Q: How does the Advanced Planning and Scheduling System deal with make-to-order (MTO) manufacturing?
A: Take a look at the Order Production and Purchase line diagram below.
In ordered production when an order comes in the product inventory is first searched and if there is adequate product inventory the order is connected by line to that inventory. If even then inventory is insufficient the line will be connected to estimations of future completion and manufacturing orders now in production. These manufacturing orders are scheduled to be started and completed in the future. Semi-processed goods and purchased goods are connected to inventory in the same way and if there are any deficiencies a line is drawn to the purchase orders. This allows required quantities of material to be connected correctly and confirmation made of on-time delivery.
If we schedule the delivery time for make-to-order line-connected orders backward from the origin point we will create a schedule that shortens lead-time and minimizes inventories.
Related article : Backward Scheduling for Theory of Constraints (JIT Scheduling)