In the current recession, it's tempting to believe that any order is a good order. But that's not necessarily the case.
The fact is, particularly in today's highly outsourced, globally dispersed manufacturing environment, some orders are much more profitable than others. Say, for example, that you receive two orders for the same quantity of product at the same price. While Order A specifies a standard two-week lead time and can be fulfilled from finished goods in a nearby distribution center, Order B requires one-week turnaround and can't be filled from the nearest center. Clearly, filling Order B will generate more transportation and supply chain costs. And it may very well also mean costly production scheduling changes and even impact other customers' orders, increasing the risk of financial penalties.
Wouldn't it be best if, at the time you accept or confirm both orders, you understood the associated costs and profit potential of each one, giving you the option of adjusting pricing or even rejecting a clearly unprofitable transaction?
Unfortunately, most manufacturers today don't have that kind of real-time visibility into the cost and profitability associated with specific orders. While some companies have invested in processes and technologies such as available-to-promise (ATP) and capable-to-promise (CTP) that allow them to determine, at the time an order is placed, when it can be fulfilled from inventory or planned production, few have invested in profitable-to-promise (PTP) processes and technologies that can also tell them whether filling a prospective order will be profitable. And, experts say, there's little current rush to implement PTP processes and technologies.