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Assemble to Order (ATO) is a supply chain strategy where products are assembled only after an order is received, utilizing pre-stocked components to quickly customize and fulfill customer demands.
In ATO, businesses keep an inventory of parts or components but wait to assemble them until an order is placed. This approach enables companies to offer product customization while minimizing excess inventory and reducing warehousing costs. It allows for more efficient logistics management by focusing on maintaining key components rather than fully assembled products.
Assemble to Order works by keeping a stock of the components needed to assemble a final product and only performing the assembly once an order is received. In logistics and supply chain management, this strategy helps businesses reduce their inventory costs while still offering customized solutions to customers.
It increases efficiency by focusing on ready-to-assemble components, speeding up production and reducing lead times. The ATO process allows businesses to stay flexible and responsive to customer demands, ultimately improving supply chain performance and customer satisfaction.
Buske Logistics is a Top 40 3PL with over 35 warehouses across North America, specializing in warehousing, transportation, and value-added services. We provide tailored logistics solutions serving major Fortune 500 companies.
Assemble to Order is a valuable logistics strategy for businesses that need to balance customization with cost-efficiency. By only assembling products after an order is received, companies can lower the risks associated with overstocking and reduce storage costs. This method enhances supply chain agility, allowing businesses to respond to changing customer needs without tying up resources in finished goods inventory.
For example, a company in the automotive parts industry might keep a stock of commonly used components like engines and body parts but only assemble the final vehicle after receiving an order. This enables the business to manage its supply chain more effectively, reduce holding costs, and quickly deliver customized products.
