Bhagwat Bhokare

What is MTS?

Make-to-Stock (MTS) is a production strategy where a company manufactures products in advance based on demand forecasts and stores them as inventory before receiving customer orders.

Key Idea

Products are produced first and sold later from stock.

How It Works
1. Company forecasts future demand.
2. Production is planned based on this forecast.
3. Finished goods are stored in inventory.
4. When a customer order arrives, the product is delivered immediately from stock.

Example

A biscuit manufacturer produces thousands of biscuit packets every day based on expected demand.
When a retailer places an order, the biscuits are supplied from the warehouse stock, not produced after the order.

Industries Where MTS Is Common
• FMCG
• Pharmaceuticals
• Retail
• Automotive spare parts

Simple Formula to Remember

Forecast → Production → Stock → Sales Order consumes stock

Step by Step Process Flow

STEP 1: Demand Planning / Forecasting

T-Code: MD61

What happens?
• Create Planned Independent Requirements (PIR)
• Demand is entered at: Material, Plant, Month / Date

Check:
MD04 → Stock/Requirement List

STEP 2: MRP Run

T-Codes:
• MD01N → Plant level
• MD02 → Material level

System checks:
• Current stock
• Open purchase orders
• Planned orders
• PIR

If shortage exists:
• Creates Planned Order
• Creates Purchase Requisition (for raw materials)

STEP 3: Convert Planned Order to Production Order

T-Code: CO40

What happens?
• Planned order converted to Production Order
• BOM & Routing copied
• Cost estimate copied

STEP 4: Release Production Order

T-Code:
• CO02 (Change)
• CO01 (Create + Release)

What happens?
• Order status becomes REL
• Components reserved
• Shop floor execution allowed

STEP 5: Goods Issue (Raw Material Consumption)

T-Code: MIGO
Movement Type: 261
• Raw materials issued to production order
• Inventory reduced

FI Entry:

Dr Production Order (Consumption)
Cr Raw Material Inventory

STEP 6: Order Confirmation

T-Code:
• CO11N (Operation level)
• CO15 (Final confirmation)
• Confirm quantity produced
• Confirm labor/machine hours
• Activity cost posted

FI Entry (Activity Allocation):

Dr Production Order
Cr Cost Center

STEP 7: Goods Receipt (Finished Goods)

T-Code: MIGO
Movement Type: 101
• Finished goods stock increased
• Production order credited

FI Entry:

Dr Finished Goods Inventory
Cr Production Order

STEP 8: TECO (Technically Complete)

T-Code: CO02

What happens?
• Order marked complete
• No further postings allowed

STEP 9: Order Settlement

T-Code:
• KO88 (Single)
• CO88 (Mass)
• WIP calculated (if incomplete)
• Variance calculated
• Balance settled to

FI Entry (Variance Settlement Example):

Dr Price Difference / Variance Account
Cr Production order

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