Make to stock is the traditional production process of building up an inventory based on sales forecasts. Inventory is then stored in locations such as warehouses or retail stores until it is purchased by the customer. The following are illustrative examples of make to stock.
The primary benefit of make to stock is efficiency. For example, a fast moving consumer goods company can produce items in large batches that allows for economies of scale and a low cost per unit.
FashionMake to stock relies on reliable forecasts of demand. For example, a fashion company may require demand forecasts for a shoe design broken down by size, color and style variation. When a forecast is off, a color or size ends up overstocked.
FoodPerishable items such as food are particularly complex to make to stock. For example, a grocery store chain may plan production of fresh fruit assortments according to factors such as public holidays, climate, weather and the demographics associated with each location. They may aggressively discount such items as their expiry time approaches to avoid waste.By definition, make to stock doesn't allow the customer to customize the product. However, make to stock items are often used as base products for mass customization. For example, make to stock snowboards can be produced without a design. These can be used as base models for custom manufacturing that allows customers to design their own snowboard art.
Original equipment manufacturers are firms that produce parts for other firms products. In many cases, such parts are produced on a make to stock basis and exported to warehouses that serve different regions to reduce order turnaround time.
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