MTO & MTS in SAP

Make-to-Order

Make-to-order production is a process in which a product is individually manufactured for a particular customer. Stock keeping is not usually carried out for products that are made to order. The primary benefits of this process are the ability to track the progress for the sales order and the flexibility to offer to the customer the products to meet their specific requirements. The benefit also lies in tracking the costs incurred in the servicing of the sales order in the manufacturing of the goods and the ability of arrive at a profitability of the sales order.

Make-to-Stock

In make-to-stock production scenario stock is produced independently of orders because you want to provide your customers immediately with goods from that stock later on. You might even want to produce goods without having sales orders, if you expect that there might be customer demand in the future. This means

that make-to-stock strategies can support a very close customer-vendor relationship because your objective here is to provide your customers with goods from your stock as quickly as possible

Major Steps:

•  Sales activity:  Sales order is created with reference to customer order (customer PO)
• Planning activity:  Planned orders are generated as output of Material Requirement Planning (MRP) With reference to Sales order

• Ext. procurement:  Required components procured externally using purchase order (PO)

• Subcontracting:  Procured components send to the subcontracting vendor & received semi finished product
• Production:  Semi finished product processed internally and gives output as final product/Assembly
• Delivery activity:  Delivers final product/Assembly to the customer against Sale order.

Steps in SAP:

Create materials with required views – MM01

Maintain CIN master data – J1ID Create Bill of Materials (BOM) – CS01

Create Routing to Finished material – CA01

Create sale order – VA01

Run MRP – MD50

View the planned orders created – MD04

Convert component planned order to PR (PR will show a/c assgn cat as M) – MD04

Convert semi finished planned order to PR (PR will show a/c assgt cat “M” & item cat. “L”) – MD04

Convert component PR into PO for external procurement – ME21N Goods receipt with reference to sale order – MIGO

View the stock (sale order stock) – MMBE

Create subcontract PO with reference to semi finished PR – ME21N Maintain storage location to the subcontractor – SPRO

Transfer goods to Subcontractor (movement type 311 +E) – MB1B / MIGO

Stock will be updated Subcontract storage location under Sale order stock – MMBE Create challan – J1IFQ

Receive goods from Subcontractor with movt type 101 (543 will be taken to the component &

subcontractor storage location to be entered) – MIGO Reconciliation of challan – J1IFQ

Complete challan – J1IF13

Convert finished material planned order to production order – MD04

Goods issue to the production with movement type 261 – MB1A / MIGO Confirmation of Production order – CO15

Goods receipt against Production order with movement type 101 – MB31/MIGO Order settlement for Production order – KO88

Delivery of Finished products – VL01N

MTS in SAP