Make a promise, keep a promise…this is the gateway to excellent customer service. How easy is it for your organization to confidently make a promise that you can keep? Does it take multiple touchpoints in order to answer a customers’ inquiry on availability? Are you able to deliver on those promises once made? Is your production plan dependable and your suppliers reliable? Do you know- really know- how the system determines a promise date and whether your supply chain is fully aligned to support those rules? And lastly….How much inventory are you holding in order to avoid stockouts?
Available to Promise (ATP) is the quantity of goods we are able to promise our customers looking on a particular date from a particular location looking out across time. The ATP check is governed by a set of rules that directly reflect our level of confidence in our ability to plan supply and achieve those plans. In some cases, we may only feel comfortable promising against the inventory we physically have. In others, we may have a high degree of confidence in our scheduled replenishment and choose to include things like purchase orders and production orders in our check. If we’re very mature, highly integrated and very stable, we may even feel confident promising against planned replenishment including planned orders or purchase requisitions.
At any given time, a sales order comes in for a product, as demand in terms of quantity, time, and location. This information is needed to understand whether the supply chain can fulfill the request. SAP ATP will use the data to balance supply as close to the demand as possible in order to be able to make a promise. Once the promise is made, then the next challenge is in keeping it. To keep our promises, we have to align our supply chain activities with those promises in mind.
When we are not yet using ATP or ATP is not trusted, we find ourselves checking availability via phone calls, emails, meetings, or other investigation. If you find yourself referencing that excel sheet on Sharepoint, that’s a good indication that there is opportunity to improve your organizations use of ATP.
Available to Promise is a key component of customer satisfaction. When ATP is working well and rules are aligned with business behaviors, we are set up for success in order fulfillment. ATP allows us to make a promise that’s realistic to our current plan. On Time In Full (OTIF) lets us know if we were able to fulfill the order on time and in full to the customers request.
In cases where the ATP date does not meet the customers needs, there may be more to consider: What if the order changes at the last moment? What if there isn’t inventory in the main warehouse, but there is in a nearby warehouse? In shortage situations, are we able to prioritize and manage fulfillment in a way that is fair and in line with our customer service policies?
ATP is a foundation for customer excellence. It is the building block that gets us to a reasonable commitment. This is especially critical at a time when customers are demanding shorter and more reliable lead times and are placing pressure on companies to promise that their orders will arrive when requested and, in the quantity, requested.
Through our oVo® methodology we help organizations improve key customer satisfaction metrics including OTIF, by improving the knowledge of people, the quality of information, the alignment of processes and the return on investment in SAP. We achieve this through an education curriculum that drives knowledge of best practices supported by the smart use of technology.
Utilizing these principles, we drive the business to operational excellence. We help organizations improve; key customer satisfaction metrics including OTIF, backorder processing, ATP checking with material planning strategies (MTO, MTS, etc.), product allocation, daily sales order monitoring, sales order rescheduling and more.
Benefits of Available to Promise (ATP)
- Improved customer service levels (internal and external)
- Lower costs to serve and improved inventory turns
- Better visibility and trust in the data
- Stability and predictability throughout the supply chain
- Increased shop floor efficiencies
- Improved product allocation and delivery prioritization
- Confident team members that are able to trust what the system is telling them
- Increased value from the system you already own
“If you don’t find the time to do it right, you’ll have to make the time to do it over.” Orders that are not on time and in full lead to increased labor and shipping costs and lower revenue due to lost sales, customer fines, and lost customers. The numbers speak for themselves:
Acquiring a new customer can cost five times more than retaining an existing customer.
To learn more on Available to Promise (ATP) and On Time In Full (OTIF) we offer a white paper on, “How to confidently Make a Promise to Your Customers and Keep It”. Reveal offers several other tips, tools and other SAP-centric supply chain education to advance your skill and SAP best practices.