Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Make to Assemble (MTA)

What it is:

Make to Assemble (MTA) is a manufacturing strategy whereby the manufacturer creates or obtains all of the components of its products but does not assemble the product until a customer places an order.

How it works (Example):

For example, let's say Company XYZ manufactures tables. If it uses the MTA strategy, it might cut the tabletops, mill a variety of legs, mix stains, and order the hardware for inserting the table leaves and any drawers. When customers order a table, Company XYZ selects the right components, assembles the table in 30 minutes, and ships it to the customer the next day.

MTA is a common strategy in restaurants, whereby a restaurant may slice vegetables, shred cheese, or make sauces in advance. This reduces the time the customer has to wait while ensuring a fresh, made-to-order product.

Why it Matters:

The MTA allows manufacturers to customize items quickly and easily and reduces labor costs by spending time assembling things only when a paying order is in hand. Because the MTA strategy does not include a lot of finished goods in inventory, the risk is that the manufacturer might receive an order larger than it is able to satisfy with the components on hand.