Key Takeaways

  • Available to Promise (ATP) provides accurate delivery dates and quantities to customers by checking inventory and resources.
  • Capable to Promise (CTP) goes further, factoring in production constraints and scheduling capacity before committing to a delivery.
  • ATP helps avoid overpromising, while CTP ensures that customer commitments match real production capabilities.
  • Companies use ATP and CTP together to balance customer satisfaction, efficient scheduling, and reduced inventory costs.
  • Modern supply chains rely on these tools to improve forecasting, avoid contractual disputes, and enhance order management.

Capable to promise is about a company making sure that it has both the inventory and the capacity to fulfill an order. This may mean making sure that all distribution and manufacturing sites have been checked for the appropriate materials.

Available to Promise

The term Available to Promise (ATP) refers to limits that must be placed on delivery commitments. To put this in words that will be more familiar in Japan's manufacturing industry, available to promise refers to delivery quotations.

Basically, ATP information consists of viable delivery dates and quantities that can be provided. This is just as important for online businesses as it is for traditional points of sale. Companies should prioritize the ability to determine how materials and resources (both workers and machines) will be allocated based on forecast demand and actual demand. With this done, delivery dates can be accurately estimated. Failure to provide accurate timelines could lead to an accusation of false advertising.

The concept of ATP is critical in relation to supply chain management. It allows companies to provide accurate available quantities and reliable delivery dates. There are a number of ways to measure required quantities and to ascertain realistic delivery dates. The methods used will depend on the company's specific circumstances.

Importance of Accurate ATP in Contracts

Available to Promise is not just a planning tool—it also plays a role in avoiding contractual and legal issues. When a business commits to delivery dates without confirming product availability, it risks misleading customers or even breaching contracts. Courts have dismissed fraud claims where a company only failed to meet contractual terms, but not when extra promises were made outside the agreement.

By relying on accurate ATP calculations, companies can ensure their delivery commitments are enforceable and avoid disputes tied to “illusory promises” that lack clear obligations. In practice, ATP safeguards both business efficiency and legal compliance.

Capable to Promise

Capable to promise determines when delivery will be possible by using a finite-scheduling model. It takes into consideration any constraints of the manufacturing system that might hinder production. These constraints could include:

  • Lead times for acquiring raw materials or purchased parts,
  • Accessibility of necessary resources, and
  • The ability to acquire resources needed for subassemblies or lower-level components.

The delivery date given to a customer in a capable to promise scenario has taken into consideration not only production capacity, but also other commitments that the company has made.

When a new or unexpected customer order is received, the capable to promise system is put into practice to determine when the order will be able to be delivered.

The whole point of the capable to promise principle is ensuring that production planners spend less time adjusting plans and rescheduling orders because the delivery-date promises that were made cannot be kept.

Legal and Practical Dimensions of CTP

Capable to Promise ensures delivery commitments align with real production capacity. From a legal standpoint, promises must be backed by actual ability to perform. A commitment that exceeds available resources can be viewed as an “illusory promise,” which courts may deem unenforceable.

CTP therefore reduces risks by tying customer commitments to tangible production data—such as raw material lead times and machine capacity. This prevents overpromising while also protecting the company from claims of failing to perform beyond its contractual obligations.

Capable to Promise, Scheduling, and Efficiency

One of the important concepts in supply chain management is delivery quotations. In terms of the ATP principle, there will be some instances in which “Make To Stock” (MTS) inventory is already available. This inventory must be allocated to a specific order, and a specific time for delivery must be calculated for that order. In situations where “Make To Order” (MTO) goods need to be produced from scratch, a company will need to work out how long the production process will take, taking into account the accessibility of parts, resources, and materials.

To provide an example, when a restaurant's sushi chef gets an order that needs to be delivered, he:

  • Makes sure that ingredients (materials required to do the job) are available.
  • Looks to see which team member (resource capacity) is able to deliver the sushi, and what vehicle is available for him or her to use.
  • Works out an exact ATP in terms of the time that the sushi will be delivered and how much sushi can be delivered.

There are various ways to calculate ATP, and the method chosen in each case will depend on how many MTS materials are available, how many Assemble To Order (ATO) materials need to be made, and how many MTO goods need to be produced.

To go back to the sushi example, calculating the ATP for this order should factor in how long it takes to catch the fish and purchase the ingredients. When calculating lead times, wait times and setup times need to be considered, as well as possible constraints like the availability of materials and operation capacity. The calculation of real-time ATP can be worked out by scheduling jobs one after the other, using the supply chain's integrated databases.

One of the key functions offered by any distribution software for the wholesale industry is order management. If a staff member can quickly and efficiently enter an order, the customer service experience is improved dramatically.

All wholesale distributors should implement ATP and planned inventories and make a commitment to capable to promise functionality in their order management process. In doing so, they will have more satisfied customers, more orders, and more efficient production cycles. Ultimately, they will enjoy reduced inventory carrying costs and greater profitability.

Role of ATP and CTP in Supply Chain Law

The concepts of available to promise and capable to promise intersect with supply chain contracts. For example:

  • ATP in contracts: Customers rely on ATP commitments for delivery timelines. Overstating availability can lead to breach of warranty or claims of misrepresentation.
  • CTP in contracts: Promises that consider real capacity are less likely to be struck down as unenforceable, since they reflect genuine ability to deliver.
  • Promissory estoppel: In some cases, courts have enforced promises outside formal contracts if a customer relied on them to their detriment. Businesses should therefore ensure ATP/CTP commitments are realistic, as they may carry binding force.

Incorporating accurate ATP and CTP into supply chain agreements enhances both efficiency and legal protection.

Frequently Asked Questions

  1. What is the difference between available to promise and capable to promise?
    Available to Promise checks existing inventory and resources, while Capable to Promise also considers production constraints before committing to a delivery date.
  2. Why is available to promise important in contracts?
    ATP ensures delivery commitments are realistic, reducing the risk of legal disputes over missed timelines or misleading promises.
  3. Can overpromising lead to legal problems?
    Yes. If a company makes promises it cannot fulfill, it may face claims of breach of contract or promissory estoppel if customers relied on those promises.
  4. How does capable to promise reduce business risk?
    CTP ties commitments to actual production capacity, avoiding “illusory promises” that courts may view as unenforceable.
  5. Do online businesses also need ATP/CTP systems?
    Yes. E-commerce companies rely on ATP and CTP to provide accurate shipping dates, manage inventory, and prevent customer dissatisfaction.

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