What is Make To Stock?
Make to stock (MTS) is a traditional production strategy that is used by businesses to match the inventory with anticipated consumer demand. The MTS method requires an accurate forecast of this demand to determine how much stock it produces.
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 Make To Stock
The two main drawbacks of make-to-stock management are difficulty with forecasting and high risk of overstocking or understocking.
What solution does Acumatica have to manage Make To Stock?