3rdJune2013 DifferenceBetweenMTS,ATO,MTO,PTO,CTO

andETO.
Maketostock(MTS)
InMTSenvironments,productsarecreatedbeforereceiptofacustomerorder.Customer
ordersarethenfilledfromexistingstock,andthenthosestocksarereplenishedthrough
productionorders.MTSenvironmentshavetheadvantageofdecouplingmanufacturing
processesfromcustomerorders.Theoretically,thisenablescustomerorderstobefilled
immediatelyfromreadilyavailablestock.Italsoallowsthemanufacturertoorganize
productioninwaysthatminimizecostlychangeoversandotherdisruptions.
However,therearerisksassociatedwithplacingfinishedgoodsintoinventorywithouthaving
afirmcustomerorderoranestablishedneed.TheseriskstendtolimitMTSenvironmentsto
simple,lowvariety,orcommodityproductswhosedemandcanbeforecastedreadily.
Assembletoorder(ATO)
InATOenvironments,productsareassembledfromcomponentsafterthereceiptofa
customerorder.Thekeycomponentsintheassemblyorfinishingprocessareplannedand
stockedinanticipationofacustomerorder.Receiptofanorderinitiatesassemblyofthe
customizedproduct.Thisstrategyisusefulwhenalargenumberofendproductsbasedonthe
selectionofoptionsandaccessoriescanbeassembledfromcommoncomponents.
Whenproductsaretoocomplexorcustomerdemandisunpredictable,manufacturersmay
choosetoholdsubassembliesorproductsinasemifinishedstate.Thefinalassembly
operationisthenhelduntilafirmcustomerorderisreceived.Inthisenvironment,
manufacturerstheoreticallycannotdeliverproductstocustomersasquicklyasMTS
environments,sincesomeadditionaltimeisrequiredtocompletethefinalassembly.
Maketoorder(MTO)
InMTOenvironments,productsaremadeentirelyafterthereceiptofacustomerorder.The
finalproductusuallyisacombinationofstandardizedandcustomitemstomeetthe
customer'sspecificneeds.MTOenvironmentsaremoreprevalentwhencustomersare
preparedtowaitinordertogetaproductwithuniquefeaturesusuallycustomizedorhighly
engineeredproducts.Thisisanalogoustothedifferencebetweenafastfoodrestaurantanda
fullservicechainrestaurant.MTOenvironmentsareslowertofulfilldemandthanMTSand
ATOenvironments,becausetimeisrequiredtomaketheproductsfromscratch.Therealsois
lessriskinvolvedwithbuildingaproductwhenafirmcustomerorderisinhand.
Engineertoorder(ETO)
InETOenvironments,customerspecificationsrequireuniqueengineeringdesign,significant
customization,ornewpurchasedmaterials.Eachcustomerorderresultsinauniquesetof
partnumbers,billsofmaterial,androutings.ETOenvironmentstheoreticallyaretheslowest
tofulfill:Timeisrequirednotonlytobuildtheproduct,buttocustomdesignittomeetthe
customer'suniquerequirements.

AssembletoOrder(ATO)andPicktoOrder(PTO)arestockingstrategiesthatareusedby
manufacturers,whentheycanproduceavarietyoffinishedproductsfromarelativelysmall
numberofsubassembliesandcomponents.Thisstockingstrategyiswidelyknownasthe
hourglassstrategy,whereyoumaintainyourinventoryatthenarrowestlevelinyourbill
structure.Thismaintainsinventoryinamoreflexiblestateandhelpsminimizeyourinventory
investment.AnATOenvironmentiswhereyouwaituntilyouhaveanactualsalesorder
beforeyoubeginmanufacturingthefinishedproduct.PTOimpliesthatyouwillpickmultiple
itemsbasedononelineitemonasalesorder.

ConfigureToOrderEnvironment
[https://www.blogger.com/blogger.g?blogID=62052174853209687][https://www.blogger.com/blogger.g?
blogID=62052174853209687]

InbothATOandPTOenvironmentsyoumightactuallyconfigureproductsbasedonthe
customerorder,orsimplymanufactureorshipstandardproductsorpredefined
configurations.Aconfiguretoorderenvironmentiswhereyouallowyourcustomersto
configurethefinishedproductthattheyintendtobuy.Typicallyyouwillofferavarietyof
choicestoyourcustomerfromwhichtheycanchoosethebestoptionsthatsuitthem.

