What is Make To Order ?
1420 reads · Last updated: December 5, 2024
The term make-to-order (MTO) refers to a business production strategy that typically allows consumers to purchase products that are customized to their specifications. As such, make-to-order is a manufacturing production process in which the production of an item begins only after a confirmed customer order is received. MTO is part of the pull-through production process, which occurs when companies produce goods based on actual consumer demand. It is common in certain industries, such as the aircraft and automotive industries.
Definition
Make-to-Order (MTO) is a business production strategy where products are manufactured only after receiving a confirmed customer order. This strategy allows consumers to purchase products customized to their specifications and is part of a pull production process.
Origin
The concept of Make-to-Order originated from traditional craftsmanship, evolving into a significant strategy in modern manufacturing with industrialization. In the mid-20th century, as consumer demand for personalized products increased, the MTO strategy became particularly important in industries like aerospace and automotive.
Categories and Features
Make-to-Order can be categorized into fully customized and partially customized types. Fully customized means the product is designed and produced entirely according to customer requirements, while partially customized involves adjustments to a standard product. The main features of MTO include high production flexibility, low inventory costs, but longer production lead times.
Case Studies
Boeing is a typical example of Make-to-Order. Boeing manufactures aircraft based on specific configurations requested by airlines, ensuring each plane meets the unique requirements of the customer. Another example is Dell, which in its early days offered customized computer configurations through MTO, catering to individual customer needs.
Common Issues
Common issues with Make-to-Order include long production lead times that may result in extended customer wait times, and potential production planning disruptions if demand forecasts are inaccurate. To mitigate these issues, companies need effective order management and production planning systems.
