Make-to-stock

Make-to-stock (MTS) is a manufacturing strategy in which production planning and production scheduling are based on forecasted product demand.

What is Make-to-stock?

Products made during one production period are used to fulfill orders made in the next production period. This means that in make-to-stock production planning, production is triggered prior to and independent of specific customer orders.

Make-to-stock is considered a push-type operation, which means supplies – raw materials and supplier-provided components – are “pushed” through the production process, and planning starts with supplies and works forward to the finished product. In contrast, make-to-order (MTO) is a pull-type operation.

In today’s manufacturing marketplace, a high inventory of finished goods is usually an unacceptable cost burden, imposing the expenses of inventory management, warehousing, spoilage and more. Likewise, inventory shortages are costly because of expediting premiums, overtime, and missed delivery times. Therefore, the ideal of make-to-stock production planning is to match the quantity of finished goods at any given time with customer demand during the next period of time. To approach this ideal, planners must successfully forecast demand and appropriately balance supplies and production capacity to meet that demand.

Two keys to efficient make-to-stock planning are (1) accurate demand forecasting and (2) tools that enable rapid adjustments to changing forecasts. Demand forecasting has become more challenging in nearly every market because of the growing variety of products for which a manufacturer must forecast demand, as well as inherently unpredictable factors affecting demand – natural disasters, health crises, and certain seasonal variations (e.g., geopolitical or weather-related shortages of raw materials), to name a few.

Modern advanced planning and scheduling (APS) systems offer make-to-stock planners the digital tools needed to generate achievable, efficient plans and schedules and quickly adjust to changes in demand forecasts, supply availability, and production capacity. Advanced planning and scheduling software can also automatically make schedule adjustments based on real-time data.

Related products: Opcenter Advanced Planning and Scheduling

Understand the benefits

Manufacturers eliminate some of the difficulties and inefficiencies of legacy or spreadsheet-based planning systems by performing make-to-stock planning on a robust APS system. They gain a greater opportunity to make the right product in the right quantities at the right time.

Optimized MTS planning

Consider demand, capacity, labor, and inventory for an accurate master production schedule, ensuring efficient production and inventory management.

Minimized inventories

Align production with forecasted demand, optimizing stock levels through advanced planning, and ensuring efficient management of manufacturing resources.

Lower cost of production

Streamline manufacturing processes, minimizing the need for excess inventory, and optimizing resources through efficient planning based on forecasted demand.

Make-to-stock planning process

In addition to demand forecasting, effective make-to-stock planning must incorporate a complex web of considerations, including manufacturing capacity planning, labor and utilization, raw material inventory and replenishment plans, and on-hand and future inventory of finished goods.

Make-to-stock planning on an advanced planning and scheduling system begins with the generation of an accurate and achievable master production schedule (MPS) based on:

Rough cut capacity
Pack-forward figures
Target days of stock cover
Manufacturing preferences
Minimum and maximum reorder quantities
Reorder multiples
Product shelf life

To be as efficient as possible, make-to-stock planning must also consider intermediate stock levels – points in the manufacturing process where work-in-progress (WIP) accumulates prior to the next operation. A make-to-stock approach often results in relatively high intermediate stock levels, so optimizing these levels is an important consideration in the planning process.

APS-based make-to-stock planning accommodates all of the above considerations. It also specifies production capacity as quantity, duration or weight. Capacity can be varied over time using a calendar system capacity tool, and available capacity is figured into the make to stock plan as a limiting factor for each time period.

Importantly, an APS system can interact seamlessly with an inventory management system, improving demand forecasting accuracy. Additionally, the interaction between an APS and a materials management system for the supply chain helps to balance supplies with demand accurately.

Explore make-to-stock related products

Factory manager reviewing plan schedule with her team

Opcenter

Opcenter APS

Opcenter APS production planning and scheduling products help synchronize manufacturing processes. Opcenter APS helps increase resource utilization and on-time delivery while reducing inventory levels and waste.

Start with a free trial

Graphic of a monitor displaying a card reading, "Opcenter Scheduling Standard - Online Free Trial"

Opcenter scheduling trial

Learn how easy it is to immediately benefit from actual scheduling software and how much it can help you in your daily work.

Try now

Learn more

MTS related products

Opcenter Manufacturing Operations Management
Advanced planning and scheduling
Advanced planning
Advanced scheduling