SAP MTO (Made To Order) with AFS

When it comes to SAP AFS, most of the users I know of adopting a MTO (Made To Order) setup. In most of the apparel and related industries, people produce for an order unlike in some other industries like vehicle manufacturing where they manufacture mainly on the expected demand not for an actual order.

AFS has a design edging towards MTO rather than MTS or Made To Stock. This mentality of AFS can be seen in the inability to use various MRP types. Even the simple minimum stock level ordering is not possible through the MRP type relevant for the AFS materials in the stable versions of AFS. This suggests, AFS is more like to be deployed with the MTO mindset than a MTS mind set.

SAP MTO (Made To Order) with AFS

Use of MTO with AFS presents a set of unique challenges. All the demands and supplies are allocated to a customer orders like Sales Order (SO) or a Sales contract. This multiplies the amount of transaction data. For an example if you are going to produce 10,000 pieces in a MTS scenario, you may use one production order for the quantity of 10,000, while in the case of MTO, if there are 10 small customer Pos making the demand of 10,000 with 1000 pieces each, you will have 10 production orders instead.

This will increase the number of data available in the system. But on the positive side you will gain more and more control over the order. You are much leaner in manufacturing, as you always try to only manufacture in the quantities customers need.

Data multiplies further with the use of sizes too. If each of the 10 SO had 5 grid values each, the number of table entries in the relevant at the detail levels will increase by 5 times. This again accounts for the increase of data in the system. Increase in the data will slow down the system, if frequent archiving is not done.

Although AFS in my opinion is more inclined towards MTO, I believe there are some areas needs to be modified to better cater MTO business. One of these areas is the subcontracting of goods. Subcontracting is a very common in specially the apparel industry. But unfortunately AFS solutions are not geared to the replicate the physical scenarios in the system in MTO. But when it comes to MTS, they have excellent features. But the good news is there are well established work around available to manage MTO subcontracting in AFS.

There are few other limitations when it comes to MTO as well. One of these is the use of Scales to maintain different discounts for different quantities. Although behavior of scales do vary depending on the configuration, in a pure MTO scenario, you can maintain Scales in purchasing not for the entire PO but only for the particular LI of the PO. If you are using AFS, you may have more insight to these problems. Please leave your thoughts as a comment to this post.

Please note, these are just my thoughts depending on what I have seen over the years. There may be differences in your experience. You can always leave your comments below.

Also See: High Level & Fundamental understandings of SAP System Architecture