MTO Vs MTS

Process in a
Made to Order
Sequence
When you specially produce and
deliver a product for a customer's
order, it is called "Made to order"
Production. For example Production
Definition
of Designer Jewelry, Production of
Areoplanes, production of Special
type of steel, High end instruments
and vechiles etc.,
Made to Stock
When you produce according to a
periodic forecasted demand and sell
the product to any incoming
customer who wants to buy them, it
is called "Made to Stock"
Production. Example Mass Steel
Production,   

When you produce against a Periodic

forecasted demand it is called Made
to stock production.  

You can enter this forecasted

demand in a tool in SAP called
Planned independent requirements in
the system.
Customer Places a Sales order. A
Sales order for the demand is created Planned independent requrirements
in SAP. can also be derived/copied from
Demand Form Sales & Operation Planning system
Sales order in some cases is which contains demand from
referenced from a previous enquiry previous periodic Sales figures from
or quotation of sales created.   the sales areas or Sales organizations
or sales area or sales offices or plants
or various combination of this (as per
your requriements). These previous
period figure for a product or a
product group can be extrapolated to
create the demand for the future
periods.    
 
Every Material that is ordered should Every Material that is Produced with
have a strategy that is - Made to a forecasted demand should have a
order Strategy = 20, set in the strategy that is - Made to stock
Material Master   MRP 3 View, Strategy = 10, set in the Material
Strategy Group Field. Master   MRP 3 View, Strategy
SAP Production Group Field.
Strategy Strategy 20 is used for Made to order
scenario, in which case the Strategy 10 is used for Made to stock
production is tagged with the scenario, in which case the
customer order. production is not tagged with the
customer order.
You should also set the Individual
 and collective Indicator in MRP 4 to
You should also set the Individual
= "1" - Individual requriement which
and collective Indicator in MRP 4 to
specifies that this is an individual
= "2" - Collective requriement or an
requirement not to be clubbed and
field value which "Blank" -
produced individually for a given
Individual and collective.
customer order.
     
Transfer of Demand is Pushed to SAP MRP Periodic demand is pushed to SAP
Demand to MRP Tool   MRP Tool
     
MRP Evaluates the Planned Periodic
Demand for the Material and
while doing this it checks for
availability of the Materials in stock
and computes the shortage quantities.
MRP For its planning calculates the
Net requirement planning MRP creates a Planned order for the
shortage quantities of this periodic
MRP analyses and evaluates the demand.
Customer Demand for the Ordered
MRP Net
Material and while doing this it does To get the Shortage Quantities -
Requirement
not check for availability of the The system thereby compares
Planning for the
Materials in stock and considers it as available warehouse stock or the
header Materials
not available at the time of creating scheduled receipts from Purchasing
procurement proposals in MRP. and Production with planned
independent requirements, material
MRP Creates a Planned order for the reservations and incoming sales
total quantity of the customer order. orders. In the case of a material
shortage, that is, if the available
stock (including firmed receipts) is
smaller than the quantity required,
the system creates procurement
proposals.
MRP Net After creating planned orders for the After creating planned orders for the
Requirement header material, if a certain header material, if a certain
Planning for the dependent requirement or dependent requirement or component
Dependent component has a procurement type has a procurement type - "In-
Requirements - "In-House" , then: House" , then:

MRP then explodes the Bill of MRP then explodes the Bill of

materials for the header Material materials for the header Material
and plans the dependent and plans the dependent
requirements by evaluating the requirements by evaluating the
shortage quantities (Requirement qty shortage quantities (Requirement qty
- Available qty) and dates of the - Available qty) and dates of the
components required in production components required in production
as per the BOM. as per the BOM.

