When can I have it? A not so simple question.
March 9th, 2010 8:41 pm Category: Scheduling, by: Jim Piermarini
“Hello, this is Jake at Western Chemical Resupply. How can I help you?”
“Hello, Jake, this is Paul, I need to order some pool supplies for my pool business.” says the voice on the other end of the line.
This is great, no problem. After getting Paul’s customer information, he asks:
“So I typically order 150 units of the new chlorine product to start the season, and I am opening my store in a few weeks. Do you have any in stock?”
“Certainly we have 100 units in stock today, and are getting steady re-supply shipments from the manufacturer all the time,” Jake says.
So many people have already begun ordering that new product, it looks like it is going to be selling well this season, Jake thinks. Jake begins a new order for the new chlorine product, typing into the order system the SKU and the 150 units, and next comes the date field. When does Paul want it? Jake asks Paul when he would like to have it shipped, and Paul answers with that dreaded question… “When can I have it?”
Yes, we all know it sounds so simple and innocent… a simple request, like “Are you free Friday for lunch?” or “When will your car be out of the shop?” but the plain fact is answering that question can be fraught with difficulty and implications. Difficulty since the state of Jakes information systems do not currently serve this up to him in a friendly way, and there can be implications, since the company policy is to stick to their commitments; once Jake makes a promise on the ship date, he may not change it without the customer’s consent: often difficult to get. Jake has already made many commitments for this product, and each new one he makes adds to the importance of not getting this wrong. A wrong answer could mean calling a lot of unhappy customers to re-schedule their ship dates.
In order to be able to answer it properly, Jake needs to know several pieces of information, all of which are in his order system. He needs to know the re-supply schedule over the next several weeks, as far out as the re-supply lead time. He needs to know the open orders that are on the books today, and for which he has already given firm ship dates, that may not slide with out causing him great pain. That’s all he needs in theory. But in practice, he needs to see this information combined in such a way to make him be able to give Paul a good answer.
So Jake opens the daily inventory chart for this SKU in the order system. The daily order chart combines the on-hand inventory with the incoming supply, and then subtracts the orders, each day to produce the daily inventory chart, like the one shown below. Jake can see the numbers too, but he is a visual kind of guy, and relates better to the graph.
But as Jake looks at this chart, he struggles with which date to choose to be able to commit to Paul for the 150 units he needs. He can see that there will be enough in inventory on or about Jan 9, then after that there is a spike in inventory around the 18th of Jan. Surely that should work? But what Jake doesn’t see is the amount that he can actually promise. He doesn’t see it because most tools do not show it. Most tools do not calculate it. Or if they do, it is kept from the user to be able to make good promises while they are on the phone. What Jake needs to see is a inventory graph like the one below, when it is plainly clear when and for what amounts commitments can be made without disturbing the other orders that have already been committed.
If Jake had this chart, he would be able to see in a glance when Paul could have his 150 units. 150 units will be available to promise (“ATP”) on Jan 27th. In fact, Jake could suggest shipping as much as 115 units on Jan 10th and the balance on Jan 27th. Paul likes this idea, since it means he can start selling it faster, and accepts Jakes idea. Jake enters the orders for 115 on the 10th and 35 units on the 27th. Paul likes getting some fast, but getting the commitment to get it all by the 27th. Jake likes being able to make the shipping commitment without having to reschedule all the other open orders. Once he enters the order, he refreshes his inventory chart for this SKU just to see what it looks like now. Ok, he thinks, that means no orders for the new chlorine product until the end of the month, at the earliest. Good to know.
Calculating the amount available to promise is not rocket science. Guessing at the amount available to promise is a recipe for a headache.
Profit Point delights in presenting useful information to the people who need it to make their work lives better. ATP is just one of our strong points. Contact us today to see how we can help you be able to answer some of those seemingly simple questions with ease.