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Giving Yourself Options – Using Oracle Assemble To Order (ATO)

Bob Collins, CFPIM, CIRM SSI North America Chicago, IL August 15, 2003. Giving Yourself Options – Using Oracle Assemble To Order (ATO). Agenda. Why consider ATO? Advantages to ATO? Example of Oracle ATO. ATO – Assemble-to-Order.

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Giving Yourself Options – Using Oracle Assemble To Order (ATO)

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  1. Bob Collins, CFPIM, CIRM SSI North America Chicago, IL August 15, 2003 Giving Yourself Options – Using Oracle Assemble To Order (ATO)

  2. Agenda • Why consider ATO? • Advantages to ATO? • Example of Oracle ATO

  3. 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)

  4. ATO Bills and . . . • Modular Bills • Planning Bills • PTO Bills (Oracle) • Hybrid Bills (Oracle)

  5. 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

  6. 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

  7. Lead Time issue • Customer delivery lead time = 4 weeks • Procure materials, fabricate and assemble – 28 weeks! Total Lead Time Customer Delivery Lead Time

  8. MTS – MTO Total Lead Time MTS Customer Delivery Lead Time Total Lead Time MTO Customer Delivery Lead Time

  9. ATO Customer Delivery Lead Time Total Lead Time Subassembly Lead Time Final Assembly Lead Time

  10. Inventory Implications MTS MTO Inventory End Items End Items Raw Materials Raw Materials Inventory Order placed

  11. ATO and Inventory End Items Order placed Inventory Subassemblies Raw Materials

  12. 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

  13. Example: Computer Computer Options Processor(1 of 8) RAM(1 of 4) Hard Drive (1 of 6) Graphics Card(1 of 5) Monitor(1 of 6) Speakers(1 of 3) Printers(1 of 7) Optical Drive (1 of 6) Ethernet Card(1 of 3) Modem(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!

  14. 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!

  15. 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.

  16. Example Level 0 ATO Model Pentium 4 Family ATO Option Class 1 Processors Hard Drives Monitors 1.4 GB 2.1 GB 17” Flat 21” Super 2 .30 .70 .40 .60 ATO Items 60 GB 80 GB 120 GB Subassemblies Components .20 .60 .20 3

  17. Planning Percentages

  18. 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

  19. Optional/Mutually Exclusive

  20. Optional/Mutually Exclusive

  21. Configurator

  22. 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

  23. Configurator Rules • E.g., Automotive Manufacturer • IF air conditioning ordered for vehicle • THEN must include tinted windshield

  24. Configured Bill (*) Level 0 ATO Model Pentium 4 Family*1234 ATO Option Class 1 Processors Hard Drives Monitors 2.1 GB 80 GB 21” Super 2 .70 .60 .60 ATO Items Subassemblies Components 3

  25. 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

  26. 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

  27. Affect on Forecast • Forecast at the Model level, using planning percentages • Configured items will consume the forecast for the Model

  28. Want to try it? Metalink.oracle.com Flow for ATO Configuration Step-by-step instructions

  29. 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.

  30. Thank you! Bob Collins, CFPIM, CIRM SSI North America Chicago, IL Bob.collins@us.ssiworldwide.com August 15, 2003

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