While creating the Procurement While creating the Procurement

Proposals for the components, it Proposals for the components, it
 takes in to considerations the Lot
takes in to considerations the Lot
sizing procedures, special
sizing procedures, special
procurements, Quota arrangements. procurements, Quota arrangements.
After creating planned orders for the
After creating planned orders for the
header material, if a certain
header material, if a certain
dependent requirement or component
dependent requirement or
has a procurement type
component has a procurement type
- "Externally Procured" , then:
- "Externally Procured" , then:
MRP Creates Planned orders or
MRP Creates Planned orders or
purchase requisitions for the
purchase requisitions for the
externally procured dependent
externally procured dependent
requirement, only for the shortage
requirement, only for the shortage
quantities (Requirement qty -
quantities (Requirement qty -
MRP Planned Available qty).
Available qty).
order for
Externally While creating the Procurement
While creating the Procurement
procured Proposals for the components, it
Proposals for the components, it
demands takes in to considerations the Lot
takes in to considerations the Lot
sizing procedures, special
sizing procedures, special
procurements, Quota arrangements.
procurements, Quota arrangements.
The procurement proposal is also
The procurement proposal is also
scheduled which means that, for
scheduled which means that, for
materials procured externally, the
materials procured externally, the
delivery and release dates are
delivery and release dates are
determined, and for materials
determined, and for materials
produced in-house, the production
produced in-house, the production
dates are calculated.
dates are calculated.
MRP Explosion After Calculating the Proposal After Calculating the Proposal
of Routing or quantities for Inhouse Procuded quantities for Inhouse Procuded
Receipes Materials, the System explodes the Materials, the System explodes the
Routing or Recipes (if MRP is set at Routing or Recipes (if MRP is set at
Lead time scheduling) which helps Lead time scheduling) which helps in
in correctly evaluating the basic correctly evaluating the basic order
order start date and basic order end start date and basic order end date.
date. MRP system calculates the MRP system calculates the operation
operation execution dates and inturn execution dates and inturn the order
the order execution time from a execution time from a forward start
forward start date or from a date or from a backward end date
backward end date provided provided (normally set at backward
(normally set at backward scheduling in Scheculing Parameters
scheduling in Scheculing Parameters customizing). Material floats and
customizing). Material floats and operation floats (buffers) are taken
operation floats (buffers) are taken into account while deriving the dates.
into account while deriving the
dates. If MRP is set at Basic Scheduling -
Then the basic start date and end date
If MRP is set at Basic Scheduling - is calculated using the flat Material
 Then the basic start date and end
date is calculated using the flat
Material Master Lead times.
Once the Planned orders and
Purchase requisitions are created,
they are converted to Production
orders or Process order/Purchase
orders.    orders.
Production Supervisors or
Conversion of
Planners convert the planned orders
Planned orders
to Production orders or Process
orders.
Purchasers would convert the
Planned orders or Purchase
requisitions to Purchase orders.
Production order adopts the planned
order information such as Quantities, Production order adopts the planned
Basic Start Date, Basic Finish Dates, order information such as Quantities,
operation dates, component
quantities.
Production Orders are created and
released on the shop floor. Before
Production saving and releasing the order, the released on the shop floor. Before
order creation production scheduler or planner can saving and releasing the order, the
change the quantities, dates and
component quantities, operation
scheduling information.
The Production order which is
created has a link to the customer
order.
Purchase orders which are created
Purchase order
through the conversion process are
creation
released and sent to the Vendors.  
Once the Production orders are
Released, they are thrown on the
shop floor for Production:
Production
order Shop Floor
a) Every Operation confirms the
Execution
production against each order once
they produce the required quantities
of that order.
Master Lead times.
Once the Planned orders and
Purchase requisitions are created,
they are converted to Production
orders or Process order/Purchase
   
Production Supervisors or
Planners convert the planned orders
to Production orders or Process
orders.
Purchasers would convert the
Planned orders or Purchase
requisitions to Purchase orders.
Basic Start Date, Basic Finish Dates,
operation dates, component
quantities.
Production Orders are created and
production scheduler or planner can
change the quantities, dates and
component quantities, operation
scheduling information.
The Production order has no link to
any customer atall.  
Purchase orders which are created
through the conversion process are
released and sent to the Vendors.
Once the Production orders are
Released, they are thrown on the
shop floor for Production:
a) Every Operation confirms the
production against each order once
they produce the required quantities
of that order.
 b) Once all the operations are
b) Once all the operations are
confirmed for all the quantities, the
confirmed for all the quantities, the
production order gets the status
production order gets the status
"CNF" - Completely confirmed.
"CNF" - Completely confirmed.
 
 
At the time of confirmation or
At the time of confirmation or Parellel to the Confirmation process
Parellel to the Confirmation process or after the confirmation process, the
or after the confirmation process, the supervisor/respective operator issues
supervisor/respective operator issues the components to the production
the components to the production order.
Goods issue to order.
the Production The Operator or Supervisor gets a
order   The Operator or Supervisor gets a list of all the components that are
list of all the components that are required for production through a
required for production through a reservation list created in SAP (a
reservation list created in SAP (a reservation list is created for every
reservation list is created for every order at the time of order creation).
order at the time of order creation).

The Products which are fully

manufactured against the order are
received to the "Finished Goods
Storage Location" through a SAP The Products which are fully
Material Movement called "Goods manufactured against the order are
Goods Receipt receipt against the Production order - received to the "Finished Goods
from the Movement type 101". Storage Location" through a SAP
Production
Material Movement called "Goods
order The Received Materials in a MTO receipt against the Production order -
scenario have a tag of the customer Movement type 101".
order and customer against them and
they cannot be issued or delivered to
any other customer order.

Order Orders which are received in to stock Orders which are received in to stock
Settlement   are settled by the finance team. are settled by the finance team.