make to order & make to stock

8/12/2019 Make to Order & Make to Stock

http://slidepdf.com/reader/full/make-to-order-make-to-stock 1/3

Make to Order (MTO) and Make to Stock (MTS)

The difference between MTO and MTS is

MTO--> Make to Order

Production is the process where the production order is triggered from a Sales Order. Ex The Prod

process will start onl! after recei"ing the sales order from the customer. #n this case the product could

be customer specific onl! ($ariant)

MTS--> Make to Stock

MTS scenario can be accomplished b! the following settings

%eed to use strateg! group &' in material master MP "iewStretg! group &' is assigned to strateg! &'

Strateg! &' is assigned to e*uirement t!pe +E (#ndi"idual customer re*uirement)

e*uirement t!pe +E is assigned to re*uirement class ',' (#ndi".cust.w-o cons.)

e*uirement class has all the parameters where we can define Production order t!pe that will be used to

create the prod order. The abo"e link needs to be established.

lso the MTS can be achie"ed using Sales Order schedule line categor! which will be assigned to

e*uirement t!pe-class. #tem categor! is assigned to e*t!pe-class and the #tem categor! is maintainedin the material master.

/ou can use an! of the abo"e configuration settings.

0or MTO 1 !ou 2ust need to ha"e all PP c!cle settings in place nothing special needed as it is a plain PP

c!cle.

3. Maketoorder production is a process in which a product is indi"iduall! manufactured for a particular

customer. #n contrast to mass production for an unspecified market where a material is manufactured

man! times4 in maketoorder production a material is created onl! once though the same or a similar

production process might be repeated at a later time.

&. /ou can use maketoorder production in two scenarios

(a) 0or branches of industr! or products where a small *uantit! of products with a large number of

different characteristics are manufactured ($ariant 5onfiguration).

(b) 6hen a product has to be assembled particularl! for a sales order (#ndi"idual 5ustomer e*uirement).

7. Stock keeping is not usuall! carried out for products that are made to order. #n companies using make

toorder production4 the demand program onl! determines the production area4 in which "arious "ariant

t!pes are produced. 8epending on how !ou track the costs associated with maketoorder production4

there are two wa!s to process maketoorder items during sales order processing.

(a) Make to order using sales order(b) Make to order using pro2ect s!stem (not rele"ant for S8 application)

,. 0or make to order production using the sales order4 all costs and re"enues in"ol"ed for an order item

are held collecti"el! at that item. particular rule is used that can be changed manuall! to transfer costs

to profitabilit! anal!sis.



9. Make to order production is largel! a production planning configuration. #t is also controlled b! the

re*uirements t!pe4 which is determined b! three things

the strateg! group (MP 7) in MM

the MP group (MP3) in MM

the item categor! and MP t!pe (MP 3)

:. Maketoorder production is controlled b! the re*uirements t!pe. The re*uirements t!pe is determined

on the basis of the MP group (MP3) and the strateg! group (MP7) in the material master record. #n

addition4 a plant must be assigned for maketoorder items in the sales order.

Resource related Billing

esource related billing is used for Maketoorder production4 external plant maintenance in Ser"ice

5ompan! and specific ser"ices as consulting

#n case of consulting compan! The total "alue of the pro2ect depends on se"eral factors and are pulled

from di"erse sources such as

; %umber of resources used on the pro2ect

; %umber of man hours spent

; Expenses incurred during the pro2ect

To calculate prices and cost incurred we can use 8P<3 8!namic item processor profile functionalit! on

SP Eas! access menu.

5onfiguration of profile for =

#M>S8SalesSales documents5ustomer ser"iceser"ice *uotation-=Profiles for =-*uotation

creation (Tcode O8P3).Standard profile is gi"en. #t is recommended to cop! and change it to !our needs.

3) Profile %ame of the profile.

&) Select the profile and double click0or = select =illing and results anal!sis

Enter desired document t!pe for debit and credit. Tick mark the field process d!namic item onl!.

7) Select usage and double click on characteristicsThis is the most important part of 8#P. /ou can add

!our own characteristics. Select rele"anc! of characteristics4 material determination4 %o summari?ation4

structuring and set #8.

,) Select characteristics and double click sourceselect the appropriate settings

9) Select source and double click on selection criteriaSelect source for each characteristics to speedup data transfer from data base to application ser"er.

:) >o to characteristics folder select characteristics and double click on material determination

select appropriate setting from transfer *uantit! - and other columns

@) Select material and double click on criteria Make appropriate setting in set and "alue for each

characteristics



To configure this !ou need help from 0#5O and PS consultant as the case ma! be.

5heck the correctness of the profile in O8P&(Menu path#M>S8SalesSales documentscustomer

ser"icecheck profile settings

A& and >& Sales documents t!pes are used for =.

/ou can define new document t!pes as !our re*uirement b! cop!ing abo"e.

Maintain 8#P in appropriate item categor! (5ontract item categor!) in Tcode $O$@.

ssign item categor! group and usage in Tcode $O$, as SE#% rele"ant for billing and SE%# not

rele"ant for billing.

Transaction flow for = is $,3 (5reate contract)5B'3 (5reate Pro2ect-6=S element)5B'& (elease

6=S element)8P<3 (5reate =illing re*uest)$0,, (Post re"enue recognition) $0'3 (5reate #n"oice).

Menu path 8P<3SP Eas! access menuAogisticsS8SalesOrderSubse*uent function8P<3

$0,, SP Eas! access menuAogisticsS8=illinge"enue recognition Maintain re"enue list.

#t is assumed that normal S8 configuration is in place. #ntegration with C and 0#5O in place The

procedure is explained for professional ser"ices without using ph!sical material (i.e. onl! ser"ices).

make to order & make to stock

Documents