Make to Order (MTO) and Make to Stock

(MTS)
The difference between MTO and MTS is
MTO--> Make to Order
Production is the process where the production order is triggered from a Sales Order. Ex:
The Prod process will start only after receiving the sales order from the customer. In this
case the product could be customer specific only (Variant)
MTS--> Make to Stock
MTS scenario can be accomplished by the following settings
Need to use strategy group 20 in material master MRP view-Strategy group 20 is
assigned to strategy 20
Strategy 20 is assigned to Requirement type KE (Individual customer requirement)
Requirement type KE is assigned to requirement class 040 (Indiv.cust.w/o cons.)
Requirement class has all the parameters where we can define Production order type that
will be used to create the prod order. The above link needs to be established.
Also the MTS can be achieved using Sales Order schedule line category which will be
assigned to Requirement type/class. Item category is assigned to Reqtype/class and the
Item category is maintained in the material master.
You can use any of the above config settings.
For MTO --> you just need to have all PP cycle settings in place nothing special needed
as it is a plain PP cycle.
1. Make-to-order production is a process in which a product is individually manufactured
for a particular customer. In contrast to mass production for an unspecified market where
a material is manufactured many times, in make-to-order production a material is
created only once though the same or a similar production process might be repeated at
a later time.
2. You can use make-to-order production in two scenarios (a) for branches of industry or products where a small quantity of products with a large
number of different characteristics are manufactured (Variant Configuration).
(b) When a product has to be assembled particularly for a sales order (Individual
Customer Requirement).
3. Stock keeping is not usually carried out for products that are made to order. In
companies using make-to-order production, the demand program only determines the
production area, in which various variant types are produced. Depending on how you
track the costs associated with make-to-order production, there are two ways to process
make-to-order items during sales order processing.
(a) Make to order using sales order
(b) Make to order using project system (not relevant for SD application)
4. For make to order production using the sales order, all costs and revenues involved for
an order item are held collectively at that item. A particular rule is used that can be
changed manually to transfer costs to profitability analysis.
5. Make to order production is largely a production planning configuration. It is also
controlled by the requirements type, which is determined by three things
the strategy group (MRP 3) in MMR

the MRP group (MRP1) in MMR

the item category and MRP type (MRP 1)
6. Make-to-order production is controlled by the requirements type. The requirements
type is determined on the basis of the MRP group (MRP1) and the strategy group (MRP3)
in the material master record. In addition, a plant must be assigned for make-to-order
items in the sales order.