Make-to-Order has emerged as the perfect paradigm for customised climate conscious manufacturing at a time when the GCC custom-manufacturing market is growing exponentially and is poised to reach almost $1.3 trillion by 2030.
In the wake of COP28, it seems appropriate that we focus on the concept of customisation, where the customer gets precisely what they want, with no compromises, and the manufacturer is able to reduce waste by not expending materials, energy, and labour on that which is not required, writes Vibhu Kapoor, Regional Vice President - Middle East, Africa & India, Epicor.
By one estimate, the GCC custom-manufacturing market had reached a value of $898 billion by 2022 and is expected to grow at a compound annual rate of 4.6% between 2023 and 2030. This is very good news for Gulf nations that have sought to diversify their economies. Programmes such as Saudi Arabia’s National Industrial Strategy (NIS) and the UAE’s Operation 300bn will benefit greatly from custom manufacturing.
MTO's attraction
Build-to-order (BTO) or make-to-order (MTO) manufacturing is a sizeable part of the customisation space. MTO’s attraction to a business is obvious. Design, assembly, and distribution are driven by customer fiat. MTO holds much in common with lean manufacturing, which is designed to minimise waste and maximise productivity.
But it differs from make-to-stock, in that MTS does not wait for an order to start production. It manufactures in bulk, which runs the risk of units sitting on shelves unpurchased. Even though bulk production is cheaper, each unit still carries a cost and if it does not sell, cash flow issues can arise, especially if the lack of interest in the product also occurs in bulk.
Fit for all
In MTO, businesses deal in much smaller batches, but they can offer more choice. Consumers will be drawn to such a brand, of course, but so will B2B customers. A business that uses a traditional MTS supplier will have to adjust to what is available, whereas those that use MTO partners will never have to compromise on their business model.
While some industries such as the consumer automobiles and personal computers sectors are obvious MTO targets, the practice can be applied to almost all manufacturing businesses that are intent on cutting costs, reducing waste, and becoming more sustainable. But let’s take apparel as a case study.
The UAE is home to a booming $17.5-billion textile industry and is poised to become a textile hub. If these businesses were to consider an MTO future, they might seize an abundance of market opportunities as the competition heats up.
Made-to-order garments may finally put a dent in the global fashion industry’s notorious materials waste. This waste has been exacerbated by the rise of “fast fashion”. According to one report, between 2000 and 2015, global production volumes doubled while the average number of times clothing was worn dropped by more than a third (36%). The UAE has an opening to become a leader in sustainable development. By moving to the MTO model in the fashion industry it can help meet the “Responsible Consumption and Production” goals of its sustainability strategy.
Benefits for all
For the MTO manufacturer, cashflow issues are greatly diminished and other benefits include reduced storage costs, less waste, and higher quality. It is true that companies that take this route will have to manage customer expectations more deftly (due to longer lead times) and also deal with the production complexities that come from catering to more customer preferences and managing more SKUs. But if the business procures the right technology platform, the benefits of MTO come shining through, far outweighing any downsides.
The digital solution will allow production managers to break down the MTO process, gauge customer demand, and design a workflow that allows efficient operations — an order comes in; the chosen product is built to specification from on-hand or quickly sourced components; the produced item goes through a quality check; the order is shipped. While this may seem complex when done outside traditional bulk-production models, the new workflow is still subject to automation to speed up production, slash costs, and enhance quality even further.
The right platform will be easy to deploy. And like the products it will help to build, the right platform will be easy to use and to maintain. It will be tailored to your industry and further customisable to your enterprise’s specific needs. The right platform will be able to serve as a partner in the MTO venture, allowing the manufacturer to enhance quality and streamline other functions of the business beyond just production operations. Enterprise resource planning (ERP) solutions offer all this and more. They can manage every aspect of the business, bringing together strategy, planning, warehousing, sales, marketing, finance, and human resources.
Sustainability, at last
As well as uniting the data and workflows of disparate business units, ERP facilitates interdepartmental information-sharing and collaboration. It helps with MTO automation by supporting a variety of SKUs, by performing frequent inventory updates, and by facilitating the continual update of listings to keep customers informed about all their options. When the ERP system does all this, the downsides of MTO dissipate. Lead times, for example, can be adequately managed and lags reduced.
We have seen the future in numbers. GCC custom-manufacturing is inching towards becoming a trillion-dollar segment. MTO will cement its place in regional commercial history. Once it has become the de facto norm, those who have not allowed for its integration will be left behind. As MTO matures, so will the technology that drives it, with ERP systems becoming more tightly integrated.
But the greatest benefit of MTO is its ability to give customers what they want (almost) when they want it while still being able to stand on a record of minimal waste and maximum sustainability. Modern customers — consumer and business — increasingly look at such a record before making purchasing decisions. When reduced waste, better products, happy customers, and enhanced production flexibility are the benefits, it becomes clear that MTO is the future.--TradeArabia News Service