MarketOrientationversusStockingStrategies
Whetheryouofferconfigurableproductsdependsonyourmarketorientationbutif
youdo,youcannotfollowaMaketoStockstrategy.Youwillpotentiallyfollowoneof
thethreepossiblestockingstrategiesMaketoOrder(MTO),ATO,orPTO,depending
onthecomplexityofyourproducts(howconfigurableyourproductsare).Onthe
contrary,youcanoperatewithanMTO/ATO/PTOstockingstrategybutstillchoose
nottoofferconfigurableproducts.ThedifferencebetweenMTOandATOisthelevel
atwhichyoustockyourcomponents.So,fromhereon,whenwementionATOwe
reallymeanbothATOandMTObecausethebusinessprocessesaresimilaralbeitthe
stockinglevelsaredifferent.

ATO/PTOScenarios
Inaconfigurationscenario,amodelbillofmaterialisusedtorepresentthelistof
choicesiftheresnoneedtoofferchoices,astandardbillofmaterialisused.The
differencebetweenmodelsanditemsisessentiallytheabilitytoconfigureanitem
whilecreatinganorder.Beyondthiscreationoftheconfigurationitem,the
manufacturinganddistributionprocessesarethesameforbothmodelsandstandard
items
InanATOenvironment,thestrategyistoforecast,build,andstockthe
subassembliesandpartsthatareusedinthemodel.OracleofferstwoflavorsofATO
thefirstoneistheATOmodelinwhichthecustomerscanconfiguretheproductto
theirliking,andtheotheroneistheATOitemthatispreconfigured.Oncethe
customerorderisreceived,thesubassembliesandcomponentsareassembled,
accordingtotheinstructionsintherouting,andshipped.
Forconfigurablemodels,thesubassembly/componentlistwillvarywithrespectto
eachorderandsowillthemanufacturinginstructions(routing).So,anotionalitemis
createdforeachuniquecombinationofoptionsusinganautomaticprocess.Thisitem
canbenumberedandnamedaccordingtoyourbusinessneeds.Forexample,whena
modelcalledMD45890isorderedwithasetofchosenoptions,thesystemwillcreate
anotionalitemtorepresentthechosenoptions,andnumbersthenewitemas
MD45890*99,basedonyourBOMparameters.Thisitemisreferredtoasthe
configurationiteminOracleApplications.[https://www.blogger.com/blogger.g?
blogID=62052174853209687][https://www.blogger.com/blogger.g?blogID=62052174853209687]

ThestrategyinPTOissimilar,althoughthereisnomanufacturing.Therearetwo
flavorsofPTOaswellPTOmodelsthatcanbeconfiguredbythecustomersandPTO
kitsthatareorderedastheyare.Becausethereisnomanufacturinginvolved,PTO

modelsorPTOkitscanbeshippedassoonastheyareordered,dependingonthe
availabilityoftherequireditems.Whenthepicklistisgeneratedfortheseitems,the
individualitemsthatwereselected(inthecaseofaPTOmodel)orthatwerepartof
thestandardPTOkitwillbeprintedinthepicklist,whichcanthenbepickedand
shipped.
OracleallowsyoutohavehybriditemssuchasanATOmodelwithinaPTOmodel.
StartingwithRelease11i5,Oraclesupportsmultiplelevelsofconfigurationwithina
modeltheapplicationswillgenerateauniqueconfigureditemforeachATOmodel
withinastructure.PriortoRelease11i5,however,multipleATOmodelscouldbe
used,buttheresultwasoneflatbillofmaterialforalllevelsofconfigurationinthe
structure.

BelowtablegivesattributestobeenabledinOracleEBSfordifferenttypesofitems

[http://1.bp.blogspot.com/SpOf6KFDCVU/U4M
SuhBLiI/AAAAAAAAAmo/vDeQToQU_HE/s1600/Different+Item+types+in+Oracle.PNG]

Posted3rdJune2013byRavikumarSingh(RAKS)

Labels:OracleConfiguretoOrder,OracleOrderManagement
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