ETO, MTO, ATO, and MTS - What type of manufacturing is best for my business?

In today's fast-paced business world, having the right production system in place can be the key to success. There are several production systems to choose from, each with strengths and weaknesses.

One type of production system is called "Engineer to Order" or ETO. ETO is a system in which products are custom-designed and manufactured to a customer's specific requirements. Highly customized products but long lead times and the highest costs are characteristic of ETO.

Another type of production system is "Make to Order" or MTO. An MTO system is similar to ETO but doesn't require designing or engineering each customer order. MTO allows for the customization of manufactured items from pre-designed components.

The third type of production system is "Assemble to Order" or ATO. ATO is a system in which already manufactured parts and components are kept in stock and assembled as directed by customer order. ATO allows the customization of finished products with faster lead times than MTO; however, an increased holding cost offsets the decreased lead times since storage of parts and components is required.

Finally, there is "Make to Stock" or MTS, a production system in which products are manufactured or assembled based on a forecast or production schedule, without any customization for individual customers. MTS allows for the fastest delivery times but may result in less flexibility and less ability to meet unique customer requirements.

Each production system has its advantages and disadvantages, and the right choice for your business will depend on your specific needs and goals. However, by understanding the available options, you can make an informed decision and choose the production system to help your business succeed.