MTO &MTS - AK , RAJESH , KISHORE

[Former Member]

hi ,

can pl send me docs relating to MAKE TO ORDER , MAKE TO STOCK " , PL TREAT THIS AS TOP PRORITY "

[Former Member]

Conceptually MTO - Make to Order & MTS - Make to Stock are 2 main business scenario.

MTO is a scenario in which the product is manufactured or assembled after receiving an confirm order. This is common in engineering products such as water treatment, machinery with certain specification, cardboard cones with specific design & shapes & so on.... Such product are only manufactured or assembled after receipt of Order & maintained as special stock against the particular sales order.

MTS is an scenario with repititive manufacturing, where the product can be manufactured & stored. As & when the order is received, it can be delivered. This is common in mass manufacturing scenarioe like soaps, oil, plastic products like containers, chairs, & so on...

This is the main difference on the face of it.

Regards,

Rajesh Banka

Reward point if helpful.

[Former Member]

hi rajesh & kishore ,

Thanks alot 4d prompt response , right now am not aware of the concept in full , but could get some light on the concept .

thanks

jerry

[Former Member]

dear jerry,

<b>Make-to-Order (MTO)</b> process characteristics include configurable end products, minor engineering effort during production of end product, subassemblies and components procured to forecast and the manufacture of end products driven by customer order.

<b>Business Goals & Objectives</b>

1) Improving Customer Service

Collaborate with business partners

Reduce order lead-time

2) Increasing Revenue

Improve capacity utilization

Improve customer retention and loyalty

Improve RFQ/RFP processes

Outsource excess capacity

3)Lowering Working Capital

Improve capacity utilization

Increase inventory turns

Lower cost procured goods and services

Lower work-in-process inventory

4) Reduce inventory carrying costs

Shorten order-to-cash cycle

Visibility to vendor/supplier inventory

Reducing Operating Costs & Increasing Efficiency

also please check this link on MTO :

<a href="http://help.sap.com/bestpractices/industry/indusmachinerycomp/v1470/IMC_DE/html/E71_MTOSalesOrdProc_EN_DE.htm">Make to order</a>

<b>Make To Stock :</b>

Characteristics of a Make-to-Stock (MTS) process are commodity based end products, production prior to sales order based on forecast, end products sold from inventory, controlling of inventory is critical and distribution and warehousing of end product is the norm.

<b>Business Goals & Objectives</b>

1)Improving Customer Service

Better service levels

Collaborate with business partners

Reduce late orders

Reduce order lead-time

2)Increasing Revenue

Improve capacity utilization

Outsource excess capacity

3)Lowering Working Capital

Improve capacity utilization

Increase inventory turns

Lower work-in-process inventory

Reduce inventory carrying costs

Visibility to vendor/supplier inventory

4)Reducing Operating Costs & Increasing Efficiency

Improve procurement processes

Lower logistics costs

Reduce administration, improve business processes

Reduce inventory levels

Reduce transaction costs

<a href="http://www50.sap.com/businessmaps/37358200533D4FE3862A0779E77FE92F.htm">MTS in discrete industry</a>

<a href="http://www50.sap.com/businessmaps/3AEBA62D515B48258290233827E3C42D.htm">MTS Business scenario</a>

Thanks,

Sadhu Kishore

[Former Member]

Make To Order:

Buildinlg Block for:

http://help.sap.com/bestpractices/industry/indusmachinerycomp/v1470/IMC_DE/html/E71_MTOSalesOrdProc_...

Make-to-Order (Customer Requirements):

Creating a Sales Order

Checking Requirements Using MRP

Requirements Planning

Converting the Planned Order into a Production Order

Confirming the Production Order

Checking the Settlement of the Production Order

Creating a Delivery

Creating a Billing Document

Checking Costs and Revenues on the Sales Order

Configuration Settings:

Create material master by maintaining general item category group- 0001(make to order)

Availability check - 02

Transportation Group - 0001

go to va01 and raise sales order

item category:TAk

Schedule line category : cp

Requirement type KE

Requirement class 040

Check TOR and avalability check

special stock : E

VOV7

of TAK

billing relivence : A

Pricing :X

go to mb1c

maintain stock with a special stock indicator E

mavement type 61

Special stock E

specify sales order number line item number and saveit

go to VL01N main data

Go to VF01

save it

There are extensive options that enable you to procure components especially for specific sales order items.

