How do you handle an unusually large order in an MTS environment?
FMCG companies generally design their supply chains for an MTS (Make to Stock) environment. The design works quite efficiently in a pull based replenishment system. The system is stretched when a distributor gets an unusually large order from one of its customers.
Such large orders are not new to FMCG companies. They have a well-defined system for large institutional orders, such as when one of their products is given free on another brand. These orders generally follow MTO (Make to Order) design.
If a distributor gets a large order, which is usually from the wholesale or HORECA segment, it can’t be fulfilled from the inventory buffer with him, nor is it advisable to carry a large inventory buffer for such sporadic orders. Such orders must follow the MTO route depending on whether this quantity is available at the CFA, RDC or CDC, or it has to be produced afresh. The supply lead time would vary accordingly.
The key is for the distributor to check and quote this delivery lead time. If it falls within the tolerance time of the customer, it gets processed as an MTO order. If not, the company should possibly work at improving its responsiveness to fulfil more such orders.