If the old proverb “Necessity is the mother of invention,” then surely the need to provide accurate promise dates is the mother of finite capacity scheduling.
It’s absolutely true. Let’s start with the basics: Any good business analyst will tell you that success often rests on these three pillars:
- A quality product;
- A fair price; and
- Delivering that product on time.
For many businesses, that last one–delivering your product on time–is often the toughest piece to achieve and a principle reason for failure. Because your business output is usually an element of someone else’s supply chain or project, failure to deliver on time has a ripple effect that multiplies problems downstream as well to other businesses. When you think about it like that, it’s easy to see why and how companies that don’t deliver when they promise, quickly become roadkill.
Enter the ATP calculation—a short name for available-to-promise. As implied, the ATP date is calculated using finite-capacity scheduling that includes all production requirements, which is a fancy way of saying that it takes all the guesswork out of providing promise dates to your prospective customers.
In the past, promise dates were based on average lead times. Managers or sales people pulled a date out of the air based on experience and the need to be conservative so that they didn’t disappoint prospective clients. Then, these guesses were entered into whatever business support or scheduling software they used and everyone crossed their fingers. Sound familiar?
Overly conservative promise dates can make even the best companies with best products non-competitive and less attractive as a supplier, while overly aggressive promise dates are unrealistic and lead to clients who don’t return for more business.
Average lead times were used in Materials Resources Planning (MRP). Scheduling based on average lead times was replaced by finite capacity scheduling (FCS or “advanced scheduling”) that uses accurate representations of the production resources and the loads on those resources from all other production requirements. A new term was popularized by the manufacturing sector; “available-to-promise” or ATP.
ATP dates are computed in finite capacity scheduling that uses accurate representations of the production resources and the loads on those resources from all other production requirements. And while the term “ATP” had its origins in the manufacturing world, it applies equally well to project scheduling. Whether you are providing a product or a service using a sequence of activities and limited resources, the promise date for delivery is equally important and can be calculated the same way. Once an ATP date is calculated, your scheduling app should make it easy to add the order or project to the schedule. No longer is a salesperson needing to pull a random date out of the air. The correct answer makes itself available to them—and the production team is able to deliver. Voila! Pillar #3 is achieved.