ATP is the inventory quantity you can confidently promise to customers for delivery within a specific timeframe. It may sound like just another buzzword, but it’s actually a real game-changer. The Available to Promise quantity, in this scenario, is the remaining 50 smartphones that the store can promise to new customers without affecting the fulfillment of available to promise atp existing orders.

Companies are increasingly competing in multiple channels, like wholesale, e-commerce, and brick and mortar. ATP supply chains are becoming necessary in order to meet customer expectations and make sure complex inventory management runs smoothly. Optimized picking and packingUsing inventory management software to track ATP supports your warehouse operations, particularly in the picking and packing stages.

• To refine your ATP calculations and make them more accurate, consider the following factors.
• Similarly, you need to carry forward the available-to-promise inventory of one period as the on-hand inventory of consecutive periods.
• If yes, the order item is confirmed as requested and the material is reserved for this order item.
• Furthermore, calculating available to promise inventory also plays a crucial role in supply chain automation.

How Does a Warehouse Management Software Calculate Available to Promise?

For externally procured materials, a purchase requisition is created and the purchasing department is asked to order. If the material is produced in-house, or if both procurement types are possible, the MRP run generates a planned order that is then converted into a production order or into a purchase requisition. Otherwise, the customer requirement could be confirmed at the latest after the goods receipt of these receipts into unrestricted-use stock. However, backorder processing is necessary for this, as requirements (for example, sales orders) do not repeat the availability check. The basic check logic of the ATP check is hard-coded and cannot be changed in Customizing. Starting from the material availability date of the order item into the past, the system checks whether there are stocks or receipts with sufficient ATP quantities.

The next heading will delve into the benefits that proper ATP Inventory management brings to your business operation. It enables directors to make informed decisions about when and how much to produce or order, relying on real-time data rather than guesswork. Moving forward seamlessly relies on a strategic approach to multichannel business optimisation influenced by robust ATP management – an essential topic covered next in our guide. On-hand inventory refers to currently available quantities of SKUs for sale. On the other hand, ATP is a forecast of how many SKUs will be available for sale without placing backorder requests.

The main difference between ATP and safety stock is what the inventory is specifically allocated for. Megaventory is a US company founded in 2010 – one of the first to offer online inventory and order management. Learn to keep customers happy with fast, accurate, and reliable fulfillment. Change managementEducate and support your inventory planners on their distinct roles in adopting the new system, and develop clear steps with attached timelines to minimize disruptions.

Available to Promise (ATP) Definition, Formula and Example

In the realm of inventory management, differentiating between the categories of Available to Promise can be pivotal for streamlining operations. These classifications enable businesses to align their supply chain strategies with customer demand, ensuring they precisely meet order fulfilment objectives without excess stockholdings. Negative ATP situations occur when customer demand exceeds the current inventory levels – a scenario that can create a ripple effect throughout your supply chain operations.

Regularly audit your data and implement processes to maintain its integrity. Alternatively, if the store has limited stock or capacity, ATP may suggest fulfilling the order from the warehouse to ensure timely delivery without overburdening the store. Your customers expect a seamless shopping experience across multiple channels, whether they’re buying online, in-store, or through a mobile app. But that requires keeping accurate tabs on your inventory with insight and communication across all of your systems and platforms. Transit timesThe duration required for products to reach your warehouse or customers.

The Importance of Available to Promise (ATP) Inventory for Multichannel Business Optimisation

• However, the plant of the order item can also be specified manually during processing.
• If orders are processed in change mode (VA02), only confirmed requirements are deducted during the calculation of the cumulative ATP quantity for this variant of the shortage check.
• Alternatively, if the store has limited stock or capacity, ATP may suggest fulfilling the order from the warehouse to ensure timely delivery without overburdening the store.
• Then, the inventory and operation capacities are deduced based on regular production trends.
• This can help prevent overstocking and understocking, leading to improved inventory management.

Implementing robust inventory management systems gives directors the agility needed in today’s fast-paced market while boosting overall revenue with improved gross margins. Salespeople can act decisively knowing that the ATP inventory meets purchasers’ needs immediately, reflecting positively on your company’s reliability and enhancing its competitive edge in the marketplace. As we move beyond understanding the conceptual differences, let’s examine the nuances behind comparing ATP with safety stock and how they contribute to inventory management strategies. ATP provides the necessary visibility across various sales channels, enabling businesses to manage inventory with precision. This strategic approach allows companies to commit to customer orders confidently while minimising overstocking or stockouts.

