Giving Yourself Options – Using Oracle Assemble To Order (ATO) Bob Collins, CFPIM, CIRM SSI North America Chicago, IL August 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 – MTO Total 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 Raw Materials Inventory Order placed MTSMTO

ATO and Inventory End Items Sub assemblies Raw Materials Order placed Inventory

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: Computer Computer 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 = 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 0ATO Model ProcessorsHard DrivesMonitors ATO Option Class GB2.1 GB 60 GB80 GB120 GB 17” Flat21” Super ATO Items Subassemblies Components

Planning Percentages

Planning Process 100 Pentium 4’s in September – GB processors – GB processors –20 60 GB Hard Drives –60 80 GB Hard Drives – GB Hard Drives –40 17” Flat Screen monitors –60 21” Super Screen monitors

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

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 0ATO Model ProcessorsHard DrivesMonitors ATO Option Class GB21” Super ATO Items Subassemblies Components 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.

Thank you! Bob Collins, CFPIM, CIRM SSI North America Chicago, IL August 15, 2003