Managing Make to Order Process for Product Variants

Objective

After completing this lesson, you will be able to use the Make to Order (MTO) Production with Variant Configuration.

Make to Order Process with Variant Configuration

When and Why to Use Make to Order

The Make-to-Order (MTO) process with Variant Configuration is a manufacturing strategy where production starts only after a Sales order is received. It's used for configurable products that can be tailored to customer-specific requirements. This sales order is considered in Material Requirements Planning (MRP). A production order is created and executed based on the configuration. After production, goods are delivered and invoiced to the customer.

Unlike Make-to-Stock, where products are produced in advance, MTO ensures that each product reflects the exact configuration chosen by the customer.

Applicable Process Steps

As you just saw, the process steps for an Engineer to Order process include:

Internal Sales Representative: Creates a sales order for a configurable material
Production Planner: Executes a MRP run and works with production order
Production Operator: Picks components and confirms activities
Warehouse Clerk: Posts goods receipts
Shipping Specialist: Creates a delivery, executes picking and post goods issues

Benefits

The benefits of the Make to Order process for Variant Configuration are:

Improve your company's sales and manufacturing performance with integrated Advanced Variant Configuration covering single-level and multi-level configurable materials.
Enable your business processes to handle highly individualized products in sales and manufacturing.
Leverage the sophisticated algorithms in the performance-optimized rules engine within a state-of-the-art configurator.
Use dependencies to prevent combinations of options that are not allowed and can be used to select exactly the right components.
Get sales pricing and print-out according to the configuration.

Note

This process flow is covered in scope Item: 1YT- Make-to-Order Production with Variant Configuration.

How to Manage Product Variants Using Make to Order

Introduction: Make to Order Process with Variant Configuration

This Make to Order scenario starts with the creation of a Sales Order for a configurable material. Then a MRP run happens. The production order is created and released. Needed components are collected and assembled. Goods receipts are posted and the final component is on stock. A delivery is done, and goods issues are posted.

Task 1: Create a Sales Order

In this first scenario, Kate, our Internal Sales Representative, creates a sales order for a configurable material. The main forklift material is a configurable one and also one component, the forkseat. This is captured by defining the different component characteristics wanted by the customers and considering the constraints and dependencies of the components.

At the end Kate also checks the sales price and the variant conditions. The sales Price Calculation is then based on the individually chosen characteristics of the components.

Task 2: Perform a MRP Run for a Sales Order

The sales order creation is finished. Kate sends out this information to Nikhil, the Production Planner. He starts a MRP run for the forklift sales order. The created planned order becomes visible. A MRP run is also executed for the component forkseat. A purchase requisition number becomes visible.

The sales order has created a requirement for the main material and for the configurable component. A MRP run takes place both for the header material and the component. On the Manage Material Coverage screen, the planned order for the main material is displayed. A purchase requisition number for the configurable component is also visible.

Task 3: Post Goods Receipt for Sales Order Components

The forkseat is ordered. Purchaser Tom creates a purchase order.

Goods arrive at the warehouse. A goods receipt is posted by Jim, our Warehouse Clerk.

Task 4: Create a Production Order for the Main Component

After the MRP run took place, a planned order is created. Production planner Nikhil converts this planned order into a production order and releases it.

Kathy, Production Operator, picks all components and confirms their processing.

Warehouse Clerk Jim posts the goods receipt.

Task 5: Perform a Forklift Delivery

Shipping Specialist Marc creates an outbound delivery to the customer.

Task 6: Perform a Component Picking

The outbound delivery is done. Marc performs a picking before the goods issues are posted.

The shipping specialist performs a picking before posting the goods issues. Then the goods issue are posted.

Task 7: Create a Customer Invoice

Shipping Specialist Marc handles the billing. At the end he creates a customer invoice.

Now, you should have an impression of "How to maintain a Make to Order process with Variant Configuration".

Summary

After completing this lesson, you're able to:

name the benefits of using a Make to Order process with Variant Configuration
name the necessary process steps of a Make to Order scenario
set up a sales order for a configurable material
perform a Make to Order Process

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