Available-to-promise inventory formula and calculation

A comprehensive evaluation process, including assessing vendor track records and user reviews, can help businesses select a solution that aligns with their specific needs and provides long-term value. By using availability to promise in the supply chain, you can accurately estimate the number of products that you can ship to your customers. The available to promise KPI also tells you the additional inventory you will need to manage the existing demand. When companies automate the system with efficient ERP systems, it helps to analyse the customer demands and adjust the required production schedules accordingly. ATP inventory provides a robust framework for businesses to optimise stock levels, align production with demand, and sidestep the costly pitfalls of overstocking or stockouts.

One such company, Walmart, deploys an available-to-promise model that keeps warehouse inventory low and the majority of available products on the floor. This allows for more efficient usage of any warehouse space, with only a small risk of running out of a particular product. Discover the most used Logistics calculators on iCalculator™ from the last 24 hours. These tools help supply chain professionals optimize freight, storage, palletization, and delivery strategies with precision and ease. ATP is primarily used by manufacturers, suppliers, distributors, and supply chain planners to manage order fulfillment and delivery commitments. This is especially useful for short-term supply chain visibility and to prevent over-promising delivery times in periods of constrained supply.

If the ATP has a positive value you can easily schedule more orders for shipping. But, if the ATP has a negative value, you might have to delay scheduling some of the orders based on the next estimated inventory supply. It is important to note that you only have to use actual values in the available to promise formula. You should not use estimations of supply or demand to calculate available to promise KPI.

ATP in the stock market stands for “Average Traded Price.” It represents the average price at which shares of a particular stock are traded over a specific period. In the above available promise example, we have to carry forward the ATP inventory from January 1st to January 2nd. To understand this phenomenon better, let’s take a look at an available to-promise example. However, if the company receives a large special order, CTP will accurately assess when that order can be fulfilled.

Instruct Supply Chain Leaders on ATP

For example, based on current demand and production resources, Sunshine Decor can guarantee 300 units of a dining chair will be available within the next 3 months. By providing real-time visibility into your available stock, ATP allows you to streamline operations, reduce errors, and make data-driven decisions that help keep your costs down. However, customer requirements can also be relevant for MRP to compensate for planning errors.

Educate the personnel on order-taking, inventory management, fulfillment, and warehouse practices to help them understand the process better. The more that they understand and are given the chance to offer input, the smoother the process will go. ATP inventory management streamlines inventory-related tasks, reducing the time and effort required for decision-making.

This approach is especially helpful in environments with lead times, production cycles, or limited stock availability. Businesses can use ATP to prioritize high-value orders, reduce backorders, and improve delivery confidence. With a clear understanding of Available to Promise inventory, you possess the key to unlocking efficient stock management and customer satisfaction. Embrace ATP systems and watch as they enhance your business’s responsiveness and reliability in delivering promises. It offers a snapshot of what is available to sell right now, giving businesses a clear sense of their capacity to fulfill orders in the short term. This approach suits companies with fast-moving items where long-term forecasting isn’t as crucial, allowing for swift decision-making based on real-time data.

Basic ATP formula

Businesses are increasingly prioritizing eco-friendly practices, such as using renewable energy sources in warehouses and implementing circular supply chain models that emphasize recycling and waste reduction. Integrating sustainability into ATP strategies not only helps reduce environmental impact but also enhances brand reputation and appeals to environmentally conscious consumers. Modern distributed order management systems with FATP capabilities offer real-time data utilisation, preventing overselling and stockouts. They enable seamless integration across sales channels, facilitating market expansion and handling increased order volumes efficiently. ATP is often confused with safety stock, a common classification in inventory management, but there are key differences between these two.

ShipBob’s inventory management tools automate much of the inventory tracking process and provides visibility into inventory flow and future inventory demand. Within ShipBob’s fulfillment dashboard, merchants can view inventory data to calculate ATP inventory. This metric is used to help retailers keep their supply chains lean while ensuring they can meet demand. ShipBob’s fulfillment platform comes with built-in inventory management software to improve visibility of inventory flow across distribution centers in real time. Whether it’s tracking inventory on hand, calculating future demand, or deciding how much to hold in safety stock, an omnichannel fulfillment provider like ShipBob can help automate the process.

Look for the “Average Traded Price” (ATP) in the stock’s detailed information section. This also empowers salespeople to instantly find out where they can deliver a potential customer’s order. Without ATP, salespeople usually have to talk to multiple departments to confirm that the inventory is available and can be delivered by the requested date. Let’s see how this technology and discipline is helping modern supply chains to streamline their orders. It’s important not to overwhelm staff and leadership off the bat so that you can lower the stakes with a test cycle. Taking the time to walk through the process will instill confidence at all levels of your team and let you iron out any wrinkles before going live.

This helps you plan for potential delays and adjust your ATP calculations according to different risk scenarios. If a material is planned using Material Requirements Planning, requirements control the procurement of the material. The Check Material Coverage app also cannot be used for statements about the availability of a material, as it also does not show the cumulative ATP quantity.