what is make to order mto 
the term make to order mto refers to a business production strategy that typically allows consumers to purchase products that are customized to their specifications as such make to order is a manufacturing production process in which the production of an item begins only after a confirmed customer order is received mto is part of the pull through production process which occurs when companies produce goods based on actual consumer demand it is common in certain industries such as the aircraft and automotive industries understanding make to order mto as noted above make to order is a business strategy used by manufacturers to meet consumer demand it means that a company only manufactures the end product once the customer places the order while this creates additional wait time for the consumer to receive the product it does allow for more flexible customization when compared to purchasing directly from retailers shelves this strategy is a pull through production or pull type supply chain operation because products are only made when strong customer demand exists this production model is commonly in the assembly industry where the quantity needed to be produced per product specification is one or only a few this includes specialized industries such as aircraft and vessel production automotive and construction among others mto is also appropriate for highly configured products such as computer servers automobiles bicycles or products that are very expensive to keep inventory here s how the mto process works some companies adopt the mto production system to manage inventory levels and provide their customers with increased customization the mto strategy relieves the problems of excess inventory that are common with other types of production strategies dell is an example of a business that uses the mto production strategy wherein customers can order a fully customized computer online and receive it in a couple of weeks make to order is also known as made to order or mass customization advantages and disadvantages of mtothe main advantage of the mto system is the ability to fulfill an order with the exact product specification required by the customer if the company can deliver the product just as the customer wants they are more likely to remain loyal to the brand sales discounts and finished goods inventory are also reduced and stock obsolescence is managed as such it ensures that companies can get full price for their goods it also reduces waste and helps promote efficiency one of the main drawbacks of make to order management is the timeliness of the customization process if products are already on the shelf as with mts then a customer doesn t have to wait until the product is made assembled and delivered to spec cost is also a factor pre made and available products are all alike and so manufacturing costs are lowered due to economies of scale mto on the other hand tends to be more expensive for the consumer since it involves customizable parts and finishes meets specific needs of customersreduces waste and promotes efficiencylonger production processcustomization is expensivemake to order mto vs make to stock mts vs assemble to order ato traditional strategies produce products and stock them as inventory until a customer buys them this is known as make to stock mts unlike mto which is meant to reduce waste and be more efficient mts may be prone to wastage and obsolescence as inventory sits on shelves waiting to be purchased this problem is particularly acute in an industry like technology where advancement is quick and the problem of obsolete inventory could quickly arise the mts method is a theoretically great way for companies to prepare for increases and decreases in demand however inventory numbers and production are derived by creating future demand forecasts based on past data but there is a high likelihood that the forecasts will be off even if just slightly this means that a company may be stuck with too much inventory and too little liquidity this is the main drawback of the mts method of production inaccurate forecasts will lead to losses stemming from excess inventory or stockouts excess inventory can quickly become obsolete in fast paced sectors like electronics or computer tech mto is similar to assemble to order ato ato is a business production strategy where products ordered by customers are customizable to a certain extent and produced quickly the ato strategy requires that the basic parts of the product are not assembled instead they are already manufactured and ready for use once an order is received the parts are assembled quickly and sent to the customer costs vary in the ato strategy where assembly costs are negligible while the cost of the components can be substantial this manufacturing process is common in the electronics industry which involves computer production consumers and computer companies may design specific devices using customized components like monitors and keyboards for an mto system to succeed it should be coupled with proactive demand management companies should also understand that the mto system is not appropriate for all types of products such as goods for everyday use example of mtothe mto strategy is not suitable for every product or industry everyday goods and services which are meant for mass consumption are not manufactured in an mto process because of the intricacies and costs involved mto tends to be used in certain specialized industries including mto is very common in property development many real estate developers buy large plots of land and sell them to consumers builders allow home buyers to make customizations in the design and construction of their homes this includes floor plans architectural designs and the use of fixtures for instance companies like pulte homes offer customized homes in many states across the u s 1