The term “make-to-order” (MtO) is translated as “order production” and means that a product is not produced until a customer order has been received. The make-to-order strategy is often understood as an alternative to the make-to-stock strategy (MtS), in which products are produced on stock for still anonymous customers without existing customer orders.
Thinking in terms of MtO/MtS opposites can lead you down the wrong logistical path. Contract manufacturing is often associated with the production of customer-specific products. This does not necessarily have to be the case. Economically, it can make perfect sense to produce even standard products only on customer order if the end products are expensive and production takes little time. On the other hand, contract manufacturing does not necessarily mean that the logistical decoupling point lies outside the company with the suppliers. In most cases, a final product is manufactured to customer order from raw materials or semi-finished products that are kept in stock (sales-order-related final production with customer-anonymous pre-production on stock).