The right product has to be placed before the right customer at the right time and right cost.
But the supply has to be in right quantity. If the finished goods are supplied more than the market demand, it would reduce the prizes in the market and affect the manufacturer with reduced profits. Hence it is highly important that our business strategy is highly aligned with the manufacturing strategy. This article aims to introduce the commonly employed strategies for manufacturing.
Engineer to Order: The process starts with the specific engineering design based on the customer’s requirements and proceeds to manufacture. The methodology has the longest lead time as it intends to meet the exact specifications. It involves the customer extensively and the usually goes through many interactions. The method is suitable primarily for large scale engineering projects or to build an initial prototype.
Manufacture to Order: The manufacturing process commences once the order gets placed. It usually does not involve any large scale design process but would need a constant stream of orders to keep the facilities running. The process could be limited to only a few product types though.
Assemble to Order: The process involves assembling the standard components already available in the inventory once the order is placed. The methodology is suitable when the availability of both the components and the resources to assemble meets the customer demand.
Manufacture to Stock/Forecast: The process involves manufacturing the finished goods as per the forecast and holding them in the inventory until the customer places the order. It is the most commonly used methodology for mature products where the demand can be forecasted/known already.
Companies should plan to have products across all the life cycles and align their manufacturing strategy accordingly. They should intend to maximise the profits from mature products and phase out the products in decline to minimise the loss. Introducing a product should be a constant endeavour for long term sustenance.
