Divide and Conquer: From MTO to ATO/MTO

Abstract

In this chapter, we present a study of an electronics manufacturer that changed its manufacturing strategy from make-to-order to a combination of assemble-to-order and make-to-order. Faced with increasing pressures from its customers, this contract manufacturer had to implement a quick response program to reduce its manufacturing lead time and improve its on-time delivery rate. Based on an analysis of the product characteristics and demand pattern, we find that delayed differentiation in production becomes feasible. We divide the products into two categories and propose different manufacturing strategies, as well as different operating implementation programs. We highlight a missing link between the current Oracle ERP system and the proposed manufacturing programs, and further develop an efficient IT tool to support intelligent materials planning. The instant impact of the quick response program has been significant, with the on-time delivery rate being increased from under 50% to almost 90% within 6 months.