Sunday, December 14, 2008

Different manufacturing strategies

Which are different manufacturing strategies?

There are 4 manufacturing strategies

a) Make to stock(MTS)
b) Make to Order(MTO)
c) Assemble to Order(ATO)
d) Engineer to order(ETO)

In MTS, stock is created by companies for items without receiving an order from customer. Examples are manufacturing of refrigerators, washing nachines and Television sets. They are manufactured in a flow shop based on master schedule and stocked in finished goods subinventory until they are shipped to a cutomer.

MTO are manufactured after receiving customer order, which means customer is willing to accept longer delivery period. The examples are commercial dish washers and refrigerators for hotels. These items are produced in a flow shop or in job shop depending up on the range of product families produced by the factory. In order to reduce lead time the factory often uses ready components to manufacture a product.

In ATO, stock of existing items is kept on hand but they are sub assemblies, not the finished product. The company uses final assembly orders to put the finished product together according to specifications of the customer order. This involves some extra lead time but not as much as MTO. Private aircrafts, commercial trucks and computers are the examples of ATO. ATO items may be produced either in flow shop or job shop. ATO offers many variations in standard product because of the choices the customers have in deciding final product from options provided .

ETO item is built on the customer product specifications such as large commercial aircrafts. Such product can not be produces according to existing specifications of the company because some engineering skill is required to incorporate customer specifications in to the design of the final product. Companies using this manufacturing strategy, always quote longer lead time .The engineering and manufacturing costs involved are also high and are tracked for each order separately.

1 comment:

  1. hi, great work on the posts.
    i have a question regarding ATO manufacturing...
    if ATO configurations are used, and when there are assemblies and sub-assemblies under the top ATO item,(i.e ATO items underneath an ATO item),
    and the order is going to production line. when the work orders gets released. there would be multiple work orders at each of the ATO items defined. now is there a way to link the work orders/discrete jobs.



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