Build to order refers to custom or made-to-order products with optional features beyond standard specifications. It can refer to customer-facing ordering options or manufacturing practices. Benefits include reduced inventory, labor costs, and storage space.
Build to order, often abbreviated to BTO, is a manufacturing term for custom or built-to-order products. In terms of retail order fulfillment, build to order typically means that a product is built, assembled, or otherwise manufactured with optional or unusual features beyond standard specifications. Alternatively, build-to-order manufacturing is a time-honored manufacturing concept where products are manufactured as needed to meet each specific sales order. The use of the term build to order establishes the meaning based on the context, with a specific demarcation being either customer facing ordering options or a discussion of the operating practices of a manufacturing facility.
From a customer-oriented usage perspective, build to order is used interchangeably with the term build to suit. For example, a real estate lot for sale by a commercial construction company may be listed with a build to suit option. These terms illustrate the company’s desire to create commercial structures according to the buyer’s needs. When used in residential construction, build-to-order might refer to a housing manufacturer’s options for additional features, design elements, or services that the client may choose to customize.
Most commonly, the terms build to order or make to order are used to describe a manufacturing concept that was used before mass production capabilities such as assembly lines. Order fulfilment, prior to mass production, was all about build to order concepts, as manufacturers did not risk investment in raw materials until an order was received. In current manufacturing practices, build-to-order is a supply chain management and manufacturing practice intended to save time, resources, labor, and reduce waste. When orders arrive, products are manufactured to fit each order. The concept is similar to the retail industry’s concept of on-demand or just-in-time inventory.
The benefits of built or made-to-order production models are numerous, with various industries reaping greater benefits in one area over another. Manufacturers do not need to purchase, maintain, or find the means to store high levels of inventories of raw materials, such as those used in manufactured housing. Asset values have increased during custom manufacturing, as raw materials do not have the same value as finished goods, thus affecting tax liabilities and other accounting issues. Labor costs can be reduced as excess production is eliminated and staffing levels can be adjusted to align with increased or decreased sales. Less storage space is needed to house finished products awaiting a future sale that may never come.
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