EAF Logistics

Has your life become a cycle of making and selling? Does it seem like you can’t keep inventory on shelves? Selling out does seem like a sign of success. But is it sustainable? Will it lead to growth? No, not unless you can formulate a solid production plan to maximize your efficiency and allow you to convert every sales opportunity available to you. Imagine never losing another sales opportunity due to insufficient inventory levels. 

 Production planning is a critical process in any manufacturing operation. It involves coordinating resources, materials, and equipment to ensure products are produced efficiently, on time, and within budget. There are several different strategies that manufacturers can use to plan their production processes, each with its benefits and drawbacks; here are four (4): 

1. Make-To-Stock (MTS). With MTS, manufacturers produce products based on demand forecasts and maintain a stockpile of inventory. This strategy is well-suited to products with predictable demand patterns, as it allows manufacturers to maintain a consistent supply of products without the need for frequent production runs. However, it can be costly to maintain extensive inventories, and there is a risk of overproduction if demand is lower than anticipated. Ideal for companies with established product offerings. 
2. Make-To-Order (MTO). With MTO, manufacturers produce products only after an order is received. This strategy is well-suited to products with variable demand patterns or customized products, as it allows manufacturers to avoid the costs of maintaining extensive inventories. However, it can be challenging to manage the production process efficiently, especially if orders are frequent and have short lead times. Ideal for companies that are just starting and do not have an established product offering.
3. Assemble-To-Order (ATO). With ATO, manufacturers produce semi-finished products or subassemblies based on demand forecasts and assemble them into finished products only after an order is received. This strategy is well-suited to products with a high degree of customization, as it allows manufacturers to produce a wide range of products without the need for frequent production runs. However, it can be challenging to manage the production process efficiently, especially if there are many different variations of products. Ideal for companies that are refining or have an evolving product offering.
4. Engineer-To-Order (ETO). With ETO, manufacturers produce customized products based on unique customer specifications. This strategy is well-suited to highly specialized products, such as aerospace components or large-scale machinery, as it allows manufacturers to produce unique products that meet specific customer requirements. However, it can be challenging to manage the production process efficiently, especially if there are many different variables to consider. Ideal for companies that have custom product offerings that are manufactured for a specific customer’s use. 

Each method has its advantages and disadvantages, and choosing the right plan for your business depends on various factors, including product type, demand patterns, and available resources. By understanding these strategies and their implications, manufacturers can develop a production planning approach tailored to their business needs. 

Read the entire Production Planning series!

• Production Planning, Which Strategy is Right for Your Business?

• Production Planning, a Spotlight on Make-To-Stock (MTS)
• Production Planning, Make-To-Order (MTO) for the Bespoke Experience
• Production Planning, Piecing Together Assemble-To-Order (ATO)
• Production Planning, Blueprints to Engineer-To-Order (ETO)