Difference between MTO and PTO scenarios in SAP SD

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Please someone help me to understand the difference between MTO and PTO scenarios is SAP SD

asked Mar 7, 2014 in SD by Renga

1 Answer

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Make-to-order (MTO):

In MTO environments, products are made entirely after the receipt of a customer order. The final product usually is a combination of standardised and custom items to meet the customer(s specific needs. MTO environments are more prevalent when customers are prepared to wait in order to get a product with unique features)usually customised or highly engineered products. This is analogous to the difference between a fastfood restaurant and a full service chain restaurant. MTO environments are slower to fulfill demand than MTS and ATO environments, because time is re'uired to make the products from scratch. There also is less risk involved with building a product when a firm customer order is in hand.

Pick to Order:

PTO- are stocking strategies that are used by manufacturers, when they can produce a variety of finished products from a relatively small number of subassemblies and components. This stocking strategy is widely known as the "hourglass" strategy, where you maintain your inventory at the narrowest level in your bill structure. This maintains inventory in a more flexible state and helps minimise your inventory investment. An ATO environment is where you wait until you have an actual sales order before you begin manufacturing the finished product. PTO implies that you will pick multiple items based on one line item on a sales order.

Learn more about SAP SD Concepts and Use Cases here: https://mindmajix.com/sap-sd-training

answered Sep 21, 2017 by micahwilliams12 (140 points)