Differences Between Make-to-Order and Make-to-Stock Production and How to Choose｜Production Method Guide
Explaining how to determine the suitable production method and improve the workplace for small and medium-sized manufacturers who are unsure whether to adopt made-to-order production or forecast production.
This document explains the differences between make-to-order (MTO) and make-to-stock (MTS) production methods, and provides a framework for identifying the production method that best suits your company. It compares the characteristics, advantages, and points of caution of both methods, starting from challenges such as excess inventory and stockouts due to demand fluctuations, responses to a wide variety of low-volume and short lead times, and the burden on the production site caused by changes in plans. In addition to the three perspectives of product characteristics, demand stability, and lead time requirements, it also introduces hybrid models that combine MTS and MTO, as well as the customer order decoupling point (CODP). In the latter part, it includes examples of inventory, progress, and performance recording and sharing using the production management system FUSE, visualization of the production site, and measures against reliance on specific individuals. This content is useful for small and medium-sized manufacturing companies looking to review their production methods and improve production management. *For more details, please download the PDF or feel free to contact us.*
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Comparison Criteria: Compare Make-to-Order (MTO) and Make-to-Stock (MTS) based on production start timing, inventory risk, delivery responsiveness, flexibility, management difficulty, and suitable products. This will make it easier to determine the method that fits your company. Judgment Axes: Present three perspectives: product characteristics, demand stability, and lead time requirements. We support considerations based on actual order quantities, shipping performance, procurement lead times, and production capacity, rather than intuition. Hybrid Model: Explain the concept of producing parts and intermediate goods in advance, with final assembly and specification confirmation occurring after receiving orders, as well as the Customer Order Decoupling Point (CODP). FUSE: A semi-customizable production management system that allows you to select necessary functions. Introduce features such as visualization of progress and performance, information sharing, phased implementation, customization, a licensing system available for all employees, and post-implementation support. *For more details, please download the PDF or feel free to contact us.
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Review of Production Methods: It can be used as a basis for decision-making when considering issues such as excess inventory, stockouts, demand fluctuations, short delivery times, small lots of various products, and responses to custom specifications. Process Design: It is effective when considering switching points at the process level, such as preparing standard parts and intermediate products based on forecasts and conducting final assembly and specification confirmation after receiving orders. Production Management DX: Sharing inventory, progress, and performance information, which can easily become dispersed in paper or Excel, serves as a reference when considering improvements to reduce reliance on individuals and delays in confirmation. Case Studies: Examples are provided in areas such as metal processing, precision machinery parts processing, and optical glass processing, showcasing visualization of production planning, reduction of management time, decrease in delivery delays, and efficiency in work arrangement. *For more details, please download the PDF or feel free to contact us.
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Nihon Computer Development Co., Ltd. is a company primarily engaged in the IT transformation of businesses. We focus on supporting the IT implementation of small and medium-sized enterprises, with a key business objective of revitalizing local communities that are deteriorating due to declining birth rates, an aging population, and economic concentration in metropolitan areas. For system development, implementation, and maintenance using userware (proficiency technology), please consult with us.
