AVAILABLE TO PROMISE Meaning and
Definition
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"Available to Promise" (ATP) is a term commonly used in supply chain management and inventory control to describe the availability of a product or service to fulfill customer demand at a given point in time. It refers to the quantity of items that can be promised to customers for delivery within a specific timeframe, taking into account existing inventory levels and pending orders.
ATP provides a real-time assessment of the amount of an item that is currently available for delivery to customers. It considers several factors such as current inventory levels, incoming shipments, and existing customer orders. By combining these factors, companies can determine the quantity of a product that can be allocated for new orders without causing stockouts or delays in deliveries.
The ATP calculation involves subtracting existing customer commitments (firm orders) from the available inventory stock on hand, accounting for any pending incoming shipments. The resulting quantity represents the number of items that can be promised to new customers. This information is crucial in managing customer expectations, optimizing inventory levels, and maintaining efficient order delivery processes.
By implementing an ATP system, businesses can enhance customer satisfaction, reduce lead times, and minimize stockouts. Accurate ATP numbers allow companies to provide customers with accurate delivery dates and make informed decisions regarding order acceptance and fulfillment. Additionally, ATP calculations can be combined with other supply chain metrics to provide a holistic view of inventory management and resource allocation.
