Forecasting for CTO Products

In Configure to Order (CTO), you can select the base product at the time of ordering the product and then configure the different features of that product from the different available options.

The various options or components are manufactured to stock and based on the customer order. The end product is then configured to order.

Forecasting for CTO is a two-level planning problem. You first create forecast models and then derive demand for options or features for those models based on attach rates also called as planning percentages. You can use existing attach rates specified in the bill of material, add them manually or predict attach rates based on the historical trend in options' mix. The models' demand, option's model-dependent demand, and options' independent demand are calculated when you generate the statistical forecast and when you run the plan on-demand. You can calculate them in real time when you modify demand for base model, option demand or attach rates. A bill of material view shows the model, option classes and options in a hierarchy, along with the associated forecast.

A classic example for a CTO product is laptop, where manufacturers make different components to stock. For example, hard disk, monitor, RAM, processor, and so on are make-to-stock components. You can later select the various component options and configure the model of the laptop based on the order requirements.

Your selections of the components of the product must be anticipated to ensure the correct mix of components are available. This is one of the challenges in planning demands for CTO products.