The real difficulty in make-to-order manufacturing
The difficulty is not running production but estimating cost correctly at quotation time. Because every job differs there is no standard product cost; a quote must rest on the actual cost of comparable past jobs. If actual cost is not accumulated per work order, quoting stays guesswork.
Critical processes
- Quote costing: material + operation time + subcontracting + overhead, referenced against similar completed jobs.
- Bill of material and routing: multi-level structures, alternative routings, work centre per operation and a separation of setup and run time.
- Work order tracking: progress by operation, actual duration, waiting time and rework records.
- Subcontracted operations: parts sent out, return tracking and matching subcontractor invoices to operations.
- Material reservation: separating stock allocated to a project or work order from free stock.
- Project costing: periodic cost accumulation and progress billing on long-running jobs.
Which solution maps to what
Bills of material, routings, work centre costing and project costing fall under [ERP consulting and development](/en/solutions/erp-consulting). Shop-floor terminals use [mobile app development](/en/solutions/mobile-app-development), quoting and customer tracking use [CRM](/en/products/crm-software), and shift calculation uses [time and attendance](/en/products/time-attendance). Non-standard requirements are met through [custom software development](/en/solutions/custom-software-development).
Mandatory integrations
Bill of material transfer from CAD/CAM systems, CNC job lists, weighbridges, barcode terminals, e-invoicing and e-dispatch, bank statements and accounting.
Where we start
In make-to-order manufacturing the starting point usually looks like this: quotes are prepared in spreadsheets, work orders reach the shop floor on paper, and actual durations are recorded by nobody. At period end the total profit is known, but which job earned it is not.
The first exercise produces an operation dictionary: standard names for the work done on the floor, the work centre each belongs to, and how setup and run time are separated. Without it two quotes cannot be compared, because the same operation is named differently every time.
What the data model must make explicit
- Quote-to-order link: which quote line produced which work order; lost quotes must remain as records too.
- Operation record: work centre, setup time, run time, operator and actual start/finish.
- Subcontracting step: quantity sent, quantity returned, scrap, subcontractor price and invoice match.
- Material reservation: stock allocated to a work order kept apart from free stock.
- Revisions: customer-driven changes recorded with a version number and date.
- Rework: modelled as a distinct operation type so it does not blend into normal run time.
Roll-out sequence
1. Quoting and operation dictionary: the standard operation list, work centre hourly rates and the material price source.
2. Work orders and shop-floor recording: start/stop capture per operation via barcode or terminal.
3. Subcontracting and purchasing: external operation tracking and order-dispatch-invoice matching.
4. Cost feedback: returning the actual cost of closed work orders to the quoting engine as a reference.
Phase four is skipped in most projects, yet it is the only step that improves quoting accuracy. Without that feedback loop the system records data but produces no decisions.
What we measure
- Variance between quoted cost and closed work order cost, broken down by job type
- Setup time as a share of total operation time
- Difference between quantities sent to and returned from subcontractors
- Rework time as a share of total shop-floor time
- Queue time per work order
Common mistakes
- Folding setup into run time. On small batches most of the cost is setup; without separation the calculation drifts as quantity grows.
- Deleting lost quotes. Win rate and price competitiveness data disappear with them.
- Recording rework as normal production. The cost of quality becomes invisible.
- Treating the CAD structure as a production BOM. A design hierarchy carries no assembly or operation sequence.
Frequently asked questions
How are quoted and actual costs compared?
Every quote must be linked to a work order, and the planned-versus-actual variance reported automatically when the order closes. Without that loop, quoting rests on experience rather than data.
How are subcontracted operations tracked?
The operation is defined as a step of the work order, with quantities sent and returned recorded separately. If the subcontractor invoice is not matched to that operation, work order cost is understated.
Can the bill of material come automatically from CAD?
It can, but a CAD structure is a design hierarchy, not a production routing. After transfer, operation sequence, work centre and time data must be completed on the production side.
How is operation time recorded on the shop floor?
Three common methods: barcode start/stop at a terminal, operator entry on a tablet, or automatic capture from the machine. Whichever is chosen, the model must allow one operator to have open records on several work orders at once; assuming a single open record does not match real shop-floor practice.
How is a quote protected when material prices move?
The source and date of the material price used in the quote must be recorded. When quote validity and price-adjustment clauses exist as fields, expired quotes are flagged automatically.
How is project-based progress billing set up?
On long-running jobs, cost is accumulated periodically by percentage of completion instead of waiting for the work order to close. The precondition is weighted operations; an unweighted percentage only shows progress in item counts.