Overview of common manufacturing principles
There are different principles according to which production can take place. Products are sometimes manufactured according to forecasts without there being a specific customer order or production is only started once a customer order has been received. Push and pull systems influence the triggering of production. There are also other ways of classifying the type of production. Production can be classified 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 Build to Stock) means that order processing is based on demand forecasts. Products are produced to 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. Stock levels can be kept low, especially for everyday goods, as forecasts can be made with a high degree of reliability. The order is forecast-driven in the areas of development, design, procurement, production and final assembly. Finally, the order is order-driven from the distribution area onwards.
Assemble to Order (ATO)
The Assemble to Order production principle is also known as Configure to Order. The specific variant is only completed when individual customer requests arrive in production. 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, production is based on forecasts. In the areas of final assembly and distribution, production is customer-specific, i.e. order-driven.
Make to Order (MTO)
Production is triggered by customer orders. Stock levels are relatively low, which means that the fulfillment of customer requests is often associated with longer delivery times. The customer 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 Engineer to Order manufacturing principle, the development and design process is triggered immediately after receipt of a customer order. Development is partly forecast-driven and partly order-driven. The areas of design, procurement, production, final assembly and distribution are generally order-driven with Engineer to Order. This manufacturing principle is particularly suitable for customized products. The degree of standardization is at its lowest due to individual production.
You can find more information under Push and pull systems.
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