Differentiating Push type and Pull type manufacturing is simple: Push type refers to Make-to-Stock (MTS), where production is NOT BASED on actual demand; on the other hand, Pull type refers to Make-to-Order (MTO), where production is BASED on actual demand.
Here’s another way of saying it:
MTS – A manufacturer producing items before orders are received. Now, you might be wondering where MTS manufacturers base the number of products that they produce over time. This traditional production strategy looks at the demand forecasts generated from data that they gathered. These will then be synchronized to the quantity of items to be made. The key to this type of manufacturing is to be as accurate as possible in making forecasts.
MTO – A manufacturer producing items after orders are received.
As you might have derived from the facts above, MTO manufacturers move right after an order is received. The usual case in this type of production strategy is that each order is unique—giving producers a hard time making them. The processes for every product, of course, vary from one another and this makes scheduling quite a handful.
In MTS, the biggest disadvantage falls into the forecasts itself. Here, inaccuracy will definitely result to losses producing high or excessive inventory ratings—where there are more products in the real demand and even stock-outs—when there would be a shortage of produced items when the demand is high.
In MTO, there are also many disadvantages and one of them is shortening lead time. If the company accepts many orders without having the ability to schedule them right, it will result to aggravating the consumers who, in that case, might be receiving their orders late or not receiving their orders at all. If the company refuses to accept orders because of certain issues, this results in loss of profit.
In this blog site of Asprova, we can see a couple of examples regarding MTS and MTO. The article about Make-to-Stock clearly states that by using the Advanced Planning and Scheduling Software, a vibration-proofing manufacturer achieved great results. In short, using a production scheduler is the biggest factor that led to more accurate forecasts.
Also, in another article focusing on MTO manufacturing, the solution was the same: using a production scheduler that can cope with the flexibility needed in MTO. This enabled them to cut-off late deliveries in half.