MANUFACTURING PROCESSES

MAKE-TO-ORDER (MTO)

• Definition: The Make-to-Order (MTO) process, also known as custom or bespoke production, is
a manufacturing approach where production begins only after a customer's order is received.
With MTO, each product is tailored to the customer's specifications.
• Usage: MTO is often used in industries where products are highly customized, such as fashion
design, luxury automobiles, and high-end furniture. It is also common in the construction
industry and certain service industries where the final product is unique, like architecture and
consulting.
• Recommendations: MTO is an excellent option when customers value customization over
speed or cost, and when product variety is too high to realistically maintain inventory. It's also
preferable when the cost of inventory, whether due to perishability, obsolescence, or storage,
is too high.
• Scenarios to avoid: MTO should be avoided in cases where rapid delivery is a priority since
waiting for orders to start production can lead to longer lead times. It may also be unsuitable
for products that have stable, predictable demand, where maintaining inventory would not be
overly costly or complex.

MAKE-TO-STOCK (MTS)

• Definition: The Make-to-Stock (MTS) process is a traditional manufacturing strategy that

matches production with forecasted demand. Products are manufactured in advance and kept
in stock waiting for the customer's order.
• Usage: This strategy is most common in industries where demand is predictable, and the cost
of inventory is low. Examples include consumer goods like canned foods, personal care
products, and many types of clothing.
• Recommendations: MTS is most suitable when the cost of not having a product available
immediately is higher than the cost of storing the product in inventory. It's also preferable
when products have a long manufacturing lead time but need to be delivered quickly after
being ordered.
• Scenarios to avoid: This strategy should be avoided when products have high carried costs, are
perishable, or prone to becoming obsolete. In these cases, holding a stock can be expensive
and risky. Also, avoid MTS when demand is unpredictable; overproduction may lead to excess
inventory, while underproduction may lead to stock-outs and lost sales.

ENGINEER-TO-ORDER (ETO)

• Definition: The Engineer-to-Order (ETO) process is a manufacturing approach where the

product is designed, engineered, and built to the customer’s specifications after the order has
been placed.
• Usage: ETO is typically used in industries that produce complex and large-scale products such
as industrial equipment, ships, aircraft, and buildings. Here, each product is unique and
requires significant design and engineering work before production can begin.
• Recommendations: ETO is recommended when products are technically complex, require
significant customization, or are new and not yet standardized. It's also ideal when customers
 are willing to wait for the extended lead time required for the design, engineering, and
production process.
• Scenarios to avoid: ETO should be avoided when products are simple, standardized, and can
be easily configured from existing designs. It's also not suitable when the cost of design and
engineering work is prohibitively high or when customers require rapid delivery.

MANUFACTURING PROCESS ASSESSMENT DECISION

Please follow the instructions below to analyze the given case study using the 15-question
questionnaire provided below. This analysis will help you determine the most suitable
manufacturing approach: Make-to-Order (MTO), Make-to-Stock (MTS), or Engineer-to-Order (ETO).

1. Read the case study carefully, paying attention to any specific constraints mentioned.
2. Based on the information in the case study, answer each question from the questionnaire with
either MTO, MTS, or ETO, depending on the most appropriate manufacturing approach for
each question. Assign 1 point for each answer in the corresponding matrix decision table based
on the manufacturing approach selected.
3. Once you have answered all the questions and filled out the matrix decision table, tally up the
points for each manufacturing approach.
4. Analyze the results:
a. If one manufacturing approach has the highest score in the matrix decision table, it
indicates a stronger alignment with the case study requirements. Consider this
approach as a potential solution.
b. If two or more manufacturing approaches have similar scores, further evaluate the
case study details, constraints, and feasibility to make an informed decision.
5. Based on your analysis, make a recommendation for the most suitable manufacturing
approach (MTO, MTS, or ETO) for the given case study. Justify your decision by referring to
specific details from the case study and the analysis results.
6. Prepare a concise report summarizing your analysis, recommendation, and justification.

15-QUESTION DECISION QUESTIONNAIRE

1. Question: Do your products require high customization?

Explanation: If the answer is yes, MTO or ETO manufacturing processes are generally more suitable
because they allow for the greatest level of product customization.

2. Question: Is rapid delivery a top priority for your customers?

Explanation: If so, the MTS process might be more fitting, as it focuses on having ready-made
products available for quick delivery.

3. Question: Is the demand for your products predictable?

Explanation: If yes, MTS can effectively handle predictable demand by ensuring that enough stock
is available to meet anticipated sales.
4. Question: Are your products perishable or do they have high carrying costs?

Explanation: If the answer is yes, MTO or ETO would be more appropriate as these methods
produce products only when there's a confirmed order, reducing risks of spoilage or excess storage

5. Question: Do you have the resources to maintain an inventory?

Explanation: If yes, then the MTS process can be beneficial as it relies on maintaining an inventory
of finished products to meet demand.

6. Question: Do your products have a long manufacturing lead time?

Explanation: If yes, then ETO might be more fitting, as this process often involves a significant
design and engineering phase post-order before production can begin.

7. Question: Do your products require significant design and engineering work?

Explanation: If so, ETO may be more appropriate, as this process allows for complex, custom
designs that can be engineered to meet specific customer requirements.

8. Question: Are your customers willing to wait for extended lead times for a custom product?

Explanation: If the answer is yes, then MTO or ETO processes could work well as these strategies
typically involve longer lead times due to the customization process.

9. Question: Are your products technically complex?

Explanation: If yes, then ETO could be the right fit as this approach is designed to handle the
intricacies of producing complex products.

10. Question: Are your products simple and standardized?

Explanation: If so, MTS could be ideal as this process focuses on producing large quantities of
standard products.

11. Question: Do you have a fast and efficient production process?

Explanation: If yes, MTS might be suitable, as this approach requires a quick turnaround to
replenish stock levels and meet customer demand promptly.

12. Question: Are the costs of not having a product immediately available higher than the cost of
storage?

Explanation: If yes, MTS is likely the best option because it prioritizes having products readily
available, reducing the chance of lost sales due to stockouts.

13. Question: Do your customers expect unique, one-of-a-kind products?

Explanation: If the answer is yes, MTO or ETO would be more appropriate as these processes excel
in delivering custom-made products tailored to specific customer requirements.
14. Question: Are your products ordered in small quantities?

Explanation: If yes, then MTO or ETO might be more suitable, as these processes cater well to low
volume, high variety production.

15. Question: Can your products be modularized, allowing for late-stage customization?

Explanation: If so, a hybrid strategy combining MTS for the generic components and MTO for the
customized components could be advantageous, offering flexibility while minimizing lead time.

MATRIX DECISION TABLE: The questions above have been condensed into a matrix decision table.
Whenever the answer is "YES" you will assign 1 point to the corresponding manufacturing process
indicated in the matrix. Finally, tally the points earned in each column, and the column with the
highest total will be the recommended process for each case.

CRITERIA MTS MTO ETO

1. High customization YES YES
2. Rapid delivery priority YES
3. Predictable demand YES
4. Perishable or high-carrying cost YES YES
5. Resources for inventory YES
6. Long manufacturing lead time YES
7. Significant design and engineering work YES
8. Customers willing to wait for extended lead times YES YES
9. Technically complex YES
10. Simple and standardized YES
11. Fast and efficient production process YES
12. Costs of not having a product immediately YES
available higher than storage costs
13. Customers expect unique, one-of-a-kind products YES YES
14. Products ordered in small quantities YES YES
15. Modularization for late-stage customization HYBRID
MTS+MTO
TOTAL SUM 1-15 SUM 1-15 SUM 1-15