As you know, Production Management is a very important part of supply chain management, this job is likened to the life of the entire supply chain because this is the stage of implementing ideas and plans. Plan ahead to create a complete supply chain. Let's join Giaiphapdonggoi.net to learn about what is MTO? What is ETO? What is ATO? What is MTS? Please!
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1. What is an MTO?
MTO stands for Make to Order which is a manufacturing technique in which manufacturers only start producing a product after a customer places an order. In that case, the goods are custom-made to the customer's specifications. MTO manufacturing techniques are best suited for specialized areas of the industry, such as aircraft manufacturing, construction, etc.
MTO is also known as the “Pull Supply Chain” strategy. A pull supply chain strategy is one in which the entire production, assembly, and distribution of any good is driven by actual consumer demand. The production of goods begins only when an order is received from the customer, and the number of units produced also depends on the instructions of the customer.
What is MTO?
About the advantages of MTO
Waste Reduction: In MTO, since products are manufactured after receiving customer orders and in specified quantities, waste and loss are minimized.
Less inefficiency: In MTO, all efforts are focused on making products according to customer requirements, so workers and machines tend to be more efficient.
Greater variety: Because it only produces and sells goods on demand, MTO offers a wider range of products. In fact, it gives customers the product exactly the way they want it.
About the disadvantages of MTO
Irregular sales: It is difficult to determine when a need may arise for a particular custom product.
Long delivery time: Since production starts after the order is received, the product will reach the customer after a while. Furthermore, because it takes time to customize the product, the delivery time may be longer.
Availability of raw materials: Uncertainty of demand increases the need for sufficient raw material supply so that production can begin as soon as an order is received.
2. What is an ETO?
ETO stands for Engineer To Order and is a term used to describe a finished product consisting of standard components combined to customer specifications. A good example would be a swivel chair for an office environment. There are often thousands of size, leg, backrest and fabric or leather combinations a customer can choose from. Keeping all the necessary materials in stock is extremely expensive. Manufacturers handling ETO orders face a number of challenges related to the development, construction, and manufacturing of tailor-made items. Usually, a small but varied amount of items is kept in stock, so different combinations can be delivered quickly. To properly deal with the ordering engineer, all the parts involved in the value chain - especially development, construction, purchasing.
What is ETO?
About the advantages of ETO
The order cycle is fully reflected, with the right level of detail shown for each production step.
Delivery dates can be fixed from the outset and will remain the same.
The surplus can be reduced to a minimum.
You will be completely transparent about the ordering network.
Action is required only in exceptional circumstances and will be signaled immediately.
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3. What is ATO?
ATO stands for Assemble To Order and is a manufacturing strategy whereby a manufacturer stocks sub-assemblies and inventory and assembles those parts into final products. at the same time the customer places an order. The strategy relies on the company's ability to quickly assemble and deliver.
What is ATO?
About the advantages of ATO
Reduce capital costs: By reducing storage and inventory needs, the make-to-order strategy significantly reduces capital costs, such as warehousing and investments in raw materials and materials. It allows manufacturers to adopt a lean business model, with fewer sunk costs.
Customization of Orders: A make-to-order strategy allows customers to order a custom product by keeping multiple sub-assemblies in stock, which can be pieced together to create produce a single finished product.
Fast delivery times, even with customization: The made-to-order assembly method allows for faster delivery times by keeping all parts ready and spending only time on assembly final.
About the disadvantages of ATO
Unreliability of forecasts: It can lead to shortages of parts in stock in case of abnormally high demand and excess of items.
part in case of unusually low demand.
Managing sub-assemblies: This can increase operational costs and lead to lower efficiency. It is important to monitor inventory status to achieve a smooth and streamlined supply chain during times of higher demand.
Dependence on the quality of the final assembly: The custom assembly method is most important to the final assembly because it determines the quality of the finished product.
4. What is MTS?
MTS stands for Make To Stock which is a conventional manufacturing technique in which manufacturers produce goods on a large scale in accordance with the anticipated demand of consumers. . Some items are put on store shelves for customers to buy, others are stored as inventory.
MTS manufacturing techniques offer fast response times because customers can buy and receive delivery at the same time. MTS is a strategy of “Strengthening Supply Chain”. In a push supply chain strategy, decisions about when to produce and how much to produce depend on anticipated customer demand.
What is MTS?
About the advantages of MTS
Efficient use of resources: Production is planned in advance based on expected demand. Therefore, the use of resources is also properly planned, creating conditions for effective promotion.
Economies of Scale: Since goods are produced on a large scale, fixed production costs are spread evenly across a large number of units of production. It lowers the average cost of production per unit and allows companies to take advantage of the benefits of economies of scale.
Scheduling: Decisions about when to produce and how much to produce are made in advance. Thus, work can progress smoothly according to schedule, and at what point, it is possible to determine how much remains to be completed.
Quick response time: Finished goods are available at the shop, delivered immediately. Customers can choose a product to buy and receive at the same time.
About the disadvantages of MTS
Inaccurate forecasts: Sales may be unusually low during the expected peak season due to some external anomalies, such as a recession. On the other hand, demand may increase unexpectedly during the expected off-season.
Inventory levels: Despite best efforts to provide accurate forecasts, inventories may decrease or remain in excess forever.
Unpredictable consumer preferences: The decision to produce a certain amount of a good is made on the basis of expected demand. However, customer preferences and trends are constantly changing. So there is always a risk of inventory being wasted due to obsolescence.
Above is some information about MTO, ETO, ATO and MTS that Giaiphapdonggoi.net provides to you. Hopefully, this article can help you better understand the production principle as well as its importance to the supply chain.
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