Assemble to Order (ATO) Vs Pick to Order (PTO)

Assemble to Order (ATO) and Pick to Order (PTO) are stocking strategies that are used by manufacturers, when they can produce a variety of finished products from a relatively small number of subassemblies and components. This stocking strategy is widely known as the “hourglass” strategy, where you maintain your inventory at the narrowest level in your bill structure. This maintains inventory in a more flexible state and helps minimize your inventory investment. An ATO environment is where you wait until you have an actual sales order before you begin manufacturing the finished product. PTO implies that you will pick multiple items based on one line item on a sales order.

Engineer-to-order (ETO)

In ETO environments, customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings. ETO environments theoretically are the slowest to fulfill: Time is required not only to build the product, but to custom design it to meet the customer's unique requirements.

Make-to-order (MTO)

In MTO environments, products are made entirely after the receipt of a customer order. The final product usually is a combination of standardized and custom items to meet the customer's specific needs. MTO environments are more prevalent when customers are prepared to wait in order to get a product with unique features—usually customized or highly engineered products. This is analogous to the difference between a fast-food restaurant and a full-service chain restaurant. MTO environments are slower to fulfill demand than MTS and ATO environments, because time is required to make the products from scratch. There also is less risk involved with building a product when a firm customer order is in hand.

Assemble-to-order (ATO)

In ATO environments, products are assembled from components after the receipt of a customer order. The key components in the assembly or finishing process are planned and stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful when a large number of end products based on the selection of options and accessories can be assembled from common components.
When products are too complex or customer demand is unpredictable, manufacturers may choose to hold subassemblies or products in a semifinished state. The final assembly operation is then held until a firm customer order is received. In this environment, manufacturers theoretically cannot deliver products to customers as quickly as MTS environments, since some additional time is required to complete the final assembly.

Make-to-stock (MTS)

In MTS environments, products are created before receipt of a customer order. Customer orders are then filled from existing stock, and then those stocks are replenished through production orders. MTS environments have the advantage of decoupling manufacturing processes from customer orders. Theoretically, this enables customer orders to be filled immediately from readily available stock. It also allows the manufacturer to organize production in ways that minimize costly changeovers and other disruptions.
However, there are risks associated with placing finished goods into inventory without having a firm customer order or an established need. These risks tend to limit MTS environments to simple, low-variety, or commodity products whose demand can be forecasted readily.

GOP Sample Questions

GOP Questions


1. Why is the ExpectedAvailableQuantity set to 10 even though the availability cannot be met for the requested date ?
2. How is the ExpectedArrivalDate calculated ?

SOLUTION

1. The Expected Available Quantity is not related to how much is available on the requested date. There is no field in Order Promising that shows you the quantity available on the requested date.

2. To check if there is Available Quantity on the requested date you should compare the Expected Date and Requested Date to infer that there is no quantity available on the Requested Date. I.e if these dates do not match this implies there is no availability on the requested date.

3. The ExpectedAvailabilityOnRequestedDate is a redundant field and GOP does not have logic currently to derive the value in this field (RUP1 -- January 2012).

In the Examples provided The ATP Rule is not Lead Time based, it is a regular ATP rule but with a Infinite time fence corresponding to the Total Lead Time. The results are correct, and as expected for the Supply Chain Search enabled ATP mode with an Infinite Time Fence.

TEST CASE 1.

1. Why is the ExpectedAvailableQuantity set to 10 even though the availability cannot be met for the requested date ?

The Expected Available Quantity is not related to how much is available on the requested date. It just shows the quantity of the promise, and this is showing up as 10 since the requested quantity is 10. There is no field in OP that shows you the quantity available on the requested date.

2. How is the ExpectedArrivalDate calculated ?

First the ship date is calculated. Since no supply is found until the Infinite Time Fence, which is on 14-Dec (based on sysdate + Total Lead Time) the Expected Ship Date is set to 14-Dec. Expected Arrival Date = Expected Ship Date + Lead time (since no transfer lead times seem to be setup) which is again 14-Dec.
TEST CASE 2.

3. How is the Expected Arrival Date calculated --- The date was calculated as request date + lead time. Should the Arrival date be calculated as being the same as the requested date if the lead time can be met ?

This is not 'Lead time based' promising mode. In this scenario, the request date is beyond the Infinite time fence. Hence, availability is assumed to be infinite on this date, and the Ship and Arrival Dates equal the requested date.



Org has 5 day shipping calendar. (Monday to Friday are working days, Saturday and Sunday are non shipping days).
Customer has requested to ship the materials on Sunday (20th Nov-2011).
Received order8-Nov-2011 and Item lead time is 3 days.

System will suggest schedule ship date = 18th Nov 2011
(this is less than the non shipping day the customer requested)


SOLUTION

GOP uses calendar days(7 days) for lead time calculations.
For a 5 day shipping calendar GOP will back up to the previous working day as long as item as item can be manufactured on or before that date.