Made to Stock (MTS) is an inventory system in which products are manufactured before customer orders are placed.

This requires anticipation of future demand for the product and careful planning and monitoring of the production process.

Advantages of Made to Stock

The advantages of Made To Stock manufacturing are numerous.

MTS is a cost-effective way of producing goods because it requires less planning and coordination. This reduces the lead time from order to delivery, making companies more responsive to customer needs.

Since the production process is already in place and the products are already manufactured, the risk of quality issues is significantly reduced.

MTS manufacturing can help companies save money by allowing them to buy in bulk and reduce the inventory they need to hold on hand.

Another advantage of MTS manufacturing is its scalability. Companies that use MTS can easily adjust production levels based on customer demand, allowing them to meet customer needs more efficiently.

Since the production process is already set up and ready to go, there is no need for additional training or hiring of staff.

MTS manufacturing is an excellent choice for companies that want to focus on their core competencies instead of worrying about managing a complex production process.

Companies can free up resources and focus on other areas by relying on an MTS provider to take care of the manufacturing process. This allows them to maximize their efficiency and better use their resources.

Disadvantages of Made to Stock

One of the significant disadvantages of MTS is that it’s inflexible compared to other inventory systems. A company must produce items with a one-size-fits-all approach, even if customers have specific requirements or preferences.

As a result, it can be challenging to meet the needs of individual customers and satisfy their demands. The company may be left with excess inventory that isn’t needed or sells slowly if demand for a product declines.

To remain competitive in an ever-changing market, companies must respond quickly to their customers’ needs. That’s why some businesses prefer to use other inventory management methods, such as the Make to Order (MTO) system.

With MTO, companies can manufacture products based on customer requests, allowing them to respond quickly and cost-effectively to customer demands.

However, while MTO offers more flexibility than MTS, some drawbacks exist. For example, producing as needed can be more expensive, as the company may have to pay for raw materials and labor costs upfront.

There is a risk that customer orders won’t match actual demand, which could lead to excess inventory or shortages.

Ultimately, businesses must decide which inventory management system works best based on their unique needs and goals. While MTS may not be the ideal solution for every company, it can still provide some benefits in some instances. By understanding the strengths and weaknesses of each system, businesses will be better able to make an informed decision that meets their specific requirements.

Differences Between Make to Stock & Make to Order

In MTS, a manufacturer produces goods before the customer orders; the finished goods are then held in inventory until an order is received. On the other hand, MTO involves creating goods only after an order is received; the goods are then made to meet that particular customer’s needs. 

The primary benefit of MTS is cost savings due to economies of scale. A manufacturer can take advantage of lower unit costs and benefit from greater production efficiencies by producing a high volume of goods in advance. 

The downside of MTS is that inventory needs to be stored and tracked, incurring storage costs and the risk of obsolescence or damage.

MTO, on the other hand, requires fewer resources upfront because it only begins production once an order is received. 

This approach allows manufacturers to produce particular goods tailored to specific customer needs, such as color or size variations. 

The downside of MTO is that it can be more expensive than MTS due to higher setup costs and lower economies of scale. There is also a risk that production may not meet the desired delivery date if orders exceed available capacity.

MTS can result in cost savings but comes with an increase in inventory management responsibilities. On the other hand, MTO allows for more customization but can be more expensive and have a higher risk of delays.

Late Orders Cost More Than Lost Revenue

Late orders can have a wide range of costs beyond the direct impact of lost revenue. Some of the costs associated with late orders include:

Loss of Customer Trust

Late orders can erode customer trust in a company, leading to decreased loyalty and repeat business. When customers expect to receive their orders by a specific date, and those expectations are not met, they may be less likely to trust the company to fulfill future orders.

Increased Operational Costs

Late orders can also result in increased operational costs for a company. This can include additional labor costs to rush orders or expedite shipping and potential fines or penalties for missing deadlines.

Inventory Management Issues

Late orders can disrupt a company’s inventory management, leading to overstocked or understocked items. This can result in additional costs, such as storage fees or lost sales due to out-of-stock items.

Reduced Efficiency

Late orders can reduce efficiency as employees may need to spend additional time tracking missing items or addressing customer complaints. This can result in lost productivity and increased labor costs.

Legal and Financial Implications

In some cases, late orders can result in legal and financial implications. For example, if a company cannot fulfill a contract by a particular deadline, they may be subject to legal action or fines. 


Manufacturers seeking to reduce expenses in their production processes can greatly benefit from a make-to-order approach.

Contact LillyWorks to find out how we can help you.