The manufacturing industry implements different processes depending on factors like the product, customer, volume, and manufacturing process. Make to order (MTO) and engineer to order (ETO) are two such approaches.
MTO is a process where the product is made once the order is confirmed and it is ideal for highly customised or configured products as well as low volume orders. The approach is often used in the food industry and the automotive industry. MTO allows the customer to determine the time and volume of production, which could result in a longer wait time for the product but can also increase efficiency by reducing production time waste.
The MTO approach typically involves a fixed design with customisations. However, there are some products where the designing and engineering process too, only begins once the order is placed. These are usually expensive, specialised, and complex products. For such products, the ETO approach is used.
ETO allows manufacturers to meet all specifications of the customer, through customer participation. The manufacturer and customer may communicate throughout the manufacturing process to ensure specifications and requirements are clarified and met.
While customer participation and involvement is high, ETO processes may also require several revisions and drafts. This may make it difficult to calculate an estimate of the cost of the product. However, the approach is ideal for industries like defence and energy.
Both MTO and ETO have their own strengths and weaknesses and pose unique challenges due to the nature of the approach. However, an enterprise resource planning or ERP software can make it easier to streamline the process for both MTO and ETO manufacturers and increase efficiency and productivity.
Enterprise resource planning is a software used to increase efficiency within organisations by integrating key business processes. ERP systems use a common database and can be implemented as on premise, cloud or software as a service (SaaS).
While on premise software like enterprise resource planning and customer relationship management (CRM) have their benefits, several organisations have transitioned to a cloud ERP system or cloud CRM solution because it enables remote access and reduces costs.
An organisation, especially an MTO or ETO manufacturer, planning on increasing efficiency through the use of an ERP system can contact a NetSuite partner in Sri Lanka as the software considers the unique requirements of the industry as well as the organisation.
If an organisation is working with a NetSuite partner in Singapore, for instance, they may be aware of NetSuite’s ERP software and its production management capabilities. The software has several features like planning and scheduling, work order management, quality assurance, product data management, and a manufacturing execution system (MES).
The cloud ERP system enables organisations to manage their entire manufacturing operation regardless of location, accurately cost, track and schedule production, and reduce the cost of goods sold by optimising cost of quality.
While a NetSuite partner in Sri Lanka can give any organisation a better idea of how an enterprise resource planning or customer relationship management software can boost growth and success, it is also important to look at how ERP can benefit MTO and ETO manufacturers specifically.
Considering the make to order or MTO approach, an ERP system can streamline processes to a great extent with the automation of repeated processes, management of resources and material, and visual scheduling. An integrated cloud CRM solution or an accounting software can further improve MTO processes, which is why it is recommended that manufacturers contact a NetSuite partner in Singapore for a cloud ERP system.
An ERP software can also streamline processes for ETO manufacturers, who deal with industry challenges like increased customer involvement and specifications and several revisions in the design and engineering process.
Additional integrated software like customer relationship management and accounting can be of great use for ETO manufacturers and a cloud ERP system can come with features like planning and scheduling, production control, and shop floor control that ETO manufacturers will find useful.
While these features benefit MTO and ETO manufacturers in different ways, it is important to remember that a software like the one by NetSuite can be customised to suit the specific industry. ERP for manufacturing will thus take into consideration the unique requirements of manufacturers and also remain flexible to the extent of accommodating the requirements of the organisation.
It is due to these benefits that ERP is recommended for MTO and ETO manufacturers.