Make to Order

Traditional production systems produce products and stock them as inventory until they
are sold (make-to-stock). In order to reduce inventory and increase the level of
customization, some firms have designed their production systems to produce a product
only after it is ordered. Such systems are referred to as make-to-order.

Make-to-order systems are not appropriate for all types of products, and the make-to-
order versus make-to-buy decision must be weighed carefully. The following are some
factors to consider when evaluating the prospect of make-to-order:

 Value of a custom product:  Are customers willing to pay more for

customization?
 Customer patience:  Are customers willing to wait for a custom product to be
manufactured and delivered? If not, the cost of losing the customer to the
competition is the margin on the product, plus the value of any future purchases
that may be lost as a result of the customer's switching to the competition. Even if
the customer switches to another model from the same firm, a loss of goodwill
may result.
 Cost of stockouts:  Assuming the customer is patient enough to wait the
specified delivery time, make-to-order eliminates the problem of stock-outs. If
stock-outs are estimated to have a relatively large cost associated with them,
make-to-order becomes more attractive.
 Inventory holding costs:  Does the product lose its value quickly? Is it easily
damaged? Do customers demand a high level of variety (and therefore higher
inventory costs)? Make-to-order becomes more attractive as inventory holding
cost increases.
 Modularity:  If the product is modular, component inventory costs can be
reduced since less safety stock is required.
 Manufacturing lead time:  A long lead time may render a make-to-order system
infeasible if the customers are not willing to wait.
 Manufacturing set-up costs:  If set-up costs are high, make-to-order might
incur too large a cost penalty relative to the benefits of customization. Automated
flexible manufacturing systems help to redu

 ake To Order - MTO


 What Does Make To Order - MTO Mean?
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. This creates additional
 wait time for the consumer to receive the product, but allows for more flexible
customization compared to purchasing from retailers' shelves.


 Investopedia explains 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.

make to order
  

Definition

Manufacturing or assembly process geared to satisfy customer-requirements only upon receiving a customer's
order. It may require the combination of standard and custom-made parts, if it requires only standard parts it is
called assemble to order process.

Configure-to-order
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It has been suggested that this article or section be merged with Build_to_Order.
(Discuss)

Configure-to-Order (CTO) represents the ability for a user to define the component make-up
(configuration) of a product at the very moment of ordering that product, and a vendor to
subsequently build that configuration dynamically upon receipt of the order.

Configure-To-Order (CTO) is a method of

manufacturing which allows you, or your
customer, to select a base product and
 configure all the variable parameters
associated with that product. Based on the
configurable items on each quote or order,
Configure-To-Order (CTO) systems
typically generate the manufacturing
routing and/or bill of materials based on
features and options such as color, size, etc.
Engineer-To-Order (ETO)

Engineer-To-Order (ETO) is a manufacturing philosophy whereby finished goods are built to

unique customer specifications. Assemblies and raw materials may be stocked but are not
assembled into the finished good until a customer order is received and the part is designed.
Engineer To Order products may require a unique set of item numbers, bills of material, and
routings—and are typically complex with long lead times. Customers are heavily involved
throughout the entire design and manufacturing process for engineer to order products.

BigMachines LFE can dramatically improve the selling efficiency of companies that sell both
Engineer To Order and Configure To Order (CTO) products.

Cto

It is a method of manufacturing which allows you, or your customer, to choose a base product at
the very moment of ordering and then configure all the variable parameters (features) associated
with that product from defined/available options.
Based on these selections, configurable items on each quote or order typically generates the
unique product configuration and manufacturing routing and/or bill of materials based on various
features and options. Vendor/order receiving company subsequently builds that configuration
dynamically upon receipt of the order. The ability of the vendor to make and deliver products
customized to specific customer needs offers a powerful competitive edge over competitors.

CTO is an environment in which the product or service is assembled or kitted on receipt of the
sales order. Oracle EBS supports the Configure to Order environment with a range of features in
order entry, demand forecasting, master scheduling, production, shipping, and financial
accounting.
Configure to Order includes Pick-to-Order (PTO) and Assemble-to-Order (ATO) items, models,
and hybrids. It supports building configurations using other configurations as sub-assemblies
(multi-level configure-to-order), internal and external sourcing of ATO models at any level in the
BOM and supports multi-level PTO/ATO hybrids.
Posted by OracleOnDemand at 9:42 PM

 
Manufacturing and Distri

Sales Order Pro

Configure-to-order

Conveniently change bill of material and routing during order entry...

The configure-to-order (CTO) features let you change bill of material (BOM) and routing configuration for manu
service and purchase type items. Whenever a CTO item is added to a quotation or sales order, the Item Configura
screen appears letting you edit sub-assembly items and quantities.

For example, edit the item quantity, ID and price, as well as drill down to details, such as item type, vendor ID, c
notes. Also, within the CTO functionality, you can configure the components that make up the CTO item. This e
you to tailor items exactly to customer specification.

Set up a variety of parameters that can be edited...

Various parameters within the BOM maintenance screen (a sub-screen of the Items maintenance screen) control
BOM can be altered. For example, restrict substitutions to items in the same item category, or prevent certain item
being deleted.

Changes made to an item using the configure-to-order option during order entry are order-specific; no changes ar
the item's master record.
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Assemble To Order - ATO

What Does Assemble To Order - ATO Mean?

A business production strategy where products ordered by customers are produced quickly and
are customizable to a certain extent. The assemble-to-order (ATO) strategy requires that the
basic parts for the product are already manufactured but not yet assembled. Once an order is
received, the parts are assembled quickly and sent to the customer.
Investopedia explains Assemble To Order - ATO
The assemble-to-order (ATO) strategy is a hybrid between a make-to-stock strategy - where
products are fully produced in advance - and the make-to-order strategy - where products are
manufactured once the order has been received. The ATO strategy attempts to combine the
benefits of both strategies - getting products into customers' hands quickly while allowing for the
product to be customizable.
Filed Under: Accounting, Business, Economy
Related Terms

 First In, First Out - FIFO

 Inventory
 Just In Time - JIT
 Make To Order - MTO
 Make To Stock - MTS
 Pay To Order
 More Related Terms