Make-to-Order Production Strategy
Make-to-order (MTO) production strategy is a method that involves manufacturing products after the receipt of customer orders. It guarantees that you will always have customers for the products you produce, and you can adjust production processes based on changing customer preferences, availability of raw materials, and other factors. MTO is an ideal strategy for businesses that offer custom-made products, small businesses with limited capital, and companies that require specialized resources for producing products.
Make-to-Stock Production Strategy
Make-to-stock (MTS) production strategy involves creating stocks of products in advance of customer orders. It allows businesses to maintain a high level of inventory, ensuring that products are readily available for customers. The MTS strategy is common in businesses that have a broader market base, regular demand patterns, and busy sales cycles. It ensures there is no delay in customer orders, and production deadlines can be set and met.
Assemble-to-Order Production Strategy
Assemble-to-order (ATO) production strategy is a blend of both MTO and MTS. It involves establishing a modular system of partially completed products that customers can personalize based on their specific needs. The ATO strategy offers businesses a level of flexibility in production, because the entire product line is not customized for each customer order. It is ideal for businesses that produce a family of products with minimal variations, and businesses that need to get products to market faster.
Engineer-to-Order Production Strategy
Engineer-to-order (ETO) production strategy involves designing and manufacturing products to meet specific customer requirements. The ETO strategy is common in businesses that produce custom-made, complex, and expensive products like ships, aircraft, and industrial facilities. It involves the development and implementation of designs that meet specific customer needs. The ETO strategy is suitable for businesses with highly skilled engineering and production staff, and where products can be made with minimal standardization.
Lean Production Strategy
Lean production strategy is a method that involves the use of fewer resources to produce high-quality goods. It minimizes the amount of work in progress, keeps inventory at minimum levels, and eliminates wasteful activities during the production process. The lean strategy is suitable for businesses that require fast turnaround times, small production runs, multiple product variations, and limited cost overheads. It offers businesses an efficient way to ensure consistent product quality while reducing production costs.
Conclusion: The production strategy that a business uses for a supply chain will depend largely on the type of business, the products produced, and the availability of resources. The different production strategies have varying benefits and drawbacks. Understanding the strategies available and choosing the most appropriate strategies for your business can reduce production time and costs, enhance customer experiences, increase efficiency, and improve the overall performance of your supply chain management.