Difference Between MTS, ATO, MTO, PTO, CTO and ETO

Make-to-stock (MTS) In MTS environments, products are created before receipt of a customer order. Customer orders are then filled from existing stock, and then those stocks are replenished through production orders. MTS environments have the advantage of decoupling manufacturing processes from customer orders. Theoretically, this enables customer orders to be filled immediately from readily available stock. It also allows the manufacturer to organi e production in ways that minimi e costly changeovers and other disruptions. !owever, there are risks associated with placing finished goods into inventory without having a firm customer order or an established need. These risks tend to limit MTS environments to simple, low"variety, or commodity products whose demand can be forecasted readily. Assemble-to-order (ATO) In #T$ environments, products are assembled from components after the receipt of a customer order. The key components in the assembly or finishing process are planned and stocked in anticipation of a customer order. %eceipt of an order initiates assembly of the customi ed product. This strategy is useful when a large number of end products based on the selection of options and accessories can be assembled from common components. &hen products are too complex or customer demand is unpredictable, manufacturers may choose to hold subassemblies or products in a semifinished state. The final assembly operation is then held until a firm customer order is received. In this environment, manufacturers theoretically cannot deliver products to customers as 'uickly as MTS environments, since some additional time is re'uired to complete the final assembly. Make-to-order (MTO) In MT$ environments, products are made entirely after the receipt of a customer order. The final product usually is a combination of standardi ed and custom items to meet the customer(s specific needs. MT$ environments are more prevalent when customers are prepared to wait in order to get a product with uni'ue features) usually customi ed or highly engineered products. This is analogous to the difference between a fast"food restaurant and a full"service chain restaurant. MT$ environments are slower to fulfill demand than MTS and #T$ environments, because time is re'uired to make the products from scratch. There also is less risk involved with building a product when a firm customer order is in hand. Engineer-to-order (ETO) In *T$ environments, customer specifications re'uire uni'ue engineering design, significant customi ation, or new purchased materials. *ach customer order results in a uni'ue set of part numbers, bills of material, and routings. *T$ environments theoretically are the slowest to fulfill+ Time is re'uired not only to build the product, but to custom design it to meet the customer(s uni'ue re'uirements.

#ssemble to Order ,#T$- and Pick to Order ,.T$- are stocking strategies that are used by manufacturers, when they can produce a variety of finished products from a relatively small number of subassemblies and components. This stocking strategy is widely known as the /hourglass0 strategy, where you maintain your inventory at the narrowest level in your bill structure. This maintains inventory in a more flexible state and helps minimi e your inventory investment. #n #T$ environment is where you wait until you have an actual sales order before you begin manufacturing the finished product. .T$ implies that you will pick multiple items based on one line item on a sales order.

Configure To Order Environment

In both #T$ and .T$ environments you might actually configure products based on the customer order, or simply manufacture or ship standard products or predefined configurations. # configure to order environment is where you allow your customers to configure the finished product that they intend to buy. Typically you will offer a variety of choices to your customer from which they can choose the best options that suit them.

Market Orientation versus Stocking Strategies

&hether you offer configurable products depends on your market orientation1 but if you do, you cannot follow a Make to Stock strategy. 2ou will potentially follow one of the three possible stocking strategies)Make to Order ,MT$-, #T$, or .T$, depending on the complexity of your products ,how configurable your products are-. $n the contrary, you can operate with an MT$3#T$3.T$ stocking strategy but still choose not to offer configurable products. The difference between MT$ and #T$ is the level at which you stock your components. So, from here on, when we mention #T$ we really mean both #T$ and MT$ because the business processes are similar albeit the stocking levels are different.

ATO/PTO Scenarios
In a configuration scenario, a model bill of material is used to represent the list of choices1 if there4s no need to offer choices, a standard bill of material is used. The difference between models and items is essentially the ability to configure an item while creating an order. 5eyond this creation of the configuration item, the manufacturing and distribution processes are the same for both models and standard items

In an #T$ environment, the strategy is to forecast, build, and stock the subassemblies and parts that are used in the model. $racle offers two flavors of #T$)the first one is the #T$ model in which the customers can

configure the product to their liking, and the other one is the #T$ item that is preconfigured. $nce the customer order is received, the subassemblies and components are assembled, according to the instructions in the routing, and shipped.

6or configurable models, the subassembly3component list will vary with respect to each order and so will the manufacturing instructions ,routing-. So, a notional item is created for each uni'ue combination of options using an automatic process. This item can be numbered and named according to your business needs. 6or example, when a model called M789:;< is ordered with a set of chosen options, the system will create a notional item to represent the chosen options, and numbers the new item as M789:;<=;;, based on your 5$M parameters. This item is referred to as the configuration item in $racle #pplications.

The strategy in .T$ is similar, although there is no manufacturing. There are two flavors of .T$ as well).T$ models that can be configured by the customers and .T$ kits that are ordered as they are. 5ecause there is no manufacturing involved, .T$ models or .T$ kits can be shipped as soon as they are ordered, depending on the availability of the re'uired items. &hen the pick list is generated for these items, the individual items that were selected ,in the case of a .T$ model- or that were part of the standard .T$ kit will be printed in the pick list, which can then be picked and shipped.

$racle allows you to have hybrid items such as an #T$ model within a .T$ model. Starting with %elease >>i9, $racle supports multiple levels of configuration within a model1 the applications will generate a uni'ue configured item for each #T$ model within a structure. .rior to %elease >>i9, however, multiple #T$ models could be used, but the result was one flat bill of material for all levels of configuration in the structure.