Frequently Asked Questions
What are examples of MTS?
A great example of Made to Stock is how manufacturers and distributors do a majority of their production in the second and third quarters to prepare for increased demand during the fourth quarter (i.e. the holiday season). For instance, production of toys and video games may increase exponentially mid-year to get ready for this surge in retail holiday sales.
What are the disadvantages of MTS?
If a company’s inventory numbers — and subsequently, their production — are off because of inaccurate sales forecasts, it can cause a variety of issues with their stock levels and supply chain. Having too much inventory and limited liquidity, or too little inventory and unmet profit potential, is one of the main disadvantages of Make to Order. That’s because wrong information can lead to excess inventory, stockouts, and revenue losses due to an inability to meet demand.
What is the MTS process?
The Made to Stock process is a more traditional production method used for mass production of consumer goods, commodified goods, and other products that are rapidly consumed. The primary goal of MTS is to match on-hand, finished goods inventory with demand forecasts, and then create the appropriate product mix to replenish inventory against that anticipated demand. Made to Stock also requires safety stock of finished goods and raw materials to buffer against any unforeseen fluctuations with incoming orders.