Make to Order (MTO) is a production model where manufacturing only begins after a customer places an order. Unlike traditional mass production or building inventory in advance, the "production" step in MTO doesn't start until an order comes in.
This model works well for highly customized products, high-value items, or products with unpredictable demand, since it helps reduce inventory pressure. The trade-off is a longer lead time between order and delivery. MTO is common in industries like machinery, specialized equipment, or products with highly variable specifications, and typically requires close coordination and communication with the customer to confirm requirements.
A simple way to think about it:
MTO means "order first, then produce," while MTS means "produce first, then wait for orders."
In everyday life, most standardized goods actually follow the MTS model—think supermarket products, beverages, apparel, and appliances. Businesses forecast demand, produce in advance, and then use existing inventory to quickly fulfill customer orders.
Not necessarily. Make to Order (MTO) doesn't always mean customized production, and Make to Stock (MTS) isn't limited to mass production either.
Some standardized products may still be made to order if demand is low, unit cost is high, or holding inventory is expensive. Conversely, some customized products may have certain parts or semi-finished components prepared in advance, with final assembly or processing completed only after the customer places an order.
Similarly, having mass production capability doesn't necessarily mean a company uses a make-to-stock model. Some businesses with mass production capacity still schedule production based on actual orders in order to reduce inventory risk.
In short, the production model a business adopts depends not only on the level of customization, but also on factors like demand stability, inventory holding costs, production cycle time, and supply chain management.
Make to Order (MTO) is a common production model in manufacturing, and most ERP production management modules support related workflows—typically involving the sales, procurement, production, and inventory modules. For example:
By using an information system, businesses can make the make-to-order process more transparent and automated, reducing the cost of manual coordination and allowing sales, production, and procurement workflows to connect more effectively—improving overall supply chain responsiveness and management efficiency.
It's worth noting that Make to Order doesn't necessarily mean a high degree of customization. The more challenging scenario is typically Engineer to Order (ETO), where—beyond production management—businesses also need to handle design changes, engineering data, and project management. As a result, ETO workflows tend to be more complex than standard MTO.
