Make to Order (MTO)
Candlefocus EditorFor businesses, the main benefit of MTO is the ability to provide highly customized goods that cater to individual customer needs. Whether a customer is requesting minor tweaks from an existing design or requesting a completely new item, MTO production allows businesses to meet customer demands more easily. Furthermore, MTO can also help to reduce waste since pre-made goods that do not reach the customer within a reasonable amount of time can be considered wasted. By only producing goods after a customer order is received, businesses can avoid issues of stock obsolescence and finished goods inventory.
However, the main disadvantages to using MTO for a business is increased overall cost and increased waiting time for a finished product. Since production does not start until an order is confirmed, businesses require more upfront work in order to fulfill customer demands. Furthermore, customization and specialized production come with higher unit costs, which can add to the overall capital and manufacturing expenses that businesses must pay. MTO also leads to an increase in waiting times for customers, since goods need to enter the production process first before delivery. Furthermore, MTO can also lead to longer lead times for businesses, since the manufacturing process has to be started each and every time.
Overall, MTO is a production and inventory management strategy that works well and is beneficial in situations when businesses need to customize their production to meet customer demands. While there are many advantages to MTO, the main disadvantage is that it can lead to increased costs and delivery times. Businesses should consider whether the increased cost of production and customer waiting times are worth the benefit of customer customization when considering MTO as an inventory strategy.