Manufacturing workflows are transforming from traditional make-to-stock models that rely on demand forecasts towards more agile make-to-order approaches offering mass customization. Here we explore this shift and provide guidance on optimizing planning.
The Problem with Make-to-Stock
Make-to-stock has been the standard operating model for generations of manufacturers. By producing goods to stock based on projected demand, companies seek to buffer against volatility while reducing lead times.
But demand forecasting is far from an exact science. Seasonal swings, economic events, competitor moves and changing consumer preferences all collide to undermine even the most rigorous projections. The result? Inventories ballooning out of control or panic-inducing stockouts.
The Appeal of Make-to-Order
Make-to-order sidesteps demand uncertainty by only producing after securing a customer order. This eliminates the risk of overproduction by linking supply directly to real-time demand. Enabling customization also allows manufacturers to address niche preferences missed by mass market goods.
Technology is accelerating this trend by facilitating rapid prototyping, flexible production methods, and tracking of bespoke components across supply chains. The promise? Virtually limitless product varieties produced at optimized volumes.
Charting the Right Course
In reality, few manufacturers dwell exclusively in the make-to-stock or make-to-order realms. Maintaining some finished goods buffer against spikes while offering tailored catalogue options is often ideal. The art lies in aligning production strategies with product characteristics and market conditions.
Make-to-stock suits low complexity commodities with steady demand. Make-to-order excels where personalization is valued and demand less predictable. Highly modular products blending standardization with varied accessories can achieve the best of both models.
HESH enable the level of operational control and visibility manufacturers need to calibrate supply and demand across multiple workflows. The future belongs to those who leverage technology to navigate flexibility at scale.
