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dif bet make to order and make to stock


what is diffrence bet make to order and make to stock , who impleming this in real time



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  • Best Answer
    Posted on Nov 22, 2007 at 03:17 AM

    Dear Shivaji

    <b>1) MTO</b>

    You can use repetitive manufacturing as sales-order-oriented production. The system generates one or more planned orders that have a direct link to the sales order item. The material is manufactured on the basis of these planned orders. The manufacturing process is therefore initiated by sales orders.

    If you are using a valuated sales order stock in sales-order-oriented repetitive manufacturing, you create a product cost collector for the individual requirements material (the material that is manufactured for the sales order stock). The costs incurred in the production of the individual requirements material are collected on this product cost collector. The costs can then be analyzed on the product cost collector. You use the functions of Product Cost by Period.

    In sales-order-oriented repetitive manufacturing, the sales order stocks are usually valuated. <i><b>This scenario is used in the automotive industry</b></i>, for example. The production of each vehicle is triggered by a sales order (or by a sales order item). The costs incurred for each particular vehicle are only of secondary importance. Instead, the focus is on period-based analysis of the costs for all vehicles manufactured during a particular period, whose costs are collected on the same product cost collector. The costs are not collected and analyzed separately for each sales order item.

    <b>2) MTS</b>

    Choose a make-to-stock strategy, if:

    --> The materials are not segregated. In other words, they are not assigned to specific sales orders.

    --> Costs need to be tracked at material level, and not at sales order level.

    <i><b>You should always use make-to-stock production if</b></i> you produce stock independently of orders because <i><b>you want to provide your customers immediately with goods from that stock later on</b></i>. You might even want to produce goods without having sales orders, if you expect that there might be customer demand in the future.

    This means that make-to-stock strategies can support a very close customer-vendor relationship because your objective here is to provide your customers with goods from your stock as quickly as possible. Returns that have passed quality inspection and other unexpected goods receipts can be used for other sales orders.

    This does not mean that you have unreasonably high stock levels. You can avoid them by doing one of the following:

    => Create a production plan in advance (in Demand Management) to plan your stock.

    If you make use of this option, you may also want to decide whether sales orders exceeding your plan are to affect production or not.

    => Receive sales orders relatively early on (using scheduling agreements, for example).


    G. Lakshmipathi

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  • author's profile photo Former Member
    Former Member
    Posted on Nov 21, 2007 at 06:27 PM


    As of my knowledge Make to Order means " The product will be manufactured only after getting the Order Confirmation from the customer with some specifications." Not sure about make to Stock

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  • author's profile photo Former Member
    Former Member
    Posted on Nov 21, 2007 at 06:32 PM


    MTO --- MRP will run and production will happen with reference to the

    particular order. Once the production is over it will be stored as a

    special stock pertain to that particular order. Production will happen

    based on CIR (customer Independent requirement). Production will happen

    based on the receipt of confirmed purchase order. BOM,Variant Configuration etc scenarios use MTO.

    MTS --- Production will happen based on Forecast. They will treat all the

    order as Make to stock during MRP run..... Produce the material and stored

    in unrestricted stock. In this case production will happen with the logic

    of PIR.


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