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Giving Yourself Options – Using Oracle Assemble To Order (ATO)
Bob Collins, CFPIM, CIRMSSI North America
Chicago, ILAugust 15, 2003
Agenda
• Why consider ATO?
• Advantages to ATO?
• Example of Oracle ATO
ATO – Assemble-to-Order
• A production environment where a good or service can be assembled after receipt of a customer’s order. The key components . . . used in the assembly or finishing process are planned and usually stocked in anticipation of a customer order. Receipt of an order initiates assembly of the customized product. This strategy is useful where a large number of end products (based on the selection of options and accessories) can be assembled from common components.
- APICS Online Dictionary (10th Edition)
ATO Bills and . . .
• Modular Bills
• Planning Bills
• PTO Bills (Oracle)
• Hybrid Bills (Oracle)
Why consider ATO?
• Options make planning and stocking EVERY possible end item unrealistic to impossible
• Difference between customer delivery lead time vs. procurement and manufacturing lead time
Stock issue
• When options are considered, there may be hundreds of thousands of end items
• Potentially millions of dollars of inventory
• Many potential configurations are never ordered
• Space problems, maintenance issues
Lead Time issue
• Customer delivery lead time = 4 weeks
• Procure materials, fabricate and assemble – 28 weeks!
Total Lead Time
Customer Delivery
Lead Time
MTS – MTOTotal Lead Time
Customer Delivery Lead Time
MTS
MTO
Total Lead Time
Customer Delivery Lead Time
ATO
Total Lead Time
Customer Delivery Lead Time
Final Assembly Lead Time
Subassembly Lead Time
Inventory Implications
End Items End Items
Raw Materials Raw Materials
Inventory
Inventory
Order placed
MTS MTO
ATO and Inventory
End Items
Subassemblies
Raw Materials
Order placedInventory
Advantages to ATO
• Better response time
• Reduced costs
• Lower inventory
• Reduced number of master scheduled and forecast items
• Faster and fewer errors in order entry
Example: ComputerComputer Options
Processor(1 of 8)
RAM(1 of 4)
Modem(1 of 3)
Optical Drive (1 of 6)
Monitor(1 of 6)
Speakers(1 of 3)
Printers(1 of 7)
Hard Drive
(1 of 6)
Graphics Card(1 of 5)
Ethernet Card(1 of 3)
Software package(1 of 5)
8 x 4 x 6 x 5 x 6 x 3 x 7 x 6 x 3 x 3 x 5 = 32,659,200 end items!
Maintenance Nightmare?
8 x 4 x 6 x 5 x 6 x 3 x 7 x 6 x 3 x 3 x 5 = 32,659,200 end items
OR
8 + 4 + 6 + 5 + 6 + 3 + 7 + 6 + 3 + 3 + 5 =56 items at the option level
ATO allows you to create fewer Bills!
More advantages
• Fewer Bills of Materials• Less BOM maintenance• More efficient order entry• Forecast/plan at level below the end
item• Helps isolate opportunities for
standardizing and changing the manufacturing process.
Example
Pentium 4 Family
Level
0 ATO Model
Processors Hard Drives Monitors
ATO Option Class
1
2
1.4 GB 2.1 GB
60 GB 80 GB 120 GB
17” Flat 21” Super
ATO Items
Subassemblies
Components.20 .60 .20
.30 .70 .40 .60
3
Planning Percentages
Planning Process
• 100 Pentium 4’s in September– 30 1.4 GB processors– 70 2.1 GB processors– 20 60 GB Hard Drives– 60 80 GB Hard Drives– 20 120 GB Hard Drives– 40 17” Flat Screen monitors– 60 21” Super Screen monitors
Optional/Mutually Exclusive
Optional/Mutually Exclusive
Description [ ] Mutually Exclusive (default)
[X] Mutually Exclusive
[X] Optional
Choose any number or no options on the option class bill
Choose one or no options on the option class bill
[ ] Optional (default)
Choose at least one option on the option class bill
Choose one, and only one, option on the option class bill
Configurator
Configurator
• When the order is placed, Order Entry picks the options the customer wants
• Rules to guide Order Entry
• Can reuse existing numbers if profile option is set
Configurator Rules
• E.g., Automotive Manufacturer– IF air conditioning ordered for vehicle– THEN must include tinted windshield
Configured Bill (*)
Pentium 4 Family*1234
Level
0 ATO Model
Processors Hard Drives Monitors
ATO Option Class
1
2 80 GB 21” Super
ATO Items
Subassemblies
Components
.60.70 .60
3
2.1 GB
Creation of Configured Item
• Creation of configuration bill of material based on the model bill of material
• Creation of configuration routing based on the model routing
• Link the configuration item to the sale order
Creation of Configured Item
• Kick off the configuration item workflow process, which completes the following:– Lead time calculation for the configuration
item (discrete manufacturing items only)– Supply Chain cost rollup for the
configuration item
Affect on Forecast
• Forecast at the Model level, using planning percentages
• Configured items will consume the forecast for the Model
Want to try it?
Metalink.oracle.com
Flow for ATO Configuration
Step-by-step instructions
Summary
• Oracle Applications supports ATO (and PTO & CTO) with a range of features in order entry, demand forecasting, master scheduling, production, shipping and financial accounting.
