Outlining Make-to-Order Production

Objectives

After completing this lesson, you will be able to:

  • Understand Make-to-Order (MTO) Production

Outline of Make-to-Order Production

Sales Order-Related Production, For Example, Planning Strategy 20

In this lesson, you will learn about sales order-related planning strategies. Take a look at the following image, which illustrates different planning strategies.

Characteristics

In make-to-order production, for example, planning strategy 20, the production planning is initiated only when a sales order is received. PIRs are not used in this strategy.

Make-to-order production is a planning and inventory management approach that focuses on producing or procuring materials specifically for certain sales order items. Instead of producing or stocking items in advance, make-to-order considers individual customer orders before initiating the production process. This approach helps to minimize excess inventory and reduce the risk of carrying unsold products.

Planning Strategy 20: Make-to-Order Production

Let’s take a closer look at the steps of planning strategy 20:

Characteristics

Imagine that the Bike Company receives 2 sales orders. With planning strategy 20, each sales order is planned separately. The system does not perform a net requirements calculation between individual sales orders or with the make-to-stock warehouse stock. In make-to-order production, lot-for-lot order quantity is used as the default lot-sizing procedure, independent from the setting in the material master.

In material requirements planning (MRP) in SAP S/4HANA, the Bike Company has to procure or produce each material separately.

The sales order stock and the requirement are reduced by a goods issue to the sales order.

How to Set Up Make-to-Order Production

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