Make-to-order manufacturing processes are extremely different than your typical make-to-stock manufacturing. There are unique issues that are faced because you are reliant on what the customer specifically asks. You are constantly at risk for production inefficiency and wastage, whereas make-to-stock manufacturers make a specific product and wait for the customers to come to them. It is much easier for a make-to-stock manufacturer to practice lean principles. This is where make-to-order ERP comes in handy, helping manufacturers to achieve less waste despite their difficult to predict orders.
Make-to-order ERP works differently from other ERP systems because it has a strong link between sales orders and production planning, just like the manufacturing process. For example, a customer orders a custom machine. That machine consists of components, listed on the bill of material, which may be used in other custom machinery. The sales order is translated with the help of the bill of material into a production request. The request will be combined with other requests to make a production schedule. Finally, the components are categorized as “to be made” or “purchased”.
From the example above, you can see that make-to-order manufacturing can become hectic in the ordering process. There is barely any time to plan ahead. Make-to-order ERP helps with these uncertainties because it can turn sales orders into production orders, ensuring that nothing is over produced or over purchased.
One of the most important components of make-to-order ERP is customer service. Since you’re always trying to meet customer demands in make-to-order manufacturing, the ERP should be able to monitor the production orders and keep the customer informed on progress. Further, since every customer order will be different, the make-to-order ERP system has a flexible ordering system, allowing the manufacturer to meet irregular demands.
It is not easy to implement lean processes when you never know what your next order will be. Make-to-order ERP makes it as easy as possible by linking the two most important departments together, sales and production. Further, instead of having to do system run arounds just to put in the customer’s order, make-to-order ERP meets customer demands by having a flexible ordering system.
Not all manufacturing processes are the same, and make-to-order manufacturing is in its own category. For this reason, make-to-order processes simply won’t fit into traditional ERP systems. In order to actually receive a return on investment and see improvement in efficiency, manufacturers working with custom orders should be on make-to-order ERP.