Flexible Make to Order (MTO) Manufacturing

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Made to Order (MTO) Manufacturing is the oldest style of order fulfillment that is not without its pros and cons.  Providing customized products to happy customers can lead to great long-term business relationships.  The risk in MTO manufacturing is with inventory control.  Too much inventory exhausts cash flow and too little inventory can impact your ability to supply products to customers on time – risking those long-term relationships.  You can exert greater inventory control and maintain unsurpassed customer service with enterprise resource planning (ERP) software.

The monetary value of inventory that you use in the MTO products for your customer may determine how much buffer inventory you keep on hand versus how much you need to order when a customer order is confirmed.  Low value, high volume parts may not put a large dent in cash flow, but there is a risk to storing too much low value inventory or storing higher value inventory.  A customer that is impacted by the economy or poor product sales could stick you with inventory that you store too long, or worse yet, expires and is turned to waste.  Many ERP software solutions include inventory demand management functionality, such as that with Microsoft Dynamics® GP, which you can use to identify trends in customer buying habits and improve inventory control.  Greater insight into specific MTO products will help you determine appropriate buffer inventory levels and when to procure inventory when levels get low.

Microsoft Dynamics GP also offers greater visibility into your supply chain.  Supplier details organized in a single software solution will make it easier to learn who your reliable suppliers are, what their different price structures are for bulk orders, and shipment options.  This information will streamline procurement and give you confidence that you can receive materials when you need MTO products for your customers.  With this data at your fingertips, you may be able to shave some cost off procurement when ordering in bulk, or early enough, while you get factory lines ready for manufacturing operations.

MTO is a common manufacturing practice that is appreciated by customers that order customized products or have important specifications.  Solid, long-term business relationships can be established when you provide quality products, at good prices, and deliver them on time.  The risk with MTO is with maintaining appropriate inventory levels without breaking the bank.  Contact Socius for more information about the demand planning and inventory control functionality in Microsoft Dynamics GP.

By Socius, Ohio Microsoft Dynamics GP Partner

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