You may, however, want to use a different planning strategy to procure components without sales orders. This allows you to keep your replenishment lead time to a minimum. You can do this by:

Planning on the basis of the finished product (see Planning Without Final Assembly (50) or Planning with a Planning Material (60))

Planning at component level (see Strategies for Planning Components)

Using consumption-based or Kanban-controlled components

Customer stock can exist on any BOM level. See Stockkeeping at Different BOM Levels for more information.

Because production is closely linked to sales orders, this results in a customer section in the stock/requirements list.

Unplanned goods receipts (such as returns) cannot, as a rule, be used for other sales orders, even if they are in working order, unless they are adapted to meet a customer's needs.

In the basic make-to-order strategy, Make-to-Order Production (20), no specific product structures are required. This means that it does not matter if the material has a BOM or not. The material can be produced in-house, or it can be procured externally. No planning is involved in this strategy.

Planning Without Final Assembly (50) and Planning with a Planning Material (60) do require a specific product structure (i.e. a BOM, which means materials are always produced in-house). These planning strategies assume that you want to plan procurement (production or purchasing) of your components by planning the finished products. This means that you need to have a fairly stable demand for your finished products. If, however, you can plan more easily at component level than at finished product level, see Strategies for Planning Components.

Refer to the following links:

http://www50.sap.com/businessmaps/092BF1DFEEB2456DADD0DD0284EBE8A2.htm

http://help.sap.com/saphelp_ides/helpdata/en/51/95368ea1fa11d189ba0000e829fbbd/content.htm

http://help.sap.com/saphelp_ides/helpdata/en/51/95368ea1fa11d189ba0000e829fbbd/content.htm

The planning strategies explained in this section are designed for the production of a material for a specific individual sales order. In other words, you do not want to produce finished products until you receive a sales order. This means that make-to-order strategies always support a very close customer-vendor relationship, because your sales orders are closely linked to production.

The same relationship exists between the sales order and production that exists in a make-to-order environment. Make-to-order is also used in the following environments.

Production using variant configuration

Assemble-to-order

Prerequisites

Choose a make-to-order strategy, if:

The materials are segregated. In other words, they are uniquely assigned to specific sales orders.

Costs must be tracked at sales order level and not on material level.

Make-to-order strategies should always be combined with lot-size key EX (lot-for-lot. Rounding values should not be used. If you maintain rounding values, they have no effect due to the make-to-order properties of these strategies.

Process Flow:

There are extensive options that enable you to procure components especially for specific sales order items.

You may, however, want to use a different planning strategy to procure components without sales orders. This allows you to keep your replenishment lead time to a minimum. You can do this by:

Planning on the basis of the finished product (see Planning Without Final Assembly (50) or Planning with a Planning Material (60))

Planning at component level (see Strategies for Planning Components)

Using consumption-based or Kanban-controlled components

Customer stock can exist on any BOM level. See Stockkeeping at Different BOM Levels for more information.

Because production is closely linked to sales orders, this results in a customer section in the stock/requirements list.

Unplanned goods receipts (such as returns) cannot, as a rule, be used for other sales orders, even if they are in working order, unless they are adapted to meet a customer's needs.

In the basic make-to-order strategy, Make-to-Order Production (20), no specific product structures are required. This means that it does not matter if the material has a BOM or not. The material can be produced in-house, or it can be procured externally. No planning is involved in this strategy.

Planning Without Final Assembly (50) and Planning with a Planning Material (60) do require a specific product structure (i.e. a BOM, which means materials are always produced in-house). These planning strategies assume that you want to plan procurement (production or purchasing) of your components by planning the finished products. This means that you need to have a fairly stable demand for your finished products. If, however, you can plan more easily at component level than at finished product level, see Strategies for Planning Components.

Make To Stock:

Planning a Product

Creating a Sales Order

Executing Multi-Level Requirements Planning

Converting the Planned Order into a Production Order

Withdrawing the Material for the Production Order

Confirming the Production Order

Creating a Delivery

Creating a Billing Document

http://help.sap.com/saphelp_ides/helpdata/en/51/9532c0a1fa11d189ba0000e829fbbd/content.htm

Regards,

Rajesh Banka

Reward points if helpful