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Make-to-order (MTO) is an approach to advanced planning and scheduling in which manufacturing is initiated once a customer order is received.

What is make-to-order?

Make-to-order is considered a pull-type operation because the event that initiates production activity – the customer order – starts with order fulfillment and works backward through the production sequence to arrive at a plan or schedule. That is, production is “pulled” by demand. In contrast, make-to-stock (MTS) is a push-type operation.

Make-to-order planning is becoming more prevalent because it is compatible with the market trend of “mass customization,” which entails small batch or lot sizes manufactured at mass-production efficiencies. As a pull operation, make-to-order incorporates customized features into the production run. Make-to-order also helps to minimize excess inventory, which frequently results in waste. As such, make-to-order is often a component of lean manufacturing and just-in-time (JIT) scheduling.

A major challenge of make-to-order planning is to minimize lead time despite the fact that the production cycle commences only after the order is received. This means make-to-order is more amenable to products with relatively short production cycles. To reduce lead time, manufacturers may employ a make-to-stock approach for intermediate product components that require a significant lead time of their own so that process steps using such intermediate components can commence more quickly after an order is received. This is the concept behind demand-driven material requirements planning (DDMRP).

Some functionality in a modern advanced planning and scheduling (APS) system is designed to optimize make-to-order planning. APS software enables planners to quickly assess changes in quantity or delivery date, as well as changes in manufacturing capacity, and adjust the make-to-order plan to meet the new demands.


Understand the benefits

Reduced costs

Minimize excess inventory and waste, optimizing production efficiency through demand-driven planning, and allowing for mass customization at efficient batch sizes

Reduced waste

Avoid the accumulation of unused or outdated materials by initiating production in response to specific customer orders.

Greater customer satisfaction

Taylor production to individual requirements, ensuring personalized products and timely delivery, and minimizing the likelihood of surplus or obsolete inventory, resulting in a more responsive and customer-centric approach.

Make-to-order planning process

Make-to-order begins with the customer order, so the production work order is created from the sales order. The manufacturing process then proceeds in accordance with the bill of materials (BOM) and bill of process (BOP).

In make-to-order production planning, stock levels of finished and intermediate products are not key process parameters. Instead, one of the focuses of make-to-order planning is the replenishment of raw materials and supplier-provided component inventories to maintain production readiness and flow. This means that a critical aspect of make-to-order planning is the close coordination of the entire supply chain.

Make-to-order planning also requires an ongoing evaluation of future demand changes and their effects on the manufacturing process. Continuous evaluation and adjustments can be conducted through advanced planning and scheduling software.

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