Manufacturing businesses are continually seeking to cut back on wasted time and money at every step of their production process. With the advent and progression of ERP and other shop-floor technologies, the total waste reduction is flattering ever more achievable, no matter the size or scope of your organization. Make-to-order developed a process which links production orders to sales orders, is one way you can decrease the length of the sales cycle and your inventory at the same time. Because all production is directly triggered by orders, make-to-order manufacturing seeks to get rid of the need for inventory storage and to only use exactly the amount of raw resources and machinery time that is required to make products that have been sold.
As you can imagine, perfecting make-to-order techniques requires smart use of resources, workflows, and production lines. As such, a make to order manufacturer will need a lot of specific functionality when it comes to their shop floor software. If you’re planning on following the techniques of MTO and are looking for the right ERP, there are some careful considerations you’ll have to make here’s what your ERP selection team will need to think about before committing to a vendor.
Because make-to-order production mandates that all production is directly drawn from sales orders, the ERP software will need to have a watertight connection between the two modules. Whether that’s via mechanical triggering of orders when sales come in or integration between your CRM and ERP, make-to-order manufacturing ERP requires a seamless communication between your front and back offices.
Because all customizations and specialization requests will come from the customer before production ever begins on their order, your ERP will need to have a powerful configuration. It will need to be capable in handling your product line, tagging products and their specific customizations and then instantly creating a bill of materials.
ERP bill of resources is serious to the smooth running of make-to-order manufacturing. They will need to be produced quickly and accurately as soon as sales order is submitted. The BoM should be directly linked to your production ordering and scheduling, as they need to kick into gear as soon as the order comes through. Your configuration should also be able to take the bill of materials for a certain production, order the necessary resources and then analyze the total costs and delivery estimates.
To be able to fully commit to make-to-order manufacturing, you’ll want to be able to manage your company’s supply chain with your eyes shut. Every single link needs to be strong and contained within the same system. Production planning capabilities will need to be both extremely flexible and responsive as make-to-order is predicated on actual, not anticipated, demand. You won’t be able to be plan months ahead, and you’ll want everyone involved in the supply chain to be using the same system. With ERP, your whole company will be drawing from the same data, no matter where they are.
In some cases, the customer isn’t always right or at least isn’t always sure about what they want the first time. Make-to-order manufacturing based solely on sales orders doesn’t predict whether the customer won’t change their mind after the order or figure out they put in the wrong numbers or customizations. So, whether you’ll have a specific return policy or not, you’ll still need some sort of inventory management system. That includes serialization of products, identification of customizations and dealing with warranties.
Make-to-order is designed to cut back on excess processes, waste, and inventory on your shop floor. This means that your business is only ordering the resources it knows will be used and utilizing machinery to manufacture products that have already been bought. Getting the technique right will be difficult, and it’s crucial that you consider everything you’re going to ask of your ERP system before you select it. Often, ERP systems will come out of the box amenable to many different methods of manufacturing, whether that’s make-to-order or make-to-stock manufacturing. If you would like to operate as a made-to-order shop floor, your implementation team should be able to recognize all the needs of the process and be able to translate those needs during configuration.