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Make To Order (MTO)

Make To Order (MTO)

What does 'Make To Order - MTO' mean

Make to order (MTO) is a business production strategy that typically allows consumers to purchase products that are customized to their specifications. The make to order (MTO) strategy only manufactures the end product once the customer places the order, creating additional wait time for the consumer to receive the product but allowing for more flexible customization compared to purchasing directly from retailers' shelves.

Explaining 'Make To Order - MTO'

The make to order (MTO) strategy relieves the problems of excessive inventory that is common with the traditional make to stock (MTS) strategy.

Dell Computers is an example of a business that uses the MTO production strategy wherein customers can order a fully customized computer online and receive it in a couple of weeks.

Known as Made to Order or Build To Order

Make to order, also referred to as build to order (BTO) or made to order (MTO), is a manufacturing process in which the production of an item begins only after a confirmed customer order is received. This type of manufacturing strategy is referred to as a pull-type supply chain operation because products are only made when there is a firm customer demand. This pull-type production model is employed by the assembly industry where the quantity needed to be produced per product specification is one or only a few. This includes specialized industries such as construction, aircraft and vessel production, bridges, and so on. MTO is also appropriate for highly configured products such as computer servers, automobiles, bicycles or products that are very expensive to keep inventory.

The Advantage

The main advantage of the MTO system is being able to fulfill an order with the exact product specification required by the customer. Sales discounts and finished good inventory is also reduced and stock obsolescence is managed. However, for an MTO system to succeed, it should be coupled with proactive demand management. It should also be considered that the MTO system is not appropriate for all types of products.


Further Reading

Combining make-to-order and make-to-stock inventory policies: an empirical application to a manufacturing SMECombining make-to-order and make-to-stock inventory policies: an empirical application to a manufacturing SME
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

A profit and loss analysis for make-to-order versus make-to-stock policy—a supply chain case studyA profit and loss analysis for make-to-order versus make-to-stock policy—a supply chain case study
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

A review of production planning and control: the applicability of key concepts to the make-to-order industryA review of production planning and control: the applicability of key concepts to the make-to-order industry
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Make-to-order manufacturing-new approach to management of manufacturing processesMake-to-order manufacturing-new approach to management of manufacturing processes
iopscience.iop.org [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Make-to-order, make-to-stock, or delay product differentiation? A common framework for modeling and analysisMake-to-order, make-to-stock, or delay product differentiation? A common framework for modeling and analysis
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Integrated model for supplier selection and negotiation in a make-to-order environmentIntegrated model for supplier selection and negotiation in a make-to-order environment
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Impacts of carbon emission reduction mechanisms on uncertain make-to-order manufacturingImpacts of carbon emission reduction mechanisms on uncertain make-to-order manufacturing
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Capacity coordination in hybrid make-to-stock/make-to-order production environmentsCapacity coordination in hybrid make-to-stock/make-to-order production environments
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Hierarchical production planning and scheduling in make-to-order environments: reaching short and reliable delivery datesHierarchical production planning and scheduling in make-to-order environments: reaching short and reliable delivery dates
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …

Simultaneous production planning of make-to-order (MTO) and make-to-stock (MTS) products using simulation optimization. Case study: Soren RestaurantSimultaneous production planning of make-to-order (MTO) and make-to-stock (MTS) products using simulation optimization. Case study: Soren Restaurant
www.tandfonline.com [PDF]
… finished items with high and regular volumes, used for a large number of finished products and managed using a make-to-order … Therefore, these products can be produced only on the basis of customer orders, and production matches the customer order quantity …


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