Fulfillment Model Definition

The term “Fulfillment Model” is used in business to describe the process and/or system a company uses to take an order, produce the product or service, and deliver it to the customer. There are several different types of fulfillment models that companies can choose from and the model that is right for a company depends on many factors such as size, type of product or service, geographic location(s) of production and customers, and company culture. The four most common fulfillment models are make-to-order (MTO), assemble-to-order (ATO), make-to-stock (MTS), and drop ship.

In a make-to-order (MTO) fulfillment model, also known as build-to-order (BTO), a company does not produce products or services until it receives an order from a customer. In this type of model, there is usually little or no inventory because products or services are only produced after an order is placed. This can be contrasted with a make-to-stock (MTS) model where products or services are produced in advance and kept in inventory until they are sold. The MTO model is often used for customized products or services where each customer order is unique. For example, a furniture company that makes custom sofas would likely use an MTO model.

An assemble-to-order (ATO) fulfillment model is similar to MTO except that instead of