In Microsoft Dynamics 365 Business Central, Material Requirements Planning (MRP) is a powerful tool that helps manufacturers plan their production and purchasing based on real demand. When you're operating in a Make to Order (MTO) environment, MRP behaves in a unique and highly targeted way. Instead of reacting to forecasts or stocking strategies, it responds directly to customer sales orders.
This blog explains how MRP functions when an item is configured as Make to Order, how inventory is reserved, and how Business Central ties every planned production order to real demand—ensuring accuracy and clarity in your manufacturing planning.
Reference Video:
Make to Order vs. Make to Stock in Business Central
Planning Starts with Real Sales Demand
In a Make to Order environment, production planning begins the moment a sales order is entered into the system. Business Central doesn't rely on forecasts, safety stock, or historical usage trends. Instead, it plans strictly around actual customer demand. Once a sales order is placed, the system recognizes the requirement and begins planning to meet it—nothing more, nothing less.
This approach keeps inventory levels lean, avoids overproduction, and ensures that resources are allocated only when needed.
Controlling Inventory Through Reservation
When an item is produced specifically for an order, it's essential that the finished goods are not accidentally allocated to another customer. Business Central handles this through inventory reservation.
The system can be set up to automatically reserve inventory for a sales order, or you can opt for manual control, allowing users to choose which stock to reserve. Once inventory is reserved, it's removed from general availability. This guarantees that the quantity produced is tied directly to that specific customer's order.
This capability is especially important for manufacturers producing customized products, or in cases where certain customers require dedicated stock.
MRP Generates One-to-One Production Plans
After the sales order is recorded, running MRP in Business Central produces a planned production order that matches the sales order exactly. There's no grouping of demand or accumulation of orders from multiple customers. MRP creates a one-to-one relationship between the sales order and the supply.
For example, if a customer requests 300 units by a specific date, the system calculates backward from that date based on production routing and lead times to determine when manufacturing should begin. A planned production order is created with that precise quantity and timeline.
This level of precision is what makes MTO planning so effective for businesses with highly variable or customized demand.
Existing Inventory and Production Orders Are Ignored
In Make to Order mode, Business Central takes a strict view of what counts as usable inventory. Even if stock already exists in the system, MRP will not use it to fulfill new sales orders—unless that inventory was specifically produced for the same customer and order.
If the system finds existing inventory or production orders that don't align with the sales demand, it recommends cancelling them. This keeps inventory clean and ensures that orders are only fulfilled with what was intentionally produced for them.
This reinforces the principle of only building what's needed, when it's needed, and for whom it's needed.
Visualizing Supply and Demand with Event-Based Availability
One of Business Central's most helpful planning tools is the Item Availability by Event view. This timeline-style interface shows all transactions—such as existing stock, incoming supply, and outgoing demand—alongside the running inventory balance.
When working in Make to Order, this view clearly displays the link between a sales order and its corresponding planned production order. If multiple sales orders exist, the system creates a separate supply line for each one.
This gives planners full transparency into how the system is responding to demand and ensures confidence in the results.
Order Tracking: Mapping Supply to Demand
Beyond generating the right orders, Business Central also provides tools to trace why an order exists. This is controlled by the Order Tracking Policy setting on the item card.
When enabled, this feature links each supply document (like a planned production order) directly to the demand that triggered it. Planners can see which sales order a production order is meant to fulfill—helping avoid confusion and simplifying change management.
This capability is a game-changer for manufacturers who want to understand and audit every step of their supply chain.
Why Make to Order Planning Matters
Operating in a Make to Order environment provides significant benefits—especially for businesses with complex, high-value, or customized products. By tying production directly to sales, companies can reduce waste, lower carrying costs, and improve order accuracy.
Business Central's MRP engine supports this with:
- Direct one-to-one planning between sales and production
- Optional inventory reservation for customer-specific orders
- Complete transparency through event-based views and order tracking
With the right setup, your planners can spend less time second-guessing the system and more time focusing on delivering value.
Up Next: Make to Stock in Business Central
In the next blog, we'll explore how MRP behaves in a Make to Stock setup. You'll see how Business Central handles forecasts, safety stock, and bulk production quantities to keep inventory levels optimized.
Need Expert Help?
Whether you're configuring Make to Order planning for the first time or want to make your MRP process more efficient, our team is here to help.
Contact WebSan Solutions today to book a personalized consultation with a Business Central manufacturing expert.