Assemble to Order (ATO) and Pick to Order (PTO) are stocking strategies that are used by manufacturers, when they can produce a variety of finished products from a relatively small number of subassemblies and components. This stocking strategy is widely known as the “hourglass” strategy, where you maintain your inventory at the narrowest level in your bill structure. This maintains inventory in a more flexible state and helps minimize your inventory investment. An ATO environment is where you wait until you have an actual sales order before you begin manufacturing the finished product. PTO implies that you will pick multiple items based on one line item on a sales order.
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