Make to order

[Former Member]

what is make to order, what is the relevant of using of this.......

plz answer

[Former Member · Accepted solution]

Hello Mohan,

Make to order production

1. Make-to-order production is a process in which a product is individually manufactured for a particular customer. In contrast to mass production for an unspecified market where a material is manufactured many times, in make-to-order production a material is created only once though the same or a similar production process might be repeated at a later time.

2. You can use make-to-order production in two scenarios -

(a) For branches of industry or products where a small quantity of products with a large number of different characteristics are manufactured (Variant Configuration).

(b) When a product has to be assembled particularly for a sales order (Individual Customer Requirement).

3. Stock keeping is not usually carried out for products that are made to order. In companies using make-to-order production, the demand program only determines the production area, in which various variant types are produced. Depending on how you track the costs associated with make-to-order production, there are two ways to process make-to-order items during sales order processing.

(a) Make to order using sales order

(b) Make to order using project system (not relevant for SD application)

4. For make to order production using the sales order, all costs and revenues involved for an order item are held collectively at that item. A particular rule is used that can be changed manually to transfer costs to profitability analysis.

5. Make to order production is largely a production planning configuration. It is also controlled by the requirements type, which is determined by three things

the strategy group (MRP 3) in MMR

the MRP group (MRP1) in MMR

the item category and MRP type (MRP 1)

6. Make-to-order production is controlled by the requirements type. The requirements type is determined on the basis of the MRP group (MRP1) and the strategy group (MRP3) in the material master record. In addition, a plant must be assigned for make-to-order items in the sales order.

REWARD POINTS IF HELPFUL

Regards

Sai

[Lakshmipathi]

Dear Mohan

In order to reduce inventory, many firms have designed their production system to produce a product only after it is ordered. Such scenario is called Make-To-Order.

Depending on different factors like manufacturing lead time, product cost, market demand, competitor’s capability, storage space, change over time, change over cost etc. manufacturing organizations decide to operate the plant as MTO or MTS. The item parameters are to be set accordingly so that the recommendations provided by Advance Supply Chain Planning support MTO or MTS strategy.

thanks

G. Lakshmipathi