Demand & Planning
Available to Promise (ATP) is a business function that provides a customer with a delivery commitment based on current and projected inventory and production.
Full Definition
Available to Promise (ATP) is the quantity of an item that is currently in stock or scheduled to be produced, which is not yet committed to existing customer orders. It's a critical metric for CPG brands to accurately forecast what they can sell and deliver. ATP calculations consider current inventory levels, planned production runs, and existing sales orders to give a realistic picture of what's truly available for new orders. This helps prevent over-promising and ensures reliable delivery dates for your customers.
Why It Matters for CPG Brands
For CPG brand operators, accurate ATP is crucial for managing customer expectations and maintaining strong relationships with retailers. It directly impacts your ability to meet demand without over-committing, preventing stockouts or delays that can damage your brand's reputation and lead to lost sales. Knowing your true ATP allows for better sales planning and more reliable order fulfillment.
In CPG Operations
In CPG manufacturing, ATP helps a brand determine how many cases of its new snack bar flavor it can promise to a distributor next month. By looking at raw material inventory, current production capacity, and existing orders, the brand can provide an accurate delivery date, avoiding penalties for late shipments or disappointed retailers.
Example
A kombucha brand with 5 SKUs uses an ATP system to track its finished goods inventory, fermentation schedules, and bottling capacity. When a large grocery chain places an order for 500 cases of its Ginger Lemon flavor, the ATP system quickly calculates if that quantity can be delivered by the requested date, considering current stock, scheduled bottling runs, and other pending orders. This allows them to either confirm the order confidently or propose an alternative delivery schedule immediately.
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Frequently Asked Questions
How does ATP differ from just looking at my current inventory?
Current inventory only tells you what's physically on hand. ATP goes a step further by subtracting what's already committed to existing orders and adding what's expected from planned production, giving you a truer picture of what's available to sell.
What are the key inputs for calculating ATP?
The main inputs include your current stock of finished goods, any planned production orders, and all existing customer orders that haven't been shipped yet. Some systems also factor in raw material availability and production capacity.
How can improving ATP accuracy benefit my CPG brand?
Accurate ATP helps you avoid over-promising to customers, reduces order fulfillment delays, minimizes stockouts, and improves overall customer satisfaction. It also enables better production planning and inventory management, leading to less waste and more efficient operations.