Make-to-stock success factors and challenges
Make-to-stock, or “push,” manufacturing helps companies minimize customer wait times, make production scheduling and resource planning decisions in advance, and take advantage of economies of scale, as goods are usually produced in larger volumes than with a make-to-order (MTO) process.
The biggest challenges for a successful MTS production strategy then are to make sure you have highly reliable forecasts and an excellent inventory management process.
Jérémie Ghandour, Tim Lange, Andreas Seyfert, and Alessandro Turco discuss ways to improve customer demand forecasting in their Mckinsey report, “Consumer-goods companies must transform their planning end to end.”
“Leaders harness the capabilities of advanced analytics forecasting tools to strengthen their fact base and close the gap between demand forecasts and commercial targets,” the authors wrote. They cite the case of a beverage company that saw a 13% improvement in forecast accuracy by building the capability to “simulate the impact of commercial activities on demand” and integrating “machine-learning forecasting into its demand-planning processes.”
Looking at inventory management, the authors recommend companies adopt “integrated and highly automating planning processes and systems” that let them “react in real time to changes in demand or supply exceptions.” With automated, end-to-end planning systems, companies can better “react to changes in short-term forecasts, manage costs and inventories more effectively, and improve service levels.”