Make to Order
This is the standard manufacturing process which simply means that we are creating a product as per the specifications provided by the customer. The core difference between MTO and MTS process is that the BOM (Bill of Materials) is different for each customer or each order in MTO whereas, in the case of MTS, there is a standard BOM that is used to manufacture the standard product.
Your production orders are dependent on the sales orders. As the name suggests, you create something based on the order received. Another feature of this production scenario is that you might be creating a different product altogether. Each order may have different variations of your core product and the production process has to be defined and changed according to each order.
EZERP Support (MTO)
Here is a quick overview of what functionalities are provided by the EZERP to support the Make to Order (MTO) production scenarios.
- Create and manage customers in the ERP
- Create a new project in the ERP
- Associated the new project with the customer name
- Create a new BOM
- Attache BOM with the project
- Do the multi-level BOM planning
- ERP clearly shows the items to be procured and items to be produced in-house
- Create a purchase order from the system itself
- Enter the production entries
- Receive inventory against the issued purchase orders
- Maintain multiple warehouses
- When the product is ready, create a delivery challan
Unique Features
Generally, in the case of MTO, a separate BOM (Bill of Material) is created for each product. This BOM may or may not contain all the items regularly used by other products. There might be some components that need to be produced in the house whereas some components have to be procured from outside. This hectic task of planning and managing the material required for a particular BOM is managed very easily by EZERP.
- The user is allowed to edit the BOM during the process
- ERP is equipped with complete role management
- No authorized access is possible
- Google sign-in options are available
- Complete logging of all the user logins
Make to Stock
Make to Stock, popularly known as MTS, is a production scenario where the production of pre-defined products is driven by the internal sales team forecasts. In this case, the products are produced and stocked for sale which is expected in the future. Companies use various measures e.g. previous sales data or use services of some marketing agency to understand the future demand of the product (generally for the next 2-4 quarters). A simple example can be a cold-drink manufacturing company where production is done in winter to meet the demand of the upcoming summer season.
Since the product is known well in advance and we have a pre-defined BOM (Bill of Material) for the product, it is very easy to plan and manage the production process. The purchase orders for the required materials can be issued well in advance. EZERP prompts users to issue purchase orders well in time based on parameters as minimum stock, reorder levels of the required material, etc.
Conclusion:
MTO and MTS may seem quite similar initially, however, they are completely different production methods. In a nutshell, Make to Production is based on the actual orders received by the company whereas, in the Make to Stock, the production is dependent on sales forecasts or predictions.