Manufacturing encompasses a wide range of processes. Some of the most common are engineer-to-order (ETO), make-to-order (MTO), mixed-mode (MM), and make-to-stock (MTS).
Manufacturing Processes Defined (ETO, MTO, MM & MTS)
There are three main manufacturing processes and one that combines processes to create a fourth (mixed-mode):
Engineer-to-order (ETO): Engineering is part of the manufacturing process and is therefore added to the overall project lead time. ETO is customer demand-driven by nature; manufacturers must be flexible and able to adapt quickly.
Make-to-order (MTO): also known as made-to-order, manufacture-to-order, and build-to-order): Products are not manufactured without a confirmed order, allowing customers to first customize designs to their specifications.
Make-to-stock (MTS): Products are manufactured based on forecasted demand instead of a specific order. Manufacturers then hold those products as inventory which ships to customers as needed.
Mixed-mode (MM): Combines MTS and MTO manufacturing into a single supply chain and, when done successfully, results in a balance of flexibility and efficiency.
What ERP features are important for each manufacturing process?
Each of the primary manufacturing processes differs from one another enough that they require different ERP system features and modules in order for an ERP implementation to be successful.
Engineer-to-order
Engineer-to-order manufacturers have distinct challenges due to generally smaller order volumes with greater-than-average value. And because they engineer products specifically to their customers’ requirements, there is extensive interaction between the company and client at almost every stage, from design and quoting, to manufacturing and shipping. ETO manufacturers also require more specific bills of materials for both jobs and orders than is typical, often must account for extended design and engineering time in their overall lead time calculations, and have more complex AP and AR needs than average.
Make-to-order
Make-to-order manufacturers operate in what many consider to be the most challenging of the Big Three manufacturing environments as primarily custom manufacturers. MTOs benefit from ERPs that allow for as much streamlining as possible. Things like easy change orders, the ability to automate repeated processes, materials management, simplified quote-to-job conversion, visual scheduling, and integrated accounting modules are all important to an MTO.
Make-to-stock
Make-to-stock manufacturers, on the other hand, rely heavily on ultra-precise demand forecasting more than anything else. This requires a high level of visibility and transparency across the MTO’s departments, which makes choosing the right ERP features absolutely critical. Some of the most important include the ability to process sales orders efficiently, optimize, track and control inventory levels, closely monitor quality and consistency, and ensure the traceability of essential components for commonly-produced products.
Mixed-mode
Mixed-mode manufacturers require a blend of the ERP modules and features that MTS and MTO manufacturers use, as they must manage both of these production types using the same system. What’s most important for an MM overall is the ability to quickly and easily switch from one product to another within their ERP, even if the two products are nothing alike and from completely different industries, in order to keep their product portfolio diverse.
MIE Trak Pro: An ERP System for All (Manufacturers)
Each of the main manufacturing processes has its strengths and challenges, but what’s universal to them all is that a thoughtfully implemented enterprise resource planning (ERP) system is often one of the best investments a manufacturer will ever make. With flexible, tailored ERP manufacturing solutions available for MTO, MTS, ETO and MM, MIE can help take any size organization to the next level.
Learn more about MIE Trak Pro here!
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