Make to Order (MTO) is order-driven manufacturing: production starts when a specific customer order arrives. Contrary to the textbook MTO/ATO distinction, the strategy is decided not by the ERP module but by the position of the Order Penetration Point (OPP) in the value stream. From over 1,200 Dreher Consulting projects we know: locating the OPP per product family first — and only then choosing between MTO, ATO, ETO or MTS — yields a workable target process.
What Is Make to Order? Definition, OPP, and Distinction from MTS, ATO, ETO
Make to Order is a manufacturing strategy triggered by an incoming customer order. The difference from MTS, ATO and ETO lies not in the ERP module but in the position of the Order Penetration Point. In MTO, the OPP sits at raw materials.
Make to Order is one of four classical strategies alongside MTS, ATO and ETO. The ASCM SCOR Digital Standard lists MTS, MTO and ETO as Source-, Make- and Deliver-process configurations. The APQC Process Classification Framework separates „Manage Sales Orders" (4.x) from „Produce/Manufacture/Deliver" (5.x). The Gabler Business Dictionary defines MTO as classical pull-logic manufacturing.
The pivotal term is the Order Penetration Point (OPP). Wikner and Rudberg define it in the International Journal of Production Economics as the value-stream point where a product is assigned to a customer order. Pre-OPP work is forecast-driven; post-OPP work is order-driven. The four strategies differ solely in OPP position:
- MTS — OPP in shipping. Manufacturing runs forecast-driven against stock; the customer order triggers dispatch.
- ATO — OPP at the component warehouse. Sub-components are pre-built; final assembly starts with the order. See the sister article on production planning and control.
- MTO — OPP at raw materials. Only the customer order triggers component and final-product manufacturing.
- ETO — OPP in engineering. Even design starts with the order — the highest customisation level.
From over 1,200 projects we know: DACH practice conflates these terms. When people say „make to order", they often mean ATO or a hybrid MTS/MTO per product family. Hopp and Spearman in Factory Physics frame MTO positioning as one question: how to combine flow-line speed with job-shop flexibility.
Why Make to Order Is Under Fresh Pressure in the DACH Mittelstand in 2026
Three drivers converge in 2026: the S/4HANA migration wave forces architecture decisions, the Mittelstand digitalisation gap remains wide, and German machinery and plant engineering is emerging from a cyclical trough. Treating MTO as a pure PPC tool question misses the executive dimension.
First, S/4HANA migrations loom. The DSAG Investment Report 2026 with around 198 DACH SAP users reports: 42 percent plan investments in S/4HANA On-Premises, 22 percent in Private Cloud, 38 percent report higher IT budgets. Every migration is an MTO architecture decision — the choice between SAP strategy 20 and 50 is a process question.
Second, the maturity gap remains wide. Per the Bitkom Industry 4.0 study report, 71 percent of industrial companies with 100+ employees use Industry 4.0 applications — but operational depth in the Mittelstand often lags that adoption. In our projects, MTO problems are regularly data-quality problems at three master-data objects: customer order, bill of materials, routing.
Third, German machinery and plant engineering is emerging from a cyclical trough. The VDMA economic outlook reports order intake stabilising at prior-year level for 2025. This is when Mittelstand companies decide on PPC and MES — and thereby on MTO viability for the next five years.
The MTO Methodology — Four Phases, One Process Owner
We implement MTO in four phases: quote and CPQ, order entry with OPP definition, manufacturing and capacity, delivery and invoicing. An MTO process owner runs across all four. Without that role, function boundaries form instead of an order-driven value stream.
A four-stage approach has proven robust in vendor-neutral process and ERP advisory:
- Phase 1 — Quote and CPQ. Enquiry, CPQ configuration, feasibility check, quote calculation. This decides which variants are admissible and which master data is maintained. From our projects: quotes without ERP master-data linkage produce orders not buildable in Phase 3.
- Phase 2 — Order entry and OPP definition. Customer-order acceptance, manufacturing-order creation with sales-order-specific stock (lot-for-lot sizing), assignment to the planning strategy. In SAP: strategy 20 or 50. The OPP itself is decided per product family, not per module.
- Phase 3 — Manufacturing and capacity. Procurement, component manufacturing, final assembly. The Siemens article on make-to-order manufacturing describes MTO as a pull operation working backward through the production sequence — common in machinery, plant engineering, shipyards and special-purpose machinery. Capacity planning decides on-time delivery.
- Phase 4 — Delivery and invoicing. Dispatch, billing, receivables. Classical MTO with long lead times involves down-payment logic and partial deliveries — finance, sales and the shop floor must jointly carry it.
The MTO process owner must sit across all four phases. From over 1,200 projects we place this role at executive level or directly below — operationally the Head of Operations. End-to-end authority matters. Fragmenting the role builds function boundaries.
Case Example: Kitchen Manufacturer with 1,500 Kitchens per Year and Six Process Variants
At a Mittelstand kitchen manufacturer shipping 1,500 kitchens annually, six unmanaged MTO variants had emerged — one per channel and product line. Consequences: unclear OPP positions, delivery dates without capacity reconciliation, manual configurator rework. The case was resolved not by a new PPC system but by one OPP decision per product family and a named process owner.
We have observed in over 1,200 projects: most MTO break points sit at function boundaries between sales, PPC and the shop floor — not inside a function. The Trovarit ERP in Practice 2024/25 confirms: order and variant manufacturers rate system stability and methodology higher than in 2022 — but the lever is methodology.
We have worked with a kitchen manufacturer of about 220 employees that called us because on-time delivery had fallen below 70 percent and the configurator released configurations the shop floor could not build. Three channels (direct, dealer, project) had two product lines each — six unmanaged variants, none documented. Sales ran ATO logic, the shop floor tried pure MTO, logistics expected MTS dispatch.
We mapped this case in eight weeks: interviews, ERP-document and configurator log analysis, swim-lane modelling of the six variants and, above all, OPP positioning per product family. The executive team named an MTO process owner with end-to-end authority who, with the channel leads and the shop-floor manager, defined exactly one OPP position per product family. Quote-to-cash fell by 24 days; on-time delivery rose above 90 percent within a quarter. The system update followed — and was leaner to specify.
What MTO Guides Rarely Spell Out
Three points typically omitted from make-to-order guides — but which, from our experience across 1,200+ projects, regularly decide success or abort. Skip them and you only extend the bottleneck with a new tool.
1. The Order Penetration Point Decides — Not the Label „MTO"
In many ERP selections the strategy question is framed as a module question: which SAP strategy, which PPC module, which configurator? Methodologically the order is reversed. We position the OPP per product family and component group first — based on variant count, demand volatility and customer-required lead time. Only then do we choose between MTO, ATO, ETO or hybrid. Pick the label before the OPP analysis and you buy a tool that does not match the value flow.
2. Three Break Points No PPC Module Repairs
From our experience, over half of MTO loss points sit at function boundaries. First, quote-to-order: CPQ without ERP master-data linkage yields quotes not buildable in Phase 3. Second, order-to-manufacturing: a configurator without a validated bill of materials yields manufacturing orders without realistic routing. Third, manufacturing-to-delivery: committed dates without capacity reconciliation lead to systematic delays. We address these in a workshop with swim lanes — before the specification.
3. A Continuous KPI Chain Replaces Isolated Shop-Floor Measurement
In our MTO implementations at southern German machinery manufacturers we observe: the shop floor alone cannot fix on-time delivery if sales and logistics measure different KPIs. We build a KPI chain across all MTO phases — quote-to-order time, throughput time, on-time delivery, DSO. Only when sales, PPC, shop floor and dispatch share the same funnel view do robust steering decisions replace finger-pointing.
Our reading
MTO is a strategy question at the OPP level, not a tool question. Locate the OPP per product family, fix the break points, close the KPI chain — and the hard 80 percent is done. The ERP planning strategy is comparatively simple afterwards.
Application Across Dreher Industries
The MTO cut differs sharply between plant and machinery engineering, variant manufacturing and special-purpose machinery. We calibrate the four phases industry-specifically — down-payment and milestone logic in project business, CPQ depth in variants, long lead times and ETO proximity in special-purpose machinery.
In plant and mechanical engineering MTO runs 6 to 24 months per order; billing follows down-payment and milestone logic. In variant manufacturing — furniture, kitchens, special tools — CPQ is not optional; OPP positioning lies hybrid between ATO (carcass) and MTO (front). In special-purpose machinery the OPP shifts into engineering, tipping from MTO to ETO — covered in the separate article on Engineer-to-Order.
Frequently Asked Questions
MTO, ATO and ETO do not differ in the ERP module — they differ in the position of the Order Penetration Point in the value stream. In MTO, the OPP sits at raw materials: only the customer order triggers component manufacturing. In ATO, the OPP sits at the component warehouse: sub-components are pre-built, final assembly starts with the order. In ETO, the OPP sits in engineering: even design is order-driven. We recommend positioning the OPP per product family rather than placing the label ahead of methodology.
MTO fits when products are strongly customer-specific, inventory carrying costs would exceed capital tied up in WIP, and the market accepts the resulting lead time. Typical DACH industries: machinery and plant engineering, shipyards, special-purpose machinery, high-end variant manufacturers. MTO does not fit volatile markets with short lead times and stable demand forecasts — there MTS or ATO carries better. We decide per product family — hybrid MTS/MTO is the norm.
From over 1,200 projects we recommend: position the OPP per product family, then choose the strategy (MTO, ATO, ETO or hybrid), then name the process owner, then model the target process in four phases, then write the specification, then choose the ERP planning strategy — for example SAP strategy 20 or 50. Start with the ERP strategy and you buy a module configuration that does not match the value flow. We work vendor-neutral, assessing requirements along process, data and system architecture.
Next Steps
Before any MTO tool selection, a short upfront clarification pays off: where does the OPP sit per product family? Who is the MTO process owner? Where are the three typical break points? Skip this and you build a PPC system on an unclear bottleneck.
For depth, see our process management services and ERP consulting. Cross-references: production planning and control, order-to-cash and process owner. Cases in our Insights; a first conversation via the contact page.
30 minutes with Dreher Consulting
A structured pre-clarification of your MTO setup — OPP positioning per product family, the four phases and the three typical break points, vendor-neutral and drawn from over 1,200 projects in the DACH Mittelstand.
