Capable To Promise Definition: Everything You Need to Know
Capable to promise is about a company making sure that it has both the inventory and the capacity to fulfill an order.3 min read
Capable to promise is about a company making sure that it has both the inventory and the capacity to fulfill an order. This may mean making sure that all distribution and manufacturing sites have been checked for the appropriate materials.
Available to Promise
The term Available to Promise (ATP) refers to limits that must be placed on delivery commitments. To put this in words that will be more familiar in Japan's manufacturing industry, available to promise refers to delivery quotations.
Basically, ATP information consists of viable delivery dates and quantities that can be provided. This is just as important for online businesses as it is for traditional points of sale. Companies should prioritize the ability to determine how materials and resources (both workers and machines) will be allocated based on forecast demand and actual demand. With this done, delivery dates can be accurately estimated. Failure to provide accurate timelines could lead to an accusation of false advertising.
The concept of ATP is critical in relation to supply chain management. It allows companies to provide accurate available quantities and reliable delivery dates. There are a number of ways to measure required quantities and to ascertain realistic delivery dates. The methods used will depend on the company's specific circumstances.
Capable to Promise
Capable to promise determines when delivery will be possible by using a finite-scheduling model. It takes into consideration any constraints of the manufacturing system that might hinder production. These constraints could include:
- Lead times for acquiring raw materials or purchased parts,
- Accessibility of necessary resources, and
- The ability to acquire resources needed for subassemblies or lower-level components.
The delivery date given to a customer in a capable to promise scenario has taken into consideration not only production capacity, but also other commitments that the company has made.
When a new or unexpected customer order is received, the capable to promise system is put into practice to determine when the order will be able to be delivered.
The whole point of the capable to promise principle is ensuring that production planners spend less time adjusting plans and rescheduling orders because the delivery-date promises that were made cannot be kept.
Capable to Promise, Scheduling, and Efficiency
One of the important concepts in supply chain management is delivery quotations. In terms of the ATP principle, there will be some instances in which “Make To Stock” (MTS) inventory is already available. This inventory must be allocated to a specific order, and a specific time for delivery must be calculated for that order. In situations where “Make To Order” (MTO) goods need to be produced from scratch, a company will need to work out how long the production process will take, taking into account the accessibility of parts, resources, and materials.
To provide an example, when a restaurant's sushi chef gets an order that needs to be delivered, he:
- Makes sure that ingredients (materials required to do the job) are available.
- Looks to see which team member (resource capacity) is able to deliver the sushi, and what vehicle is available for him or her to use.
- Works out an exact ATP in terms of the time that the sushi will be delivered and how much sushi can be delivered.
There are various ways to calculate ATP, and the method chosen in each case will depend on how many MTS materials are available, how many Assemble To Order (ATO) materials need to be made, and how many MTO goods need to be produced.
To go back to the sushi example, calculating the ATP for this order should factor in how long it takes to catch the fish and purchase the ingredients. When calculating lead times, wait times and setup times need to be considered, as well as possible constraints like the availability of materials and operation capacity. The calculation of real-time ATP can be worked out by scheduling jobs one after the other, using the supply chain's integrated databases.
One of the key functions offered by any distribution software for the wholesale industry is order management. If a staff member can quickly and efficiently enter an order, the customer service experience is improved dramatically.
All wholesale distributors should implement ATP and planned inventories and make a commitment to capable to promise functionality in their order management process. In doing so, they will have more satisfied customers, more orders, and more efficient production cycles. Ultimately, they will enjoy reduced inventory carrying costs and greater profitability.
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