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Support for the Build to Order (BTO) production model

Tim  Minahan, SCM expert EXPERT RESPONSE FROM: Tim Minahan, SCM expert

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QUESTION POSED ON: 02 March 2003
How do you see the BTO (build to order) production model affecting the SCM market?

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Truly supporting the build-to-order manufacturing environment will require the combination of what were generally considered disparate capabilities -- e.g., inventory management, planning, execution, sourcing, logistics. With the growing trend to outsourcing supply, manufacturing, logistics, and other functions to third-parties it will be equally important is the need to support collaboration around these activities on an intra- and inter-enterprise basis.

That said, it should be noted that few manufacturers will adopt a BTO-only environment. Instead, most manufacturing environments will remain mixed-mode -- e.g., BTO, make-to-stock, etc. -- with manufacturers utilizing the proper manufacturing mode for the proper product. For example, it makes little sense to adopt BTO for a standard, commodity-like product -- such as a standard bolt, nut, or O-ring -- that has a very low price point. However, the same manufacturer may utilize a BTO or engineer-to-order model for custom versions of these parts, such as those for use in aerospace and defense equipment.

In short, the real challenge for SCM applications will be to provide systems that can support the needs of a multi-mode manufacturing environment.


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