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Availability to Promise
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Lean Manufacturing, Basics, Principles, Techniques
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Master scheduling is the meeting point for sales forecasts, order entry, and manufacturing planning in most manufacturing companies. One feature contained in the master scheduling modules of many MRP II and ERP software packages is a calculation that is descriptively named "available to promise." Its purpose is
• to provide information for promising valid delivery dates to customers
• to reserve or allocate products for customer orders in advance ofdelivery
• to provide warnings that supplies are getting low so remaining products can be allocated to satisfy the greatest number of customers or the most important ones
• to prevent unusually large demands from reducing inventories unexpectedly to levels that cause stockouts for customers who haveplaced steady demands and/or provided good projections of theirneeds
• to provide sales organizations with information about what is available based on previously planned product schedules so they cansell what has been planned rather than take orders at random levels
• to differentiate quantities of products that have been produced tosatisfy the forecasts of different markets, customers, or sales organizations and ensure that each gets its fair share.
ATP must be applied differently to products that are make-to-stock, assemble-to-order, and make-to-order. In all cases it compares current and future supplies against existing customer orders to determine what supplies are not yet allocated. When a new order is entered or reviewed, the customer's request is matched with the unallocated supplies to determine when it can be satisfied.
On make-to-stock products, ATP can be used to determine the following: • if products are available at the time of order entry • if all line items can be shipped immediately or at the customer's • when every item on an order will be available for a single shipment • when partial shipments can be made. On assemble-to-order items, ATP can be used to determine when a configured product can be promised based on the availability of the options and features that have to be assembled. Deliveries of make-to-order products can be promised based on ATP for critical raw materials, components, or capacities of critical work centers. OBSTACLES TO THE USE OF ATP In truth, many of the companies whose systems are capable of calculating available to promise information have failed to use it in actual practice. For some, available to promise does not fit the dissociation that exists between sales and manufacturing. Sales may forecast to give manufacturing a driver, but has no obligation to sell into that plan. Customer orders are often accepted and promised with "standard delivery lead-times" or simply entered for immediate delivery without any comparison to the plans or available to promise. Sales people may in fact be rewarded for overselling the forecasts or for selling the dollar volume even though the mix bears no resemblance to the forecast. If this approach continues to exist once a system is installed, available to promise is usually switched off or ignored. Some companies would like to use their available to promise information, but it is not accurate enough to use or not presented in the right form to use it. If the supplies (on-hand inventories or supply orders) cannot be trusted or the demand data contains errors or false demands, available to promise information calculated from these will also be untrustworthy. If many customer promises based on these data are not met, available to promise will not be used for very long. If available to promise is not presented to the people who enter the orders in an easily usable form, the same will be true. Sales and customer service people usually do not want to see available to promise as one line on a multiline master scheduling worksheet. They want it to appear on their order entry and quotation screens. If the orders call for multiple line items, they usually want to enter the whole order and review available to promise for the entire order rather than one line at a time. To Be Continued STAY CONNECTED To stay current on Lean Management Basics and Best Practices, subscribe to our weekly MBBP Bulletin... and we'll send you our PowerPoint presentation, "Introduction to Kaizen Based Lean Manufacturing™." All at no cost of course.
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