Q1: What are "make-to-order" (MTO) and "make-to-stock" (MTS)? Why did EA cakes want MTS over MTO? Do you agree with such a decision? Why or why not? Q2: What are aggregate: capacity planning (ACP), master product scheduling (MPS) and shop floor scheduling? Q3: How is the adoption of SAP viewed by (a) production staff, (b) IT staff and (c) the management? Q4: Can a standard software system like SAP give adequate computer support to an individually designed business management system?Take a stand, and give some rationale for your position. Make-to-order (MTO) is a business production strategy that typically allows consumers to purchase products that are customized to their specifications. MTO strategy only manufactures the end product once the customer places the order. This strategy creates additional wait time for the consumer to receive the product, but it allows for more flexible customization compared to purchasing from retailers' shelves.
The final product is usually a combination of standard items and items custom-designed to meet the special needs of the customer. Make-to-stock (MTS) is a traditional production strategy used by businesses to match production with consumer demand forecasts. MTS method forecasts demand to determine how much stock should be produced. MTS relies heavily on the accuracy of demand forecasts; inaccurate forecasts will lead to losses. Customer orders are typically filled from existing stocks, and production orders are used to replenish those stocks.
EA cakes want MTS over MTO because the market is more dynamic, and increase in competition from home (New Zealand) and abroad. Most customers wanted their product not next week, but right away. I agree with EA cakes’ decision of wanting to change from MTO to MTS because of the reasons above and also MTO increases market speed and allows expanding the market share by attracting and catching new customers. Aggregate capacity planning (ACP) is an attempt to balance capacity and demand in such a way that costs are minimized.It is balanced against the agreed target capacity and meets the production and sales goals.
The financial goals of the company are forecasted by demand. Master production scheduling (MPS) is a plan that has been developed by a company for production, inventory, staffing etc. MPS gives the operation manager of an MTS company the ability to ensure that available capacity is allocated with a customer focus. Shop floor scheduling prioritizes, schedules work, and communicates the progress of work regarding the schedules and plans that ave been made.
Shop floor planning is necessary to ensure that expected quantities are completed on time and that resources such as labor, materials, machinery and equipment are used to best effect. The production staffs viewed the adoption of SAP as an ERP system that focuses on function such as inventory, finance, accounting, production, etc. They had doubt about how SAP modules are relevant to their business processes. The production staffs believed the functional view poorly represents the interaction with other functional views.The IT staffs were certain that the existing SAP software will provide all necessary computer support. They believed that even if the SAP would not fit their business processes precisely, it may be an investment that provides greater long-term flexibility and better solutions to the company’s problem.
The management of EA cakes’ adoption of SAP was a predicament. The managements were put in between two equally undesirable alternatives. They have a choice of either continuing with the existing SAP modules or ordering high cost computer support in addition to existing SAP system.I think standard software system like SAP can give adequate computer support to an individually designed business management system, but I believe standard software system like SAP is geared more towards larger organization.
Larger organizations will benefit more from SAP if implemented properly because of the cost of acquiring it. SAP charges base on the number of users and number of licenses a company requires. In my own opinion, even though if the cost of acquiring SAP fits into EA cakes’ budget, I would recommend a smaller enterprise system like Dynamics AX, but geared more towards sales and production.
