Mastering Manufacturing with Business Central: Make to Order vs. Make to Stock
When it comes to manufacturing in Microsoft Dynamics 365 Business Central, one of the most foundational decisions you'll make is whether to operate on a Make to Order (MTO) or Make to Stock (MTS) basis. This decision has direct implications for cash flow, lead times, and how you configure your ERP system.
In this fourth batch of our Mastering Manufacturing with Business Central blog series, we'll break down the business logic behind both models, explore how Business Central supports them, and highlight real-world use cases.
🎥 Watch the full webinar this blog is based on:
Make to Order vs. Make to Stock in Business Central (WebSan Solutions)
Understanding the Models: Make to Order vs. Make to Stock
At a high level, these two models describe how you manufacture goods in response to demand.
What is Make to Order (MTO)?
Make to Order means you only produce a product after receiving a customer order. This is ideal for custom or high-value products where holding inventory is costly or impractical.
🛠 Example:
A client in New Hampshire manufactures custom wood flooring. Every order is unique—different stain, size, and finish—which means they produce only after receiving the customer's specifications.
What is Make to Stock (MTS)?
In a Make to Stock model, products are manufactured in advance based on forecasted demand or to maintain minimum stock levels. This enables rapid order fulfillment, often at lower per-unit cost.
Example:
If your business produces standardized parts or fast-moving goods, MTS allows you to fulfill orders immediately from inventory—without waiting for production.
Key Differences: Business Impact
| Factor | Make to Order (MTO) | Make to Stock (MTS) |
| Inventory | Minimal or none | Moderate to high |
| Lead Time | Longer (based on order) | Shorter (based on availability) |
| Cash Flow | Order triggers production | Pre-investment in inventory |
| Customization | High | Low |
Your choice between MTO and MTS is a business strategy. It influences your inventory holding costs, customer response time, and production planning complexity. Often, manufacturers use a hybrid approach—some products are made to stock, others to order.
How Business Central Supports Both Models
One of the strengths of Microsoft Dynamics 365 Business Central is how it flexibly supports both MTO and MTS planning models—even at the item or location level.
Let's say:
- You produce Item A to stock in your Toronto warehouse.
- You make Item A to order in your U.S. distribution center.
That's possible using Stockkeeping Units (SKUs) or simple location-based planning setups. You can fine-tune replenishment behavior based on real-world needs across your sites.
The Bottom Line
Make to Order and Make to Stock are more than system settings—they're strategic business choices that directly affect how you serve customers, manage resources, and grow sustainably.
Business Central not only understands the nuance between them—it gives you the flexibility to plan both at scale and with confidence.
What's Next in the Series?
In the next blog, we'll roll up our sleeves and walk you through the specific reordering policies available in Business Central. You'll learn about:
- Order-based planning (used for MTO)
- Fixed reorder quantity, lot-for-lot, maximum quantity (used for MTS)
- How to use safety stock and planning periods effectively
Need Help Navigating Your Manufacturing Setup?
Whether you're running a hybrid model, moving off spreadsheets, or scaling production in Business Central, our team can help.
Let's talk!
Contact WebSan Solutions today to book a consultation with one of our manufacturing experts.