ERP in Process Manufacturing: Available to Promise
One of the more elusive benefits of ERP is improved order promise date logic. This is less of an issue in discrete manufacturing where a finite number of specific items are going to be produced in a finite time period. However, in process manufacturing, order promise dates, as well as available quantities, are more flexible, which makes programming logic correspondingly more complex. This process is normally referred to within ERP as available to promise, or “ATP”, and the reason the benefits of available to promise are so elusive is that it is often perceived that giving customer service authority to find creative ways to break normal promising rules provides an increased level of customer satisfaction.
Can ATP Account for Variables?
The first place available to promise can fall apart in your ERP system is if your organization is not a clear-cut make-to-order or make-to-stock operation. That’s because in a make-to-order environment, available to promise wants to look at the lead-time data loaded in for the material, and use it to calculate the promise date. In a make-to-stock scenario, available to promise expects that product is always available to ship immediately. In the real world, any order can be expedited and pushed through quicker than standard lead-time, and any material can be out of stock. Available to promise is virtually guaranteed to be of no value when the promise date for the same quantity of the same material can vary based on the customer, the customer’s perceived need, the material, and the current plant capacity.
Another weakness of using available to promise and ERP is that it depends on math that everyone in the supply chain has padded as a hedge against performance measurements. On one level, it is understandable that people reason along the lines of “I can get almost any new work order out in three days, so just to be sure, I’m going to put my manufacturing time in at five days.” Again, not a startling exaggeration, but when everyone in the chain goes through that logic, all of a sudden, lead-times are at four weeks, with lots of idle capacity, while your competition has a standard two week delivery. And of course, that leads to leadership incredulity; “Our ERP system doesn’t know how to calculate lead time???”
Be prepared for some very interesting and passionate arguments around available to promise and ERP. You will likely find that few people understand all of the competing dynamics – perceived need, available capacity, available inventory, available components, and customer accommodation – that influence a promise date. Even fewer understand that promise dating is a zero sum game (if I give you speedy delivery, then someone else is getting a slower delivery). At the end of the day, you may conclude that your promise date process could never be accurately described as “logical”. So then the question becomes, “Should promise dating be a logical process and therefore hardwired into our ERP system?”. If it is, you can derive the benefits you originally promised. If not, you are better off shutting available to promise out of ERP and forgetting about it.
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