ManufacturingMarch 19, 2020

What If Inventory Is Not Available?

When a customer places an order with a company, there is a…
Avatar Dave Turbide

When a customer places an order with a company, there is a certain expectation of when that order will be fulfilled. Sometimes that expectation is implied by the acceptance of the order – Amazon Prime orders are usually expected to be shipped within hours and received within two days, for example. In many industries same day or next day shipment is expected. In other situations the seller will quote an expected ship date. Either way, the customer that does not get the expected service level will undoubtedly be disappointed and sometimes severely inconvenienced if the goods are not in their hands when expected.

In a ship-from-stock environment, immediate shipment is the norm as goods are pulled from available inventory. But what if the inventory is not available? Are you able to inform the customer at the time you take the order that there will be a delay, and how much of a delay it will be? This seemingly simple task implies that you know inventory status (accurately), have the ability to track order commitments in real-time and have availability information available at order entry, even if the order is entered by the customer on a self-service web portal. Not so simple after all – there are a lot of moving parts.

What the above paragraph describes is called Available-To-Promise or ATP and is a standard feature in most ERP, order management, and supply chain systems. Perhaps surprisingly, many companies do not incorporate ATP into their routine order management process either because they don’t know or understand the power of ATP or because their systems and data are not accurate enough to provide credible information. Letting the customer know at the time of order placement just when they can expect delivery is an important contributor to building a great customer relationship. Not fulfilling that promise can destroy credibility and drive customers away.

Make-to-order companies are not off the hook. Their customers also expect to hear when their goods will be received and they expect the get them when promised. ATP can help here but depends even more strongly on having accurate information to work with including Master Production Schedules that are stable and accurate as well as a controlled and predictable production environment, reliable suppliers and more.

Stay up to date

Receive monthly updates on content you won’t want to miss


Register here to receive a monthly update on our newest content.