Make to order

Make to order (also called engineering to order or custom production) is one of the forms of cooperation of the manufacturer with the client. It involves creation for client opportunities to influence the final product through a choice of different components of the product and its configuration. In very demanding customer market, this type of cooperation is becoming more and more common. It allows to customize the product in such a way as to meet high customer expectations. In the case of make to order final product is created only after order by the customer. Such order is preceded by a phase of negotiations during which terms of the contract are adjusted.

Types of make-to-order

A special type of production on the order is engineering-to-order. It involves even greater influence of customer on the final product. The client is involved even in the design phase of the product. Most often cooperation of client with producer is done using web applications.

Advantages and disadvantages of make to order production

Advantages:

• meeting of high customer expectations
• ability to produce only quantity of the products, which is needed on the market
• in the long term, reduces the consumption of natural resources e.g. iron ore, energy. through better capacity utilization, which promotes the protection of the environment

Disadvantages:

• more difficult production planning than in case of production to storage
• flexible devices are required, in order to able to deliver different orders
• need for a separate costing for each product

Make to order — recommended articles

Custom production — Nested production — Intermediate goods — Types of procurement — Specialization strategy — Types of supply — Cost advantage — Supply management — Unitary production

References

• Rajagopalan, S. (2002). Make to order or make to stock: model and application. Management Science, 48(2), 241-256.
• Soman, C. A., Van Donk, D. P., & Gaalman, G. (2004). Combined make-to-order and make-to-stock in a food production system. International Journal of Production Economics, 90(2), 223-235.
• Van Donk, D. P. (2001). Make to stock or make to order: The decoupling point in the food processing industries. International Journal of Production Economics, 69(3), 297-306.