Configuring Sourcing and ATP Formulas

This lesson outlines the configuration of sourcing strategies and Availability-to-Promise (ATP) formulas in SAP Commerce Cloud. It offers a structured approach to understanding how the system determines the best location to fulfill an order and how it calculates the stock available for sale.

Sourcing is the process of determining the optimal point of service (POS) or warehouse from which an order should be fulfilled. SAP Commerce Cloud uses sourcing strategies to automate this decision-making process based on business priorities.

The primary goal of a sourcing strategy is to balance customer satisfaction (for example, fast delivery) with operational efficiency (for example, minimizing shipping costs or clearing stock from specific locations). By configuring these strategies, businesses can control how SAP Commerce Cloud evaluates potential fulfillment locations for every order entry.

SAP Commerce Cloud offers three out-of-the-box strategies. Each strategy evaluates fulfillment locations differently:

1. No splitting strategy: This strategy ensures that an entire order is sourced and shipped from a single fulfillment location (such as a warehouse or POS) in a single shipment. If the system can't find a single location with all the items in stock to fulfill the entire order, the order won't be processed automatically.
2. Pickup strategy: This strategy is designed for Buy Online, Pick Up In Store (BOPIS) scenarios where customers buy products online and collect them from a designated store location.
3. No restrictions strategy: This strategy is a comprehensive sourcing algorithm. It evaluates all available warehouses and points of service to fulfill an order by splitting order entries into multiple consignments across different locations without any location or splitting limitations.

Both the no-splitting and no-restriction strategies rank warehouse locations using configurable, weighted criteria called sourcing factors.

Based on this ranking, the order is assigned as follows:

1. No-Splitting Strategy: The entire order is assigned to the single, highest-ranked warehouse.
2. No-Restriction Strategy: The order may be assigned to the highest-ranked warehouse or split among multiple high-ranking warehouses.

Sourcing factors are the variables that define how warehouse locations are evaluated and prioritized during the sourcing process. By default, the implementation contains four factors:

• Distance: The distance between the fulfillment location and the delivery address.
• Allocation: The number of Stock Keeping Units (SKUs) available for a fulfillment location.
• Priority: The priority level assigned to a fulfillment location.
• Score: Similar to priority, but created with the intention to be calculated by a specific logic, rather than a static value. Data for this is usually sourced from 3rd party solutions.

A warehouse's priority can be set in its Properties tab. At the very bottom, in the Score section, are fields to add a score and a priority. The priority is a numerical value used to rank fulfillment locations. Customers need to be careful when deciding on a priority scale to make sure values are meaningful and applied correctly.

The score is used to determine a sourcing location using more detailed logic and is usually populated with values from external sources.

Administrators can assign weights to different sourcing factors by creating and assigning a sourcing configuration.

Availability to Promise (ATP) is the calculated quantity of a product that is available to be promised to a customer. It isn't simply the raw stock count; it's a dynamic calculation that considers various factors.

An ATP formula in SAP Commerce Cloud is a configurable calculation method that determines the available quantity of products that can be promised to customers. The formula considers multiple inventory factors. These factors include physical stock, planned inward movements (receipts), planned outward movements (issues), and various inventory events that affect stock availability, such as order cancelations.

The full standard formula in SAP Commerce Cloud looks as follows:

Each of these variables can be added or removed from the formula using toggle switches.

ATP formulas are managed through the Backoffice Administration Cockpit, which provides access to formula configuration, allowing business users to create, modify, and activate ATP formulas for different base stores.

• Sourcing strategies automate the choice of fulfillment locations based on their specific logistical priorities.
• Sourcing configuration allows businesses to combine and weight multiple sourcing factors to prioritize warehouses based on distance, priority, stock levels, or score.
• ATP formulas provide an accurate "Available to Promise" count by accounting for multiple factors, such as subtracting reservations from and adding returns inventory.