Assemble to Order (ATO)
Candlefocus EditorA good example of an ATO strategy is a PC-maker who will choose different components from suppliers such as motherboards, keyboards, and monitors to craft custom PCs as ordered. This model is cost-efficient for the PC-maker since the cost of assembling the different components once ordered is negligible, but the cost of manufacturing the different components is considerable.
The ATO approach can be beneficial in some industries, like car manufacturing. In this situation, companies can use a more predictable stock of components—like tires, motors, and axles—to assemble standardized cars. As customer orders come in, companies can quickly assemble the cars using their stock of components, while still allowing customization by allowing customers to choose different options such as upholstery and exterior color.
The ATO approach is a great fit for companies who need to customize their products after receiving customer orders. This approach lowers the costs associated with manufacturing, as it allows companies to use a more predictable stock of components that can be prevented for long periods of time, reducing lead times and order delays. ATO can be used in combination with many other business processes, such as make-to-order or make-to-stock, to make the production process more streamlined and efficient.