What is Make to Stock (MTS) for Manufacturers?
Make to Stock or Make-To-Stock are sometimes referred to as Build to Stock (BTS) or Build-to-Stock. Manufacturing historians tend to associate make to stock with the production techniques manufacturers were using during the industrial revolution. Makers would produce large quantities of goods, which then had to be stored in warehouses, in anticipation of demand.
The Make to Stock strategy is used to match production and inventory with customer demand and forecasts. For example, let’s say for the past 3 years your manufactured 3/8-inch drill bits have seen a steady rise in sales from 800,000 the first year to 1,000,000 the second year, and 1,200,000 the third year. Your forecasting might show that this trend is going to continue and you should expect to sell 1,400,000 3/8-inch drill bits. With this particular product you cannot do make to order and expect to fulfill demand so you have to make the drill bits and stock them. As long as your forecasting of demand is accurate this is a good business move.
Are there any other advantages besides being able to meet demand with supply? Yes. Another advantage of Make to Stock is companies in most scenarios are able to spread the production evenly over a given period of time. Once again, this all depends on the accuracy of your forecasting.
Does Microsoft Dynamics 365 Business Central have Manufacturing? Yes, Business Central has Manufacturing included within the Dynamics 365 Business Central Premium license which can be purchased for $100 per user/month.
Can You Perform Make to Stock in Business Central?
Yes, the Make to Stock process in Microsoft Dynamics 365 Business Central is relatively easy. You enter a Sales Forecast, create a Production Plan, and then create a Production Order. That’s it! Below is a 5-minute video showing just how easy Make to Stock in Business Central is.
What’s the difference between Make to Stock and Make to Order?
Make to Order (MTO) or sometimes referred to as Build to Order (BTO) is the opposite of Make to Stock. With Made to Order items are produced from actual demand or orders from customers. For example, a customer might want purchase a customized Motor Home Roof and because demand for this one-of-a-kind roof is most likely nonexistent this product would be a Make To Order.
Learn how to scale your ERP system for growth
Is your manufacturing ERP software performing at its peak powers? Find out by Auditing Your ERP for Manufacturing Fit and Functionality with our free guide.
Would you like to know more about Business Central's manufacturing capabilities? Reach out to us through the form below!