What is MTO (Make-to-Order)?
A manufacturing strategy where production begins only after a customer order is received.
Definition
Make-to-Order (MTO) is a manufacturing strategy where production of a product starts only when a confirmed customer order is received. Unlike Make-to-Stock, MTO reduces inventory risk and waste because nothing is produced speculatively. MTO is common for products with high variability, customization options, or high value. The trade-off is longer lead times since customers must wait for production to complete.
How MTO Works in ERP
ERP systems support MTO through sales order-driven production planning. When a sales order is confirmed, the ERP triggers MRP to plan materials, creates production orders linked to the specific customer order, and tracks costs against that order. MTO requires strong production scheduling and capacity planning to manage customer delivery expectations.
ERP Vendors with Strong MTO
Epicor Kinetic
ERP built for manufacturers — from job shop to enterprise
Microsoft Dynamics 365
Modular ERP + CRM tightly integrated with Microsoft 365
SAP S/4HANA Public Cloud
Standardised cloud ERP with quarterly auto-upgrades and low TCO
SYSPRO
Purpose-built ERP for manufacturers and distributors
Frequently Asked Questions
When should I use Make-to-Order?
Use MTO when products are customizable, have long shelf life concerns, are high-value, or when customer-specific configurations make stocking impractical. MTO reduces inventory costs but requires accurate lead time planning.