ERP Planner: Made-To-Order vs Make-To-Stock

common inventory questions

Made To Order ERP Modules

If you took interest in this article, you probably already get the difference. In made-to-order, production is designed to support one or more unique sales orders, whereas a make-to-stock production process handles predetermined orders based on a sales prognosis.

In a made-to-order system, production orders are initiated by sales orders, which means your ERP system must establish and maintain an unbreakable, yet flexible, link between sales order modules and production modules.

So sales must translate to production orders, which must be monitored en masse and individually (so you can keep customers informed).

So let’s say a client orders your widget, which has many components listed on its bill of material. Some components are used in different widgets.

  1. The sale is converted (via the bill of material) into a production request.
  2. The production request can then be combined with others to inform the production schedule.
  3. The widget’s components are then purchased or manufactured.

As you can imagine, the made-to-order approach can be stressful if your inventory system isn’t flexible. It can especially become challenging to design if your planning process is 100% dependent on the ups and downs of unpredictable clients. At the end of the day, made-to-order production can be less efficient because stock and waste are less predictable. A system which has everything you “might” need “always” in stock is a luxury for most businesses and in the end, questionable in its efficiency. A healthy ERP system for Mac will excel at silo’ing and stacking production orders into batches which, over time, will begin to show predictable trends.

If your business operates on Mac, then you’re in luck, but AcctVantage is cross-platform ERP Accounting & Inventory software designed to accommodate both Made-To-Order and Make-To-Stock scenarios.

Posted in