What is Assemble to Order?

Assemble to Order

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Assemble to Order

Assemble-to-order (ATO) is a production strategy in which products are assembled or configured based on customer orders rather than being pre-assembled in advance. Under this approach, a manufacturer stocks component parts and sub-assemblies and only puts them together once a customer order is received. This allows companies to offer a wider range of product configurations and reduces the need to maintain large inventories of finished goods, thus lowering storage costs and reducing the risk of inventory obsolescence.

ATO is often used in industries where customization is important, such as electronics, computer manufacturing, automotive, and furniture. By using the assemble-to-order strategy, companies can meet specific customer demands while maintaining relatively quick order fulfillment times compared to more customized manufacturing approaches, like make-to-order (MTO).

Example of Assemble to Order

Let’s consider a computer manufacturing company that uses the assemble-to-order (ATO) strategy.

This company produces custom-built personal computers (PCs) for its customers. Instead of manufacturing and stocking pre-built PCs, the company maintains an inventory of individual components, such as processors, motherboards, graphics cards, hard drives, and memory modules.

When a customer places an order for a PC with specific configurations, the company checks the availability of the required components in its inventory. Once all the components are ready, the company assembles the PC according to the customer’s specifications and ships it out. This way, the computer manufacturer can offer a wide range of customization options to its customers while still maintaining relatively quick order fulfillment times.

The ATO strategy allows the company to reduce inventory holding costs, lower the risk of obsolescence, and cater to various customer preferences efficiently.

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