Custom production

Custom production
See also
Make to order Principles of Supply Chain Management Finished product Design bid build Just in time manufacturing Selective distribution Consumer orientation Product structure Line balancing

Custom production (Make to order production - MTO) is one of the forms of cooperation between the producer and the client. It consists in creating the client the possibility of influencing the final product through the ability to choose different product components and any configuration. At the present time, when we are dealing with a very demanding customer market, this type of cooperation is becoming more and more common. It allows you to customize the product in such a way that it meets the client's expectations. In the case of custom production, the final product is created only when ordered by the customer. Such an order is preceded by a phase of negotiations during which the terms of the order are specified.

Custom production shows how many customers are looking for personalized and unique products. However, this results in the necessity of changes in enterprises - transformations of mass production into a warehouse, in variable production to the customer's direct order. This type of production is carried out in systems that are characterized by a great versatility of equipment.

Characteristics of custom production

Custom production can be defined as the production of a small amount of products from a huge range of goods to choose from. This process is started after the individual ordering of the buyer. In this type of production production stands are characterized primarily by the instability of work, because the production of products occurs individually or in a certain repetition. Nevertheless, this repeatability is irregular, which makes it impossible to effectively anticipate new production.

Characteristics of custom production:

diversified production range
use of universal production machines suited to various types of tasks
employing highly qualified employees
using non-complex devices of universal character
no fixed working time
a wide range of work for individual employees
diverse clients
constant search for suppliers
low stock levels
high customer knowledge about the product
implementation of new, innovative solutions

Custom production makes the company more likely to make production changes and changes, which results in a low level of stability of the production process, and also generates high costs. An uneven production range also causes difficulties in planning and scheduling tasks.

Types of custom production

Engineering to Order - ETO is associated with more customer influence on the final product. The customer participates already in the design phase of the product and its detailed construction. Most often this is done through the customer's internet collaboration with the producer.
Assemble to Order - ATO) assumes maintaining stocks of parts, elements and even entire segments to assemble the finished product ordered by the customer faster. Such a production organization not only saves time, but also eliminates the need to buy fragments of the product every time.
Finish to Order - FTO is synonymous with custom assembly. It is also characterized by the production and maintenance of universal parts and components, in order to produce the product more quickly in accordance with the client's wishes. However, the difference between these concepts lies in the fact that the FTO does not have to exist only in the area of production activity. Finishing the final product may already appear in the distribution phase.

Advantages and disadvantages of custom production

Advantages:

Better satisfaction of customers' requirements
Possibility to produce as many products as customers on the market - suction effect
In the long term, the consumption of natural resources such as iron ore, energy etc. decreases through their better use, which contributes to environmental protection

Disadvantages:

Difficult production planning than in the case of production for storage
The necessity of a certain flexibility of devices to be able to execute orders
The need for a separate calculation of costs for each product.