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What is MTS and MTO and the difference between them?

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)

Make To Order Production


This strategy still is for standard products which have a clearly defined specification. Other
than MTS, there is absolutely no forecast on products which are made to an order from a
customer. You start production after the customer’s request comes in and not, like with
MTS, beforehand.
When you identify a product to be made to order, the availability check in the Sales Order
needs a lead time; the time it takes to replenish or produce the product from soup to nuts.
Therefore when a customer requests the item, no freely available stock to fulfill the order
can be found. Everything is made from scratch and takes its time.

Disconnect between Sales and Production #2: You cannot plan for a 100% (or more!)
utilization on the production line and allow for the free flow of orders, which were set to
MTO, into the production schedule. All too often there is pressure to fully utilize the line; and
that can only be done with orders resulting from a forecast. If MTS fills the line and MTO
orders drop on top, they fall into backlog and the quoted lead time to the customer is a
farce.

Make To Stock Planning


When your product is a commodity that can be sold out of a catalog and is defined and
specified through a master record, it can be planned; if it is somewhat predictable. A steady
consumption in the past helps predicting the future, however, there may be events in the
future which require a more forward-looking planning process.

In any case, if you can somewhat predict what will happen, you may consider a Make To
Stock strategy. Even if it is hard to predict the future, but the customer does not accept long
delivery times, you might be required to make some of your product to stock.

Making to stock means production without actual requirements. The Sales Order does not
drive the production program but the forecast does. Incoming Sales Orders use existing
inventory for the delivery which keeps the customer lead time to a minimum.

Once your product is identified as a ‘Make To Stock’ the availability check in the Sales
Order must look for inventory and not place additional load in the production program. If
there is no stock your service level degrades and the customer needs to wait for the next
receipt from production.
Disconnect between Sales and Production #1: the “customer is king” paradigm does not
have any validity in an MTS scenario. If you want to make the customer the king you need
to make your product to that customer’s order.
For a long time, I have had a spreadsheet that I referred to with all of the standard SAP planning
strategies and their corresponding requirements types. I thought I would share it with you.These are the
strategy group entries found in transaction OPPT with the English descriptions. The strategy assignment
to the various independent and customer requirements types can be found in transaction OPPS. The full
list of requirements types can be found in transaction OVZH or OMP1.

Strategy Indep. Customer


Description
Group Req. Type Req. Type
10 Make-to-stock production LSF KSL
11 Make-to-stock prod./gross reqmts plng BSF KSL
20 Make-to-order production n/a KE
21 Make-to-order prod./ project settlement n/a KE
25 Make-to-order for configurable material n/a KEK
26 Make-to-order for material variant n/a KEL
30 Production by lot size LSF KL
Strategy 20 (KE) or 30 (KL).
31 Prod. by lot, with make-to-order prod.
Default is 20.
Strategy 30 (KL) or 20 (KE).
32 Make-to-order prod. with prod. by lot
Default is 30.
Strategy 30 (KL) or 40 (KSV).
33 Prod.by lot, with plng with final assem.
Default is 30.
40 Planning with final assembly VSF KSV
Strategy 40 (KSV) or 20 (KE).
41 Plng with final assem, with make-to-ord.
Default is 40.
50 Planning without final assembly VSE KEV
51 Plng w/o final assembly / project settl. VSE KEV
52 Plnng w/o final assem. w/o make-to.stock VSE KSVS
54 Planning variants VSE KEKT
55 Planning variants w/o final assembly VSE KELV
56 Characteristics planning VSE KEKS
59 Planning at phantom assembly level VSEB n/a
60 Planning with planning material VSEV KEVV
61 Plng with plng material / project settl. VSEV KEVV
63 Planning w.plng material w/o mke-to-ord. VSEV KSVV
65 Planning variants with planning material VSEV ELVV
70 Planning at assembly level VSFB n/a
74 Plng at assembly lvl w/o final assembly VSEM n/a
80 Project settlement for non-stock items n/a KPX
81 Assembly processing with planned orders n/a KMSE
82 Assembly processing w. production orders n/a KMFA
83 Assembly processing with networks n/a KMNP
84 Service orders n/a SERA
85 Assembly processing with network/project n/a KMPN
86 Assembly processing with process orders n/a KMPA
89 Assembly proc. w. characteristics plng VSE KMSE
Below is a table of the requirements types found in the strategy group assignments above. The
requirements classes can be found in transaction OVZG.

Req. Req. Type Req. Req. Class


Type Description Class Description
BSF Gross planned indep. reqmts 102 Gross reqmts plnning
ELVV Make-to-ord.variant + plngMat. 061 Mk->O. MatVar.PlgMat
KE Indiv.cust.ord. w/o consumpt. 040 MkToOrdNoValW/o cons
KEK Make-to-ord.configurable mat. 046 MMTO config. value.
KEKS Ord. + cons. of char. planning 043 Mke-ord.cons.charPlg
KEKT Order + consumption of variant 042 Mke-ord.cons plgVar.
KEL Make-to-order, mat. variants 047 MkToOrd.-mat.variant
KELV Make-to-ord.variant + consumpt 048 Mke->O.mat.var.cons.
KEV Make-to-order with consumption 045 MTO val. with cons.
KEVV Indiv.cust.with plng mat.cons. 060 Mke->O.Cons. plngMat
KL Sales ord.manufact.by lot size 041 Order/delivery reqmt
KMFA Assembly with production order 201 Assembly: prod.order
KMNP Assembly with network orders 202 Network
KMPA AssemOrd. with process orders 206 Process order, stat.
KMPN AssemOrd. with network/project 212 Netplan/proj.settlmt
KMSE Assembly planned order 200 Assembly: plnd order
KPX Project account assgmt or IM 075 Project w/o stock
KSL Sale frm stck w/o ind.req.red. 030 Sale from stock
KSV Sales Ord w. consumpt/Delivery 050 SlsOrd w consu./Delv
KSVS Stock with cons.w/o final ass. 049 Stk w.cons.w/o F.Ass
KSVV Stock with consum.of plng mat. 070 Wrhse cons.plng mat.
LSF Make-to-stock production 100 Make-to-stock prod.
SERA Service order 203 Service order
VSE Planning w/o final assembly 103 Plnng w/o assembly
VSEB Planning; phantom assemblies 106 Plng phantom assemb.
VSEM Plng assemblies w/o final ass. 107 Plng assy w/o fn.ass
VSEV Planning the planning material 104 Planning plng mat.
VSF Planning with Final Assembly 101 Plnng with assembly
VSFB Planning for assemblies 105 Assembly planning