Make To Order
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 that typically allows consumers to purchase products customized to their specifications. Therefore, MTO is a manufacturing process that begins production only after receiving a confirmed customer order. MTO is part of a pull production process, where companies produce goods based on actual consumer demand. This is common in certain industries, such as aerospace and automotive.
Origin: The concept of Make-to-Order can be traced back to the Industrial Revolution when handcrafted and customized products were the primary production methods. With the development of mass production techniques, MTO evolved into a strategy specifically for high-value, low-demand products. In the mid-20th century, with the advancement of information technology, the MTO strategy was further optimized and promoted.
Categories and Characteristics: Make-to-Order can be divided into two main categories: pure MTO and partial MTO. Pure MTO means that all production steps begin after receiving the order, suitable for highly customized products. Partial MTO involves completing some standardized production steps before customizing the final product based on the order, which can improve production efficiency. The main characteristics of MTO include high customization, low inventory costs, and longer delivery times.
Case Studies: 1. Aerospace Industry: Boeing typically uses the Make-to-Order strategy to manufacture airplanes. Each aircraft is designed and produced according to the specific needs and specifications of the customer, meeting the unique requirements of different airlines. 2. Automotive Industry: Some high-end car manufacturers, such as Ferrari and Lamborghini, also adopt the Make-to-Order strategy. Customers can choose the color, interior, and other configurations of the vehicle according to their preferences, resulting in highly personalized products.
Common Issues: 1. Longer delivery times: Since production starts after receiving the order, delivery times are usually longer. 2. Higher production costs: Customized production typically requires more resources and time, leading to higher production costs. 3. Demand forecasting difficulties: Since production is based on orders, demand forecasting and production planning can be more complex.
