What is make to order?
In make to order, demand triggers production. A customer orders a standard or lightly varied product, and the manufacturer then sources, builds, and ships it. Because nothing sits as finished stock, capital is not tied up in unsold goods and there is little obsolescence risk. The trade-off the customer accepts is waiting through the build, rather than buying something already on the shelf.
How is make to order different from make to stock?
The difference is timing and inventory. Make to stock (MTS) builds to a forecast and holds finished goods so orders ship immediately, which is efficient for high-volume, predictable products but risks unsold inventory. Make to order builds only after the order, which removes finished-goods risk but adds lead time. Many manufacturers run both: MTS for staple items, MTO for anything varied or lower volume.
How does make to order compare to configure to order and engineer to order?
All three build after the order. They differ by how much is decided beforehand:
- Make to order (MTO): a standard product is built on demand, with little or no configuration or new engineering.
- Configure to order (CTO): the product is assembled from predefined options the customer chooses. No new engineering. See configure to order.
- Engineer to order (ETO): the product is designed or engineered specifically for the order. See engineer to order.
Why does make-to-order quoting matter?
Even for standard products, MTO quoting has to reflect current material costs, capacity, and lead times at the moment of the order, not last quarter's numbers. When that is done by hand, quotes drift out of date, margins slip, and promised lead times get optimistic. Getting the quote right up front is what keeps an MTO operation profitable and its delivery promises credible.
How does software help make-to-order manufacturers?
Software helps MTO manufacturers quote from current costs and real capacity, standardize how quotes are produced, and connect the quote to purchasing and production so nothing is re-keyed. For products with any configuration, a quoting system prices from the actual selections automatically. AltoLeap builds custom quoting and operations software for make-to-order, configure-to-order, and engineer-to-order manufacturers. See our CPQ for manufacturers guide and our Custom CPQ & Quote Automation page.