Make to stock (MTS) vs. Make to order (MTO) - What do they mean?
In a Make To Stock environment production is triggered based mainly on forecasted demand, and any receipt from the production line is put into inventory (where customer orders are ultimately fulfilled from). A couple of scenarios to consider:
- We receive a customer order 2 months before it needs to be delivered. i.e. We have an open Sales Order that shows in MD04. This order will not trigger a production process.
- We receive a very large customer order today and do not have enough inventory to fulfill it? We'll have to wait until the next period produces enough product and tell the customer to wait... This is because what is produced this period is for customer orders requesting product in the next period.