In 2025