Schedule a demo

We’ll show you how our platform works so you can see for yourself what Skubana can do.

Someone from our team will contact you shortly

Made To Stock

What does Made to Stock (MTS) mean?

Made to Stock (MTS) is a production strategy used by retail businesses to match their inventory levels with projected consumer demand. Rather than establishing a production level and then attempting to sell those goods, a brand using an MTS approach would estimate how many orders its products could generate, and then provide enough available stock to effectively meet those orders. It’s worth noting the MTS method requires accurate demand forecasting to determine how much stock it produces; when future demand can be adequately estimated, then the MTS strategy will be an efficient option for the manufacturing process.

The difference between Made To Stock and Made To Order

While the Made to Stock production technique involves manufacturing goods based on anticipated consumer demand, the Made to Order (MTO) strategy allows shoppers to purchase goods that are assembled to order and have been customized to their specifications. In that way, MTO goods are made based on actual demand, with the final product created especially for the customer who purchased it.

4 benefits of using Made to Stock

Made to Stock is a conventional approach to the production process, where goods are manufactured on a large scale in accordance with forecasted demand. The advantages of using MTS production include streamlined scheduling, more efficient use of resources, greater economies of sales, and faster response times.

Streamlined scheduling

Companies who implement MTS make decisions on when and how much to produce well in advance of the actual production. A master production schedule is created to help facilitate production planning and workflow, which means manufacturing is more likely to run on time, and the quantity of goods left to make can be correctly determined at any point. 

Efficient use of resources

Since Made to Stock means you’re manufacturing products to prepare for customer demand, you have the ability to organize your resources and ensure production is carried out to maximum efficiency. From another angle, because production is planned out ahead of time, your company will only use the resources it truly needs, helping to cut waste (and costs).

Greater economies of scale

Make to Stock goods are generally produced on a much larger scale than Make to Order items, which means the fixed costs of production are divided equally over a greater number of units being produced. This will drive down the average cost of production per unit, and allows companies to enjoy all the benefits of economies of scale, as well.

Faster response times

One of the most important ways MTS products set themselves apart from MTO goods, is that Made to Stock items are ready to fulfill customer orders as soon as they come in. Whenever a customer places an order, their products can be shipped almost immediately, thus reducing wait times by a substantial amount (which cannot be said for Made to Order purchases).

Frequently Asked Questions

  • What are examples of MTS?

    A great example of Made to Stock is how manufacturers and distributors do a majority of their production in the second and third quarters to prepare for increased demand during the fourth quarter (i.e. the holiday season). For instance, production of toys and video games may increase exponentially mid-year to get ready for this surge in retail holiday sales.

  • What are the disadvantages of MTS?

    If a company’s inventory numbers — and subsequently, their production — are off because of inaccurate sales forecasts, it can cause a variety of issues with their stock levels and supply chain. Having too much inventory and limited liquidity, or too little inventory and unmet profit potential, is one of the main disadvantages of Make to Order. That’s because wrong information can lead to excess inventory, stockouts, and revenue losses due to an inability to meet demand. 

  • What is the MTS process?

    The Made to Stock process is a more traditional production method used for mass production of consumer goods, commodified goods, and other products that are rapidly consumed. The primary goal of MTS is to match on-hand, finished goods inventory with demand forecasts, and then create the appropriate product mix to replenish inventory against that anticipated demand. Made to Stock also requires safety stock of finished goods and raw materials to buffer against any unforeseen fluctuations with incoming orders.  

More terms and formulas

Other Commercial Off-the-Shelf (COTS) See definition and examples
formulas Finished Goods Inventory See definition and examples
Orders Pick and Pack See definition and examples

Watch Webinar

It's as easy as entering your information.

Invalid input