Available to Promise (ATP) is a crucial element in supply chain management. It basically forecasts the quantity that can be produced on or before a chosen date to deliver the order that has been placed by the customer. Based on the data of materials and proper resource allocation ATP can be derived. It is also important to consider the demand factor while predicting the ATP.
Formula for calculating Available-to-Promise (ATP)is
ATP= Total Supplies – Total Demand in a given date range.
Categories of Available-To-Promise (ATP)
It is divided into two categories, Push and pull strategies.
A push strategy is nothing but real-time ATP. Here, the quantities and delivery due dates are derived based on the demand that has been forecasted. Based on regular production trends the inventory and operation capacity are deduced. With appropriate scheduling, real-time ATP can be easily computed. Since it involves pre-planning and being ready for unexpected production requirements, this is more favored than the pull strategy.
In a pull strategy, the available quantity of the materials and the due dates are calculated only after a confirmed order is received from the customer.
How is ATP useful?
When this process is automated with efficient ERP systems, it helps to analyze the customer demands and then helps in adjusting the required production schedules accordingly. It even assists the customers to easily understand when they can expect the delivery for the orders placed.
Get more definitions about available-to-promise (ATP) and other ERP related terms here.