Discrete Manufacturing: Hybrid of Make To Stock (MTS) and Make To Order (MTO)
What is Hybrid of Make To Stock and Make To Stock?
A discrete manufacturer will manufacture some products that have a continuous stream of sales orders via MTS, and some products that need to be customized for certain customers via MTO.
A discrete manufacturer which manufactures small standard trailers and custom trailers for consumers.
What does that mean for the manufacturing management and the inventory management?
For the assembly and for each sub-assembly, a BIll Of Material (BOM) will be created, and production orders will be planned. A sub-assembly may have to be manufactured. Materials Requirements Planning (MRP) that determines which components are short and need to be ordered, and when to order them to be on time with the final assembly, will be needed.
Regarding inventory management, the determination of the ReOrder Point (ROP) and the Order Quantity will be done based on the history of sales orders, forecasts, current stock, purchase orders in transit, shipments in transit, and committed sales orders. This is not an easy task since sales patterns in the past may not apply to the nearby future. Seasonal factors, promotions, pandemics, trade tariffs, new products and unforeseen factors may change totally your sales pattern. Advanced inventory optimization applications that are integrated with Acumatica ERP, do exist such as NetStock, EasyStock, and Goods4Cast.
The Challenges with Hybrid
The Acumatica Manufacturing edition can handle mixed mode manufacturing at the same time. For Make-To_Stock manufacturing you can just create a work/production order. For Make-To-Order manufacturing you can create a work/production order from a sales order in Acumatica.
When you have a mixed mode manufacturing you also have to look at your inventory management as explained in this IFS article.
What solution does Acumatica have to manage hybrid MTS and MTO?
The Acumatica Manufacturing Edition handles the Bill of Material, planned production orders, master production scheduling, MRP and management of the actual production run.