BTO - Build to Order

BTO (Build to Order) is a production method in which manufacturing starts only after a customer places an order. This approach allows for customization based on the customer's specific needs and requirements, reducing inventory risks and enhancing customer satisfaction.

Features of BTO

  1. Customer Needs Response

    • Products are customized based on customer requests, offering individual specifications.

    • Example: A computer manufacturer producing computers with customer-specified configurations (memory, storage, processor, etc.).

  2. Reduced Inventory Risks

    • There is no need to hold a large inventory in advance, minimizing inventory costs and disposal risks.

    • Example: Parts are procured and assembled after the order is confirmed.

  3. Lead Time Until Manufacturing Start

    • Since production begins only after an order is received, it may take longer for the product to reach the customer.

    • Example: An automobile manufacturer producing vehicles based on customer-selected options may have a delivery time of several weeks to months.

  4. Flexible Production Planning

    • Production schedules can be adjusted flexibly, allowing quick responses to demand fluctuations.

    • Example: Increasing production lines to handle unexpected order increases.

Benefits of BTO

  1. Improved Customer Satisfaction

    • Providing products tailored to specific customer requests enhances customer satisfaction.

  2. Cost Reduction

    • Reducing the risk of holding unnecessary inventory lowers inventory management and disposal costs.

  3. Competitive Advantage

    • Offering customized products differentiates a company from its competitors.

  4. Improved Demand Forecast Accuracy

    • Manufacturing based on actual orders enhances the accuracy of demand forecasts.

Challenges of BTO

  1. Lead Time Management

    • Properly managing the time from manufacturing to shipping and providing accurate delivery times to customers is necessary.

  2. Production Complexity

    • Producing customized products requires diverse processes, complicating production management.

  3. Cost Variability

    • The procurement of parts and production processes for customized products can cause cost fluctuations, making cost management essential.

Examples of BTO

  1. Computer Industry

    • Manufacturing customized PCs based on customer-specified configurations (processor, memory, storage, etc.).

    • Examples: Dell, HP, Lenovo, etc.

  2. Automobile Industry

    • Manufacturing vehicles based on customer-selected options and specifications.

    • Examples: Toyota, BMW, Mercedes-Benz, etc.

  3. Furniture Industry

    • Manufacturing furniture based on customer-specified designs and sizes.

    • Examples: IKEA's customized order furniture.

BTO is an effective production method for providing products tailored to diverse customer needs. Proper management can enhance a company's competitiveness.