ATP / Available to Promise

Available-to-Promise, or ATP is a logistics function, usually of ERP (enterprise resource planning) or MRP (manufacturing resource planning) software, that allows a person or system taking an order to commit to a delivery date for a customer.

The algorithms within the software will determine how those dates are calculated, and how realistic they are compared to the situation at gemba.

The software that determine available quantities can be based on forecasts or on actual quantities. Since this is a guide on continuous improvement and not on the inner workings of ERP/MRP systems, this article will focus on how your CI efforts impact the ability of the system to give customers accurate information.

1. Quality: The quality your processes deliver will play a role in how much product is available on time. First and foremost, your CI efforts should emphasize that poor yield has a real impact on customers. This impact is amplified the closer you get to zero inventory. With a large pile of finished goods, ATP is easy to calculate, but the cost is tremendous. The better quality gets, the easier planning becomes.
2. Lead Time: One of the benefits of Standard Work is that processes have a starting point for making improvements. But regardless of how efficient your process is, you have to be reliable to be able to predict delivery times. If your processes can’t be counted on to hit production targets each day, again, planning dates for delivery to customers gets much harder. Anecdotally, customers tend to prefer a bit longer of a delivery promise they can count on over a shorter promise that is unreliable.
3. Stock Outs: Having well developed production processes, especially those that use kanban systems, keeps you from running out of materials. The production planners need to make sure that the kanban system is integrated with the MRP/ERP system though. Kanban is real time and visual with respect to the operator, but the computer system has to account for usage to be accurate in ATP dates. The programmers and materials team will take care of that, but the production people need to make absolutely sure that they adhere to their kanban If they don’t, the management software will get screwed up in a hurry and cause all sorts of logistics problems and customer headaches.

ATP and Competition

ATP will determine your competitiveness. If you can beat the competition with a sooner delivery date, all else being equal, you will win the business nearly every time.

Since all else is seldom equal, a fast, reliable promise date will score your sales team tremendous points when going up against other companies to land sales.

Production Management & ATP

Communication is critical for companies where delivery time is important to customers. In many cases, the company might even have penalties in contracts.

Your system should have some way to account for changes in production rates as soon as possible. The closer your ATP system is to real time, and the less it relies purely on forecasts and production rates, the more issues can be avoided.

Daily management and andon processes are great ways to keep production on track and limit the impact problems have on sales.

Keep in mind how interconnected the company is, even when you are working in or managing a production area. The work you do, obviously, affects customers in the form of the products you are making.

But the information you provide, or enable others to provide, can be a competitive advantage to the sales team. Be accommodating to requests for information and think about how variation in your operation makes it hard for the people who interact with customers.