SAP Best Practise of Make-to-Order Make to Order Production

Jun. 8th, 2009 | Version 0.2 Shanghai Jiang, Lai (George)

Table of Contents

Concept of Make-to-Order Production Make-to-Order Production Process Overview SAP Best Practise for Make-to-Order Production

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Concept of Make-to-Order Production

Make-to-Order (MTO) is a production approach where once a confirmed order for products is received, products are built. MTO is the most appropriate approach used for highly customized or low-volume products. products

Market Requireme nt

Stock Level

Correct and Appropriate Balance

Operationa l Stability

Scenario Engineer-to-Order (ETO)

P:D* D>>P

Characteristic The product is designed and built to customer specifications

Typical Usage Large construction projects and one-off products, such as Formula 1 cars High-end motor vehicles and aircraft Dell's approach to customizing its computers The grocery and retail sectors

Make-to-Order (MTO)

D>P

The product is based on a standard design, but component production and manufacture of the final product is linked to the order placed by the final customer's specifications The product is built to customer specifications from a stock of existing components. This assumes a modular product architecture that allows for the final product to be configured in this way The product is built against a sales forecast, and sold to the customer from finished goods stock

Assemble-to-Order Assemble to Order (ATO)

D<P

Make-to-Stock (MTS)

D=0

* P is defined as the production lead-time, i.e. how long it takes to manufacture a product, and D is the demand lead-time, i.e. how long customers are willing to wait for the order to be completed

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Make-to-Order Production Process Overview

Vendor
Purchase Requisition

Production Plant
Material Requirements Planning

Customer
Inquiry (optional)

Purchase Order Execution

Goods Receipt for Purchase Order

Create Production Order

Quotation (Optional)

Invoice

Goods Issue to Production Order

Release and Print Production Order

Sales Order Processing

Goods Receipt from Production Order

Confirm Production Order w/ or w/o Backflush

Delivery

Month-end Closing

Picking and Packing

Goods Issue against Delivery

Invoice

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SAP Best Practise for Make-to-Order Production

Market Requireme nt

Stock Level

Correct and Appropriate Balance

Operational Stability

Aggregation Aggregationbased Demand Planning on Product Level

Planning with Planning Material

Proactive P ti Demand Management

Pre-procurement of the Long Lead-time Common Parts

Component Supppy with Pull + KANBAN + JIT

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Thanks for your attention!

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