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What Is Available-To-Promise?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 07 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
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Available-to-promise (ATP) is a type of approach to the processing of customer orders that involves providing some sort of commitment to customers regarding the status of a customer order. Typically, the promise will involve details on the anticipated delivery date of the items ordered, and may even include information on the anticipated shipping dates of multiple shipments as a means of filling that order. The purpose for the available-to-promise is to keep the client informed of the when to expect the order to be fulfilled and when he or she can reasonably expect to receive the items ordered.

While available-to-promise is a function that can be managed manually, larger companies tend to integrate this process in the overall strategy for managing supply and demand for the goods and services offered to consumers. This involves making use of software that can quickly assess the specifics of a customer order, relating it to the current inventory of finished goods that are not already committed to filling outstanding customer orders, and if necessary projecting production figures to ascertain when the new order can be filled and shipped. Once this analysis is complete, the customer can be supplied with a projected shipment date and an anticipated delivery date, a process that helps to set reasonable expectations on the part of the customer.

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At its core, available-to-promise polices and procedures accomplish two core benefits. When automated, the process makes it possible to quickly update production quotas in order to meet customer demand, making it possible to then adjust production schedules accordingly. At the same time, the automated ATP means that customers are able to quickly learn when to expect orders to arrive, making it easier to adjust their schedules to allow for the receipt of the ordered products. In some cases, the process is so fast that customers receive a confirmation of the order immediately upon placement, followed up with confirmation of shipping arrangements within a matter of hours or possibly a single business day.

Within the scope of available-to-promise, there are a couple of different approaches that may be employed. With push-based ATP, the focus is on making use of historical data to anticipate future demand for specific products, making it possible to adjust the production process to accommodate those projections. With pull-based ATP, the focus is more on assigning or allocating resources based on the orders that are currently open. Depending on the type of business model employed and the length of time it takes to produce the quantity of items ordered, one model is likely to be a better fit than the other. As long as the ATP approach used results in filling orders in a time frame that is considered equitable to the client, both methods are considered viable.

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