Component availability may or may not align with order receipt, causing lead time issues and necessitating communication with vendors.
For MTO and ATO, the process reacts to an order. No matter which manufacturing strategy applies, there is an element of process flow management involved. Basically anything you pick up at the supermarket is a product of MTS manufacturing. This is a “push” strategy since it’s focused on keeping the supply chain well stocked. These are goods that are shipped and bought in bulk. Now we’re talking about goods that are regularly sold at high volume and lower cost and margin. Make to Stock is at the other end of the scale. It applies to goods that only need to be assembled for the purposes of shipping to the customer, without the need for specialized work processes or custom additions. Assemble to OrderĪssemble to Order is essentially the same idea as MTO but simplified.
That sofa that you ordered to fit the exact dimensions of your living room with the design that you picked from a huge catalog and you had to wait six weeks for? That’s MTO manufacturing. Multiple stages, specialists and contractors may be involved. Goods made under MTO methodologies are typically high-margin and high-cost.
MTO works well on low-quantity orders and goods that are not mass-produced. Since work is done in response to an order, it’s labeled as a “pull” strategy. Make to Order manufacturing, as the name suggests, activates when an order is received. Each strategy allows for agile responses to managing order flows in different manufacturing contexts. Two of the most commonly-used manufacturing philosophies are Make to Order (MTO) and Assemble to Order (ATO), with the strategy used determined by the nature of the market involved.
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One way to optimize production planning is transitioning to a demand driven strategy.Ĭlick here to download our ‘What Lean Manufacturing Means in the Age of IoT’ white paper > MTO and ATO Manufacturing When production isn’t precisely matched to orders and demand, the result is excess stock, overcrowded warehousing and cash tied up in inventory. Obeying the just-in-time laws of production allows manufacturers to walk the line between having cash tied up in inventory and being able to quickly respond to market forces and orders. Avoiding overstock, filling orders on time and maintaining cash flow is a delicate balancing act that has to be well orchestrated. Meeting demand while maintaining lean operations requires a high level of optimization. With more orders, a busier factory floor and more crowded production lines, industry has come to rely on digital insights and management methods to ensure smooth operation. Given the complexity of the processes involved, it’s no surprise that digital tools for monitoring, synchronizing and managing everything have become the driving force of many efficiencies in today’s industrial and manufacturing sectors. Is your industrial facility ready for current challenges? Methodologies, technologies and even physical setups that can deliver an ounce of additional savings or shave costs just a bit can scale up to a massive impact on the bottom line. Modern manufacturing processes are highly advanced and optimized for efficiency.
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