MTO stands for Make to Order. In this mode of manufacturing no finished product is kept in inventory. When a customer places an order the company produces the item specifically for that customer. All job shops operate as MTO manufacturers. Other modes of manufacturing include engineer-to-order, assemble-to-order, and make-to-stock, repetitive and mixed-mode. For different product lines a single company may operate in several of the modes simultaneously.
As companies implement lean manufacturing many companies are making the transition from make to stock (MTS) towards make to order (MTO).
Many vendors of Enterprise Resource Planning (ERP) systems claim that their products are widely applicable - configurable to meet the needs of any business, whatever the product or service offering. However, producers of high-variety and bespoke products, such as Make-To-Order (MTO) companies, present particular challenges to implementation, it remains unclear whether ERP systems can cater for their needs.. This paper provides a state-of-the-art review of ERP systems and an assessment of the applicability of ERP to the MTO sector. While several comprehensive reviews of the ERP literature have previously been presented, these either do not focus on the MTO sector, or seek to assess the applicability of ERP systems, or give sufficient attention to recent developments in the fast moving ERP industry. In assessing applicability, this paper considers factors such as the planning and control stages of relevance to MTO companies, the typical size and supply chain positioning of MTO companies, and market-related features. The assessment concludes that there is a significant gap between the requirements of MTO companies and the functionality of ERP systems. One such gap is between the customer enquiry management and design & engineering processes of MTO companies and those supported by ERP systems. Eight key areas in need of further research are described. These include: providing effective decision support tools for customer enquiry management activities in the MTO sector, linking ERP systems with production planning and control concepts of relevance to MTO companies, and conducting an in-depth empirical study into existing applications of ERP systems in MTO companies and their impact on performance