What is Available to Promise?
‘Available to promise’ is a way of replying to customer order queries, based on what stock is available and when items can be delivered. The available to promise system fulfils orders and helps plan production. It’s often built in to business management software, and is available within Dynamics NAV (formerly Navision).
In the latest version of Dynamics NAV and its future updates, there is now also an option to set up what’s termed ‘item category.’ Companies can create as many of these as they like and use them to sort and organise products and the multiple variations of each they have in stock. An item category can easily be searched to quickly find a product.
How CBIZ Supported One Customer with Available to Promise
CBIZ have a customer who manufactures two products, but each product can have thousands of variations. The products are made to order and 65% of these need to be delivered within a two-month time period.
Their customer’s target delivery time is four weeks and, as they explained to us, the number of orders they have to make and ship within three to four months of the year created total chaos for their staff.
During their busy period they were working to a 15-week lead time, causing low customer satisfaction rates and very frustrated and exhausted staff. Another Dynamics NAV (formerly Navision) reseller they’d worked with had told them that could do the production planning for them, based on the available capacity, and that this would solve all of their issues.
We explained to them that:
- Dynamics NAV will not plan production based on capacity. It will show you how your current plan utilises your machines/work centres and allows you to manually amend your plan, but it will not plan your production
- The planning tool on Dynamics NAV is purely a material requirements planner, which tells you when you need to start production to meet deadlines and alerts you when you must purchase or manufacture components to fulfil the production needs
The Customer Requirements
In order to develop a solution for the customer, we needed to understand their requirements. These were:
- To ensure promised delivery dates were realistic and achievable
- Smooth out the process for the large volume of products requiring manufacture over that was required over the four months
- Transform their relationship with their customers
- Raise their position in their market place
It was agreed that what they really needed was an available to promise calculation at the point of sales order entry, based on production capacity for each product. The key points were:
- Their two products went down different production lines, although they merged at the point of assembly
- The actual manufacturing time for an individual item was minutes rather than hours and was relatively constant for each product
- The turnaround time meant that they could calculate approximately how many of each product they could make within a given period
- They only made to order, so they didn’t have to worry about safety of stock for their finished products
- They had relatively few components for each product, so the management of the inventory of the components wasn’t really a problem
Our Solution Using Available to Promise in Dynamics NAV
Following the discussions, we were able to propose a solution to the customer where we presented the initial setup, ongoing maintenance requirements, the day to day processing and the benefits that the system would produce.
This simple solution was based on the standard NAV capacity planning model, but using new tables which categorise production times and capacity availability by product groups and again by item category.
We then created a new dataset to group products whose manufacturing time/process could be equated, which, in this instance, was the customer’s two products. Each product group is given a budget of the quantity of items that can be produced within a day. The budget has a start and end date to allow the company to amend it if they make changes to the shift patterns.
Next, we created a calendar dataset which is generated from the product group budget and holds the daily production budget quantity and the actual quantity (based on sales order lines) for each product group.
These two datasets mean that when a user has entered a sales order on the system, they run a routine that performs a calculation based on the budgeted quantities and the existing actual items. It factors in the earliest possible delivery date for each line and so the earliest possible delivery date for the entire order.
The new routine also takes in to account:
- If the customer has requested a fixed delivery date, the routine will start there and works backwords to find the earliest date prior to the request
- If this date cannot be met, the system will ask the user if they want to change or keep the date. The user must check with the customer. If the date is kept, the production department receives a warning that additional capacity is needed
- A production lead time of one week
- A dampener time which identifies a period of time from ‘today’, where the plan cannot be changed
- The maximum number of days which can exist between two calculated delivery dates on the same order. If this number of days is exceeded, the user is warned and manual intervention is required
The company has two charts – one for each product – on the Dynamics NAV home page that show the budgets versus the actual product quantities by day. These help the management to decide if their capacity levels, and therefore their budget quantities, are adequate to meet demand, as well as giving them a high-level view of their sales performance.
The solution has now been running for two years with our customer seeing and feeling the following results:
- Promised delivery dates are being met
- In their busy periods they are running at a five to six-week lead time (rather than 15), but because the customer is now confident of the dates they are being given, customer satisfaction has increased
- This lead time has improved their customer relationships and therefore their position in their marketplace
- Easily find a required product by searching the appropriate item category, and quickly confirm if it’s in stock
- Their production department are much happier, less stressed and definitely more motivated. This has been achieved by smoothing out the production plan so that they know how many products they have to make each day. They know the quantities required are achievable and they can be confident they aren’t going to be hit by the sudden rush jobs
