Email
sinha.rk.dr@gmail.com
How rigid is your MTO-MTS classification of the portfolio?
Companies often segregate their product portfolio into Make to Order (MTO) and Make to Stock (MTS). The classic methodology is based on whether the customer tolerance time is more than the supply lead time or otherwise.
The main issue with this classification is that it becomes rigid over time. Companies rarely have a relook at their working, whereas both the parameters change over time.
Supply lead time can be shortened considerably through strategic decoupling points in the distribution network and building flexibility and responsiveness in the distribution, manufacturing, and procurement process. These are a part of capability building for the supply chain team.
On the other hand, customers can be segmented based on their tolerance time and even nudged to modify it, thereby making our offer the best among competitors.
Since both the customer tolerance time and supply lead time are dynamic over time, shouldn’t your portfolio classification be dynamic as well? Point to ponder…