Evolving Models in Customer Order Servicing – Supply Chain Implications
Retailers of late are embracing the ATB model to maximize order promising, reduce inventory holding and to provide near-to-accurate delivery dates, thus providing improved serviceability to customers.
So what is ATB all about? How does it transform ones business? How should a business gear up to run in such a model?
ATB (Available to Book) is all about allocation of stock to customers orders based on booking date. This means that available supply (on hand, future stock, safety stock etc) is made available to customer demand in the most optimized way.
ATB model revolves around the concept of arriving at the best possible supply-demand match. It looks into supply that would be available in the future and ties it up with those customer demands that needs to be fulfilled after such a supply is secured as on hand. This prevents blocking up of current on-hand inventory to future demand which is then used for fulfill immediate customer demands.
Such a model calls for a dramatic change to the current business landscape, especially from its supply channels. Suppliers must be evaluated based on their capability to deliver on time as promised and also how far they are able to promise supply to be available, since this would be a driving factor for the business to promise delivery date to its customers. This leads to supplier categorization based on these aspects which eventually rolls downs to the SKUs supplied by them.
Another aspect to consider is on how recovery process needs to be streamlined, in case supply is not secured as promised to the customer demand. How orders will be re-allocated if supply fails and which orders will needs to be given preference which could be based on order promise date, order placed date, priority orders etc. Such ground rules need to be set in place upfront.