Available-to-Promise (ATP)

What is Available-to-Promise (ATP)?

Available-to-Promise (ATP)

In the world of logistics, one of the key challenges is ensuring that products are available to customers when they need them. This is where the concept of Available-to-Promise (ATP) comes into play. ATP refers to the quantity of a product that is or will be available to promise to a customer, based on their required shipment date.

Imagine you are a customer who wants to purchase a product. You have a specific date in mind by which you need the product to be delivered. The ATP calculation helps determine whether the company can fulfill your request within the given timeframe.

ATP takes into account various factors such as existing inventory, anticipated purchase or production receipts, and the required shipment date. By considering these factors, companies can make informed decisions about promising delivery at a future date.

To better understand ATP, let's break it down into its key components. First, we have the quantity of a product. This refers to the number of units available for sale or delivery. It could be the physical inventory sitting in a warehouse or the anticipated production output.

Next, we have the concept of promising. When a company promises a delivery date to a customer, it means they commit to fulfilling the order within that timeframe. The promise is based on the available quantity of the product.

ATP is often 'time-phased,' which means it considers the future. Companies need to anticipate purchase or production receipts to ensure they can fulfill customer orders on time. By factoring in these anticipated receipts, they can make accurate promises to customers.

For example, let's say a customer wants to purchase a laptop and needs it delivered in two weeks. The company checks their inventory and sees that they have 100 laptops available. However, they also have an order for 50 laptops scheduled to arrive in a week. Based on this information, the company can promise the customer that they will deliver the laptop within the requested timeframe.

ATP is a crucial concept in logistics as it helps companies manage customer expectations and ensure timely delivery. By accurately calculating the available quantity of a product and considering future receipts, companies can make realistic promises to customers.

In conclusion, Available-to-Promise (ATP) is the quantity of a product that is or will be available to promise to a customer based on their required shipment date. It takes into account existing inventory, anticipated purchase or production receipts, and is typically 'time-phased' to allow for promising delivery at a future date. ATP is an essential tool for companies to manage customer expectations and ensure efficient logistics operations.