Make-to-Order (MTO) and production management software solutions
The organization of industrial activities is a key factor for success. This is why production management must be approached in a unified way by coordinating all resources and prioritizing activities according to the company’s operational and strategic objectives. In this context, choosing the right production strategy for each industry is important for the medium and long-term development of companies. The main production strategies are MTO (Make-to-Order) and MTS (Make-to-Stock), which each company either manages separately, focusing on only one of them, or combines them according to the products it manufactures and the evolution of demand in the markets where it operates.
What is MTO? What are its characteristics?
MTO production is made-to-order production according to customer specifications. Unlike MTS (Made-to Stock), which is mass or proactive production strategy, MTO does not involve the creation of stock based on forecast demand, but the production of customized products according to orders received from customers.
In the case of made-to-order production strategy, beside the fact that finished products are customized to specific requirements, there are other advantages: losses due to obsolescence are reduced, because the remaining finished products are in small quantities or not at all, and the resulting waste materials are fewer. On the other hand, MTO also has disadvantages: demand is not constant, it takes longer to produce and deliver customized products, and production and sales costs are higher than those applicable to MTS.
MTO production planning is also simpler than the MTS one as it does not take into account previously produced products remaining in the inventory, nor does it involve advance procurement of raw materials and WIPs. The availability of raw materials is a potential risk because, in the absence of safety stocks, any new order requires a supply/replenishment of the necessary material resources. This action takes time and it is influenced by market fluctuations and variations in purchase prices.
Because of the uneven pace of production activities in MTO, software systems are needed to adjust workflows when there’s a lack of demand so that the efficient operation of production lines is not affected.
MTO production management software solutions
The Axes Software specialists have created the xTrack MES application, a complex software system that, in addition to managing resources and production processes, and monitoring execution, also allows, unlike other MES solutions, the planning of technological operations. Moreover, the application is flexible and can manage both MTO and MTS types of production orders.
MTO orders come from external sources (they are not internal orders, generated on the basis of forecast demand) or are manually entered into xTrack MES. The technological operations planning module for such an order does not take into account data on stocks of raw materials and WIPs (because they do not exist) or existing finished products (because the surplus left over from a previous order, if any, cannot be considered for the new order due to the mismatch of product characteristics).
According to the MTO characteristics, the exact quantities specified in the orders sent by the customers must be produced, so automatic control is necessary: the surplus remains in the warehouse, and if there are shortfalls in the production volume achieved, a new production order is automatically scheduled.
There are special functionalities within the xTrack MES application that monitor the order execution status on the production lines in real time. Interfacing xTrack MES with a WMS application ensures traceability and batch genealogy. In addition, the application includes a module to check the technical quality conditions of the finished products that are ready for delivery.
In addition to production planning (functionality specific to Advanced Planning and Scheduling (APS) software systems), the xTrack MES modules ensure the coordination of machine feeding operations, the accurate real-time registration of reworkable and non-reworkable scraps.
Interfacing xTrack MES with other applications or systems enables the automatic retrieval, centralization and processing of a variety of production and consumption data as well as information on resources (production times, personnel involved, machines and equipment used) and finished products.
In short: the application’s functionalities for automatic planning of technological operations and coordination of production logistics make MTO and MTS more efficient. With xTrack MES, errors are eliminated and production start-up times are reduced by 50%. The software solution provides full visibility of technological operations, integration with the Quality Control module and automatic control of material moves between different machines.
By properly implementing xTrack MES on production workflows and linking it with xTrack WMS modules, product traceability, data collection by scanning codes on production lines, connection between incoming raw materials and outgoing finished products is ensured. Tasks are assigned to the staff employed and a record of customers is automatically kept for the delivery of customized orders.
Find out more about the xTrack MES solution and how it can help you manage your company’s production activities. Contact our consultants by filling in the form below!
