Planning

Manufacturing production is the process of developing finished goods from raw materials using
human and machine labor in the most cost-effective and efficient manner.
There are three methods of manufacturing production: Make to stock (MTS), Make to Order
(MTO), and Make to Assemble (MTA). Let’s have a look at the various manufacturing
methods, their strengths, and their drawbacks.

Make To Stock (MTS)

Make to stock is a manufacturing production process where the products are developed in bulk
based on the expected demand of customers. The demand is assessed by sophisticated
forecasting tools and delivered at the point of consumer purchase.
Uses
There are several benefits of make-to-stock manufacturing production. It believes in creating
just enough stock to meet customer orders based on accurate forecasts of demand.
Also, undertaking successfully would mean efficiencies at each step in the manufacturing
process until the delivery. The forecasting process relies on technology that assesses past
demand to feed into an algorithm that evaluates future orders.
It would enable the manufacturer to order raw materials in bulk and produce a high volume of
products, ideally matching customer demand.
Accurate forecasting also lets workflow and labor be managed appropriately. Also, orders are
fulfilled with ease and efficiency, and there is little to no wastage or lost opportunity.
Who Uses Make to Stock?
Make to stock is a traditional method of manufacturing production and is used by
manufacturers. It is used in high turnover industries having relatively predictable consumer
patterns like the retail sector.
Make to stock is a useful manufacturing production system for industries influenced by
seasonal changes or holidays like Christmas, Easter, and New Year. It is also helpful in
industries that evolve at speed, like technology, where the required products can change
rapidly.
Limitations
Make to stock relies on accurate forecasting of consumer demand. If the forecasts are wrong,
it may lead to insufficient stock to meet the demands, and the company would lose out on
sales.

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But, it may lead to an oversupply of materials going into waste. Forecasts can also be used to
structure workflow and staffing. If it goes wrong, it can lead to production scheduling issues
and financial issues within the workforce.

Improvements
The main aim of manufacturers looking to improve make to stock processes is to make sure
that forecasts are as accurate as possible. The reliability of the estimates is the key as it
affects every aspect of the production line efficiency.
If the forecasts predict lesser orders than ultimately placed, the manufacturer scrambles to
meet customer needs. Failing to do so leads to lost opportunity and causes reputational
damage.
Also, if more orders are forecast than the ones placed, the manufacturer is left with an
oversupply of stocks. Some stocks could be perishable and may go to waste. If held, it leads to
warehousing and labor costs to manage.

Make To Order (MTO)

Make to order is a production process where the manufacturing is done after the order is
received. It lends itself to bespoke manufacturing suiting a particular outlet or customer needs.
On the contrary to make to stock, make to order production starts when an order is received. It
has a lower chance of wastage or inefficient production workflow.
Uses
Make to order works on specific and detailed customer demand. Manufacturers are aware of
the exact order and the material required. It means there is less wastage of inventory or labor
in creating the product for sale.
Who Uses Make to Order?
Make-to-order is usually used by large and complex organizations like defense, construction,
or airlines. They need precise products and can absorb, to some extent, a longer lead-time in
receiving the goods.
Limitations
The drawbacks of make-to-order are largely around irregular order patterns and if they can
manufacture a product within a given time frame and deliver it to the customer.

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Make-to-order products are very specific and have little visibility over the orders coming in at
any time. The unreliability of orders and their financial stability can be very difficult to manage
for a manufacturer.
When an order comes in, making and delivering it may take longer than those made under a
make-to-stock system when an order comes in. It’s because the production takes place only
after the order is placed.
Various hiccups may come into play due to lack of raw materials, delay in delivering materials
or components, and difficulty in managing workflow. It’s all due to the unpredictability of orders
being made and the requirement of particular skills.
Improvements
The process is under constant scrutiny by manufacturers and customers. They always look for
ways to streamline the system and ensure better outcomes with the production and delivery
process.
Mistake-proofing: It aims to develop products quickly without costly errors involving correcting
past errors and future-proofing against a repeated error. Implementing inventory management
software helps you control the flow of goods, assess supplier performance, or up-skill staff.
Load-leveling: It’s a useful tool for make to order manufacturers as it lets small batches of the
order develop in a time-effective manner. Plus, letting manufacturers quickly identify and
resolve the issues that may affect the next batch of overall orders.
Iterative Improvements: Continuous improvements in make to order manufacturing are central
to the process. It minimizes waste, maximizes resources, and delivers a product specifically
designed as per customer needs.

Make To Assemble (MTA)

Make to assemble is a mixture of make to stock and make to order processes. Here, the
manufacturer stocks the basic requirements of the order but waits for orders to come in before
making the final product.
Uses
Make to assemble has several advantages and tackles various issues raised by the make to
stock and make to order processes. It attempts to resolve them through a hybrid process
effectively.
The basic elements of the product are already in stock. So, make to assemble May not face
the same supply risks or may need a longer delivery time frame like the make to order method.

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Plus, it builds the product based on actual orders and avoids the risks of understocking or
overstocking the make-to-stock method. The method may still use forecasting methods used in
make-to-stock processes to maintain efficiencies with workflow and inventory.
Make to assembly is comparatively cost-effective for the manufacturer. It has the least amount
of stocked materials and goods, allowing for stable warehousing and storage costs.
A make to assemble process still delivers relatively bespoke products and a much shorter time
frame than make to order.
Who Uses Make to Assemble?
Make to assemble is used across various sectors like the food assembly or computing sector.
Laptops or desktop computers are mostly assembled through this manufacturing process.
They are the most cost-effective way to get through a reasonably high number of orders
without undue delays in delivery.
It is also used in the consumables sector, keeping non-perishable stock in warehouses and
adding perishable ones just before delivery.
Limitations
Like the make-to-stock method, the make-to-assemble method depends on demand
forecasting and faces the same reliability issues.
Forecasting can be tricky. Even by a small margin, getting it wrong may lead to oversupply or
oversupply of stock and subsequent wastage or inability to satisfy orders.
Plus, a two-step system to produce the orders may lead to many complications. Make to
assemble depends on efficient assembly processes, and the re-ordered basic components and
bespoke sub-parts are well put together by trained and skilled staff.
Improvements
Any lapses in the assembly line processes may lead to wastage or flawed products and cause
significant financial losses. The assembly line process must run highly efficiently and
effectively to optimize the process.
Skilled staff must manage quality control and order delivery to ensure that the build of every
product is done as per the specifications of the customer and delivered promptly.

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