Different principles can be applied in manufacturing. Some products are manufactured according to forecasts, without specific sales order With other products production only starts after the reception of a sales order. Push and pull systems influence the triggering of output. There are also other ways of classifying the type of production. Production can be structured according to the following principles:
- Make to Stock (MTS)
- Assemble to Order (ATO)
- Make to Order (MTO)
- Engineer to Order (ETO)
Make to Stock (MTS)
Make to Stock (also called Build to Stock) means that order processing is based on demand forecasts. Products are produced in stock. The MTS manufacturing principle has the highest degree of standardization. Compared to MTO, ATO and ETO, it is the most forecast-driven, but is most suitable for selling standardized products in large quantities. Especially for everyday goods, inventory levels can be kept low since they enable highly reliable forecasts. The order is forecast-driven in the areas of development, design, procurement, production and final assembly. From the distribution area onwards, the process is ultimately order-driven.
Assemble to Order (ATO)
The manufacturing principle Assemble to Order is also known as Configure to Order. Individual customer requirements in production define the particular variant. Assemble to Order is suitable if the stock of finished goods is to be kept low and there are several variants of an end product at the same time. In the areas of development, design, procurement and production, forecasts determine production. In the areas of final assembly and distribution, production is customer-specific, i.e. order-driven.
Make to Order (MTO)
Sales orders trigger production. Stock levels are relatively low, which means that the fulfilment of customer requirements is often associated with longer delivery times. The sales order is forecast-driven in the areas of development and design. The areas of procurement, production, final assembly and distribution are order-driven.
Engineer to Order (ETO)
With the production principle Engineer to Order, the development and design process is triggered directly after receipt of a customer order. The development is partly forecast driven, partially order-driven. The areas of design, procurement, production, final assembly and distribution are generally order-driven in Engineer to Order. This manufacturing principle is particularly suitable for customer-specific products. The degree of standardization is lowest due to individual production.
For further information see Push and pull systems.
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