Manufacturing principles
To select the manufacturing principle that best applies to a product and related market, you need to consider the requirements of production and logistics, in addition to customer expectations about delivery lead times. The following is an overview of manufacturing principles:
- Make to stock - This is the classic manufacturing principle, where products are produced for stock based on forecast or minimum stock refill (the latter is typically calculated based on forecast or historic consumption).
- Make to order - Standard products are made to order or finished to order. Although pre-production might be done by using the make to stock principle, expansive steps of the value chain, or steps that create variants, are triggered by a sales order or transfer order.
- Configure to order – Similar to the make to order principle, the final operations of the value chain are made to order. The actual product variant that is produced isn't predefined but is created at the time of order entry based on the configuration model of the sales product. The configure to order principle requires a certain level of process unification for a given product line.
- Engineer to order - Engineer to order processes are typically addressed by a project and usually start with the engineering phase. During the engineering phase, the actual products that are required to fulfill the order are designed and described. Production orders, batch orders, or kanbans can then be created to produce the products.