Manufacturing principles refer to the fundamental concepts that guide the process of producing goods. They are designed to ensure that products are manufactured efficiently, cost-effectively, and to a high standard of quality. The four main manufacturing principles are make-to-stock, make-to-order, configure-to-order, and engineer-to-order. In this blog post, we will discuss each of these principles in detail and provide real-world examples to illustrate their application.
Make-to-Stock (MTS)
Make-to-Stock (MTS) is a manufacturing strategy that involves producing goods based on anticipated customer demand. In other words, products are manufactured in advance and stored in inventory until they are needed. MTS is commonly used for standardized products that have a predictable demand pattern, such as soft drinks or snack foods. The goal of MTS is to ensure that products are available for immediate delivery when customers want them.
One example of a company that uses MTS is Coca-Cola. The company produces large volumes of soft drinks and stores them in warehouses until they are needed. This enables the company to quickly fulfill customer orders and maintain a consistent supply of products in the marketplace.
Make-to-Order (MTO)
Make-to-Order (MTO) is a manufacturing strategy that involves producing goods only after a customer places an order. In other words, products are not produced until there is a confirmed customer demand. MTO is commonly used for customized products that are tailored to the specific needs of individual customers, such as furniture or jewelry.
An example of a company that uses MTO is Gemvara, an online jewelry retailer. Customers can design their own jewelry on the company's website and the pieces are only produced after the customer places an order. This enables the company to offer a wide range of customization options while minimizing inventory costs.
Configure-to-Order (CTO)
Configure-to-Order (CTO) is a manufacturing strategy that involves producing goods based on pre-defined product configurations. In other words, products are assembled from pre-manufactured components or modules to create a finished product that meets the customer's specific requirements. CTO is commonly used for products that have a high level of variability, such as computers or automobiles.
An example of a company that uses CTO is Dell, a computer manufacturer. Customers can configure their own computer on the company's website by selecting from a range of pre-defined options for components such as processors, memory, and hard drives. The company then assembles the computer based on the customer's chosen configuration.
Engineer-to-Order (ETO)
Engineer-to-Order (ETO) is a manufacturing strategy that involves producing unique products that are designed to meet the specific requirements of individual customers. In other words, products are not produced until there is a confirmed customer demand and each product is designed from scratch. ETO is commonly used for highly specialized products such as custom-built machinery or large-scale infrastructure projects.
An example of a company that uses ETO is Siemens, a global technology company. The company designs and builds custom solutions for a wide range of industries, including energy, healthcare, and transportation. Each solution is designed from scratch to meet the specific needs of the customer, requiring a high level of engineering expertise and customization.
In conclusion, manufacturing principles are essential to the production process, and companies must choose the right strategy to meet their specific needs. Make-to-Stock (MTS) is ideal for products with predictable demand patterns, Make-to-Order (MTO) is ideal for customized products, Configure-to-Order (CTO) is ideal for products with a high level of variability, and Engineer-to-Order (ETO) is ideal for highly specialized products. Companies can use these principles to optimize their manufacturing processes and deliver high-quality products to customers.