1/21/2018 Make to Order (MTO) and Make to Stock (MTS) - ERP Operations - SCN Wiki

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Make to Order (MTO) and Make to Stock (MTS)

Created by Jyoti Prakash, last modified by Alexander Teslyuk on Jan 10, 2014

The difference between MTO and MTS is

MTO--> Make to Order
Production is the process where the production order is triggered from a Sales Order. Ex: The Prod process will start only after receiving the sales order from the customer. In this case the product could
be customer specific only (Variant)

MTS--> Make to Stock

MTS scenario can be accomplished by the following settings
Need to use strategy group 20 in material master MRP view-Strategy group 20 is assigned to strategy 20
Strategy 20 is assigned to Requirement type KE (Individual customer requirement)
Requirement type KE is assigned to requirement class 040 (Indiv.cust.w/o cons.)
Requirement class has all the parameters where we can define Production order type that will be used to create the prod order. The above link needs to be established.

Also the MTS can be achieved using Sales Order schedule line category which will be assigned to Requirement type/class. Item category is assigned to Reqtype/class and the Item category is maintained
in the material master.

You can use any of the above config settings.

For MTO --> you just need to have all PP cycle settings in place nothing special needed as it is a plain PP cycle.

1. Make-to-order production is a process in which a product is individually manufactured for a particular customer. In contrast to mass production for an unspecified market where a material is
manufactured many times, in make-to-order production a material is created only once though the same or a similar production process might be repeated at a later time.

2. You can use make-to-order production in two scenarios -

(a) For branches of industry or products where a small quantity of products with a large number of different characteristics are manufactured (Variant Configuration).
(b) When a product has to be assembled particularly for a sales order (Individual Customer Requirement).

3. Stock keeping is not usually carried out for products that are made to order. In companies using make-to-order production, the demand program only determines the production area, in which various
variant types are produced. Depending on how you track the costs associated with make-to-order production, there are two ways to process make-to-order items during sales order processing.
(a) Make to order using sales order
(b) Make to order using project system (not relevant for SD application)

4. For make to order production using the sales order, all costs and revenues involved for an order item are held collectively at that item. A particular rule is used that can be changed manually to transfer
costs to profitability analysis.

5. Make to order production is largely a production planning configuration. It is also controlled by the requirements type, which is determined by three things
the strategy group (MRP 3) in MMR
the MRP group (MRP1) in MMR
the item category and MRP type (MRP 1)

6. Make-to-order production is controlled by the requirements type. The requirements type is determined on the basis of the MRP group (MRP1) and the strategy group (MRP3) in the material master
record. In addition, a plant must be assigned for make-to-order items in the sales order.
make to order mto stock mts sd

2 Comments
Odaiah Pelley
Hi

Please correct the wordings MTS to MTO.

MTS--> Make to Stock

MTS scenario can be accomplished by the following settings
Need to use strategy group 20 in material master MRP view-Strategy group 20 is assigned to strategy 20
Strategy 20 is assigned to Requirement type KE (Individual customer requirement)
Requirement type KE is assigned to requirement class 040 (Indiv.cust.w/o cons.)
Requirement class has all the parameters where we can define Production order type that will be used to create the prod order. The above link needs to be established.

Also the MTS can be achieved using Sales Order schedule line category which will be assigned to Requirement type/class. Item category is assigned to Reqtype/class and the Item category
is maintained in the material master.

You can use any of the above config settings.

These are MTO Settings.. Please correct the blog.

Borson Sarker
Helpful article

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