Advantages and Disadvantages of Make to Order

4/20/22 2:30 PM

Within manufacturing, there are two methods of dealing with inventory: having a substantial amount - or none at all. Now, choosing which way to deal with inventory could be a bit simplistic or a complex process. Therefore, you should ask yourself a few questions before determining whether you should be a make-to-order operation or a make-to-stock operation. 

happy-manufacturing-workers

How long does it take to produce your product? Are your customers far away and may need extra time to ship the product to them? How costly is holding your product in a warehouse or having excess inventory? These questions are essential to ask yourself when deciding on your form of inventory control and how you are choosing to deal with it. Within this blog, we will draw an emphasis on make-to-order and how it may be the most beneficial option for your operation. Therefore, here is a brief explanation of what exactly make to order is and how the advantages and disadvantages associated with the methodology. 

What is Make to Order and The Advantages and Disadvantages Associated With It

Make-to-order pertains to fulfilling orders when the consumer requests them. Depending on the industry and the product you are looking for, make-to-order will usually enable the customer to make variations and customizations based on what they want due to the advantage of not being produced yet. This is generally conducted through a well-organized business that has the materials and components on-site ready, allowing manufacturing to begin and not be delayed. Make-to-order products exist underneath a pull system. 

The advantages of made to order include the following:

  • Waste Minimization: Waste minimization is one of the most substantial advantages of make-to-order, considering that it is a method underneath other waste minimization concepts such as lean and JIT. Make to order doesn’t just reduce waste within the production operation - it cleans the entire process up. It allows costs, production, materials, and anything considered excess to be eliminated from the procedure. If anything is deemed wasteful, make to order removes this problem. 
  • Reduce the Risk of Inefficiency: Inefficiency is another component within manufacturing that is heavily considered and discussed. All manufacturing takes place on receiving consumer orders, which means that operations are directed to focus on manufacturing products as efficiently as possible. Make to order cleans up the process by focusing on a particular consumer's order. You will need to decide when to begin production through school forward or backward scheduling. 
  • Customizable Products: Customers will come to you when they wish to have a more personalized shopping experience. Usually, these will be high-paying customers looking for quality measurements instead of anything off of the shelf. Customizable products will ensure that the customer can pick precisely what they are looking for and ultimately be happier with the outcome considering they hand-picked all of the parts within it, thus ensuring a more quality product. 

The disadvantages of make to stock include the following: 

  • Irregular Sale Demands: Peaks or spikes in sales tend to occur for all businesses, which is one of the greatest downfalls of make-to-order. As opposed to making to stock, the orders need to be produced after the customer places the order, which leads to much longer lead times. Overall, this leads to a significant strain on your business. 
  • Material Stock Falling Behind: To achieve an actual JIT or lean operation, it is essential to have suppliers on board and get material to you quickly. Making-to-order's fundamental nature always pertains to being primed and ready for the next customer order, thus ensuring that manufacturing begins as soon as possible. Unfortunately, there can be the in-stock level reading of materials, or a substantial number of orders can push you backward. Running out of materials and supplies is a significant disadvantage of make-to-order operations. 
  • Customer Wait Times: Customer wait times are by far one of the most important, if not the most crucial aspect, that needs to be considered when generating a product. Long lead or wait times may make customers sway away from your product, so ensuring the quickest and most efficient operation is necessary. 

A software that can aid in implementing processes about make-to-order includes PlanetTogether’s Advanced Planning and Scheduling (APS) Software. APS Software has become an integral component of manufacturing operations seeking to enhance operational efficiency and ultimately reduce waste, increase profitability, and take their process to the next level. Therefore, PlanetTogether’s Advanced Planning and Scheduling (APS) Software is a must for manufacturing facilities seeking to enhance their operation.

Advanced Planning and Scheduling Software 

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix, fast delivery, and downward cost pressures. APS can be quickly integrated with ERP/MRP software to fill gaps where these systems lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

  • Create optimized schedules balancing production efficiency and delivery performance
  • Maximize output on bottleneck resources to increase revenue
  • Synchronize supply with demand to reduce inventories
  • Provide company-wide visibility to capacity
  • Enable scenario data-driven decision making

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

Related Lean Video

 APS Resources

Topics: manufacturing, analytics, workload, manufacturing technology, manufacturing process, operations scheduling, lot for lot, manufacturing trends, manufacturing planning and control, make to order

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