in batch mode – meaning that at a certain time interval, the system checks availability for orders piled up in that period of time. The process is triggered by the need to check resource availability before making a commitment to deliver an order. For example, ATP calculation using Oracle software depends on the level of “stock, planned receipts (production orders, purchase orders, planned orders and so on), and planned requirements (sales orders, deliveries, reservations, etc.)”
Assumptions (Not Ideal Scenario)
- By end of first week all open orders have been fulfilled and shipped.
- All Available to Promise or new order has been shipped by end of week
- On Hand quantity by end of week is zero
- On Hand quantity or Available to Promise by end of week is not zero.
Cumulative ATP gives clear forecast of available quantities to sales team so they can promise to customer about available quantities in coming weeks and months.