In this post, you can get a clear idea on Capable-to-promise with example and its limitations. This post also tells about available capacity and differences between capable-to-promise and available-to-promise.
Capable-to-promise (CTP) is the process of committing orders against available capacity as well as inventory. This process may involve multiple manufacturing or distribution sites.
Capable-to-promise is used to determine when a new or unscheduled customer order can be delivered. Capable-to-promise employs a finite-scheduling model of the manufacturing system to determine when an item can be achieved.
It includes any constraints that might restrict the production, such as availability of resources, lead times for raw materials or purchased parts, and requirements for lower-level components or subassemblies.
The resulting delivery date takes into consideration production capacity, the current manufacturing environment, and future order commitments.
The objective is to reduce the time spent by production planners in expediting orders and adjusting plans because of inaccurate delivery-date promises.
Limitations of Capable-to-Promise (CTP)
- It is difficult to use the CTP process to schedule a complete Supply Chain Plan.
- It is not usable for delivery documents checking
- Some of the factors can have a negative influence on the performance of the CTP process like a large number of lots to be created, a large number of resources, a large number of activities per order.
- It is not suitable for SD delivery schedules
- It is not suitable for backorder processing
What is Available Capacity
Available capacity is the process that involves the determination of the potential of a unit to perform a specific task within a set time framework. The capacity to deliver an expected output varies from industry to industry.
Based on the business, the available capacity has to be ascertained. It can work in terms of volumes, quantity, and compare the same with the standard available capacity of the firm.
The available capacity can be determined for single resources or a set of resources put together. The process helps in overall business planning and inventory management.
Main differences between Capable-to-promise and Available-to-promise
1.Available-to-Promise considers only material availability, whereas CTP considers both capacity and material availability
2. CTP gives a clear idea about the capability of demand fulfillment within a given period of time. But ATP does not give a realistic idea about it.
3.Calculation of CTP is a little complex and takes more time. But the calculation of ATP is simple and takes less time.
Example of Capable-to-promise
Let us assume, X is the final product and Y and Z are components required to produce X.
Now, suppose the on-hand inventory of product X is zero. In this case, if you do ATP it shows zero only because it checks only the availability of the material.
If you do CTP it shows the availability of both materials and available resources. So it determines the availability of components Y and Z to make the product X.
It also checks the number of products that can be produced using these materials and resources. Along with this CTP also checks how many more components Y and Z and other resources are required to make more product X.
Determining the ideal working hours
The working hours of an organization are crucial to determine the production capacity of the unit. However, the working hours comprise of the breaks, technical glitches faced during those hours, and any organizational problems that might arise.
Cracks are generally deducted to attain the working hours. They are also known as the theoretically available hours.
The productive working hours gained after deducting the technical and organizational problems are known as the operating time.
Similarly, capacity utilization can be used to understand the percentage of the running time of a unit in production.
The differences obtained while calculating the available capacity are known as the version number. The actual version number is further used in scheduling and planning capacity requirements.