MTO Process in SAP SD
In SAP Sales and Distribution (SD), the MTO (Make-to-Order) process caters to scenarios where products are manufactured specifically for a customer’s order. Learn about the MTO Process in SAP SD. Optimize production with our guide on the Make-to-Order workflow, enhancing planning and boosting customer satisfaction. Here’s a breakdown of the typical workflow:
1. Sales Order Creation:
- A sales order is created in SD (transaction VA01) with the MTO material and desired quantity.
- The MTO material configuration in the material master (MM) should be set to “Make-to-Order” (Planning Type = “PP” with Strategy Group = “40”).
2. Availability Check & Production Planning (PP):
- An availability check is triggered to ensure sufficient raw materials are available for production.
- MRP (Material Requirements Planning) in PP is initiated based on the sales order demand. This can involve:
- Generating a planned order for the required components.
- If the components are already produced, no planning order is needed.
3. Production Order Creation:
- A production order (transaction CO01) is created in PP, referencing the sales order. This order specifies the production details (materials, work centers, routing).
4. Production & Goods Receipt:
- Production commences based on the production order.
- Once completed, a goods receipt (transaction MIGO) is posted in MM to reflect the finished product quantity. The system allocates this quantity to the specific sales order.
5. Delivery & Billing:
- A delivery document (transaction VL01) is created in SD to deliver the finished product to the customer.
- Based on the delivery, a billing document (transaction VF01) is generated for invoicing the customer.
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Here are some additional points to consider in the MTO process:
- Configuration in SD & MM: Proper configuration of the MTO material type (in MM) and sales order settings (in SD) is crucial for smooth processing.
- Component Availability: Ensure sufficient raw materials are available before confirming the sales order.
- Production Planning: MRP helps plan and schedule production activities efficiently.
- Delivery & Billing: These processes complete the sales cycle by delivering the finished product and generating the invoice.
Advantages of MTO:
- Reduced Inventory Costs: No finished goods are kept in stock, minimizing storage and carrying costs.
- Increased Customer Satisfaction: Products are tailored to specific customer needs.
Disadvantages of MTO:
- Longer Lead Times: Production needs to be completed before delivery, potentially leading to longer lead times.
- Less Flexibility: MTO requires more precise planning compared to MTS (Make-to-Stock) due to its customer-specific nature.
By understanding the MTO process in SAP SD, you can effectively manage production for customer orders and optimize your inventory management strategy.
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Author:-
Saurabh Bapat
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