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What Does "Build to Order" Mean?

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  • Written By: Sandi Johnson
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  • Last Modified Date: 28 September 2016
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Build to order, often abbreviated as BTO, is a manufacturing term for customized or built on demand products. In terms of retail order fulfillment, build to order typically means a product is built, assembled, or otherwise manufactured with optional or unusual characteristics beyond standard specifications. Alternatively, build to order manufacturing is a time-honored production concept where products are manufactured as needed to fill each specific sales order. The use of the term build to order establishes meaning based on context, with specific demarcation being customer-facing order options or discussion of a manufacturing facility's operational practices.

From the perspective of customer oriented use, build to order is used interchangeably with the term build to suit. For example, a parcel of real estate for sale by a commercial construction company may be listed with a build to suit option. Such terms illustrate the company's willingness to build commercial structures as needed by the purchaser. When used in residential construction, build to order might reference a housing manufacturer's options for additional features, design elements, or amenities the customer can opt to customize.

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Most commonly, the terms build to order or make to order are used to describe a production concept used since before mass production capabilities like assembly lines. Order fulfillment, prior to mass production, was all based on build to order concepts, since manufacturers did not risk investment into raw materials until an order was received. In current manufacturing practices, build to order is a supply chain management and production practice intended to save time, resources, labor, as well as lessen waste. As orders come in, products are manufactured to fill each order. The concept is similar to the retail industry's concept of on demand or just in time inventory.

The benefit of build or make to order production models are numerous, with various industries gaining more benefit in one area over another. Manufacturers need not purchase, maintain, or find the means to store high levels of raw material inventories, such as those used in manufactured housing. Asset values are augmented under build to order manufacturing, since raw materials do not have the same value as finished goods, thereby affecting tax liabilities and other accounting concerns. Labor costs can be reduced, since surplus production is eliminated and staffing levels can be adjusted to align with an increase or decrease in sales. Less storage space is needed to house finished products waiting for a future sale that may never come.

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SkyWhisperer
Post 3

If you ever buy any of the build to order computers, make sure to buy it from a shop and not from a computer hobbyist.

I made the mistake of asking my well intentioned friend to build me a computer once. Well, he built it all right, at a decent price. The problem is that there is more to building a computer than simply assembling components.

Some components don’t work well together, and other components you definitely don’t want to be cheap with – like a power supply. The computer overheated over and over and eventually fried in six months.

That’s the first time in my life I ever had a computer practically blow up on me. These things are not supposed to happen, but lesson learned I suppose.

andee
Post 2

The last computer I bought was a build to order laptop. My son-in-law used to repair computers, but since they have become so much cheaper, there isn't as much money in computer repair work anymore.

When I was looking for a new laptop, he told me he could build me a custom built laptop with all the features I wanted.

Another nice thing about this is I would also get only the programs I needed. In the past when I have purchased a computer from a retail store, it comes pre-loaded with a lot of programs I don't want.

This way I received only the programs I needed and didn't have to worry about all the extra stuff taking up space on my hard drive.

julies
Post 1

It sounds like if more companies would operate on a "build to order" philosophy they might not incur as much debt.

Depending on what type of business you are in though, many people may not have the patience for build to order products.

My cousin builds log homes, and he hires a few people here and there, but most of his business is a one man operation.

Every one of his homes is a custom, build to order home. The home buyers know when they place an order to build a home with him, it will probably be at least a two year process.

They also know they are getting a very well built, one of a kind, quality home that they wouldn't be able to get anywhere else.

Most of his business has been built by word of mouth. People see the quality of his work, and don't mind waiting for him to build their home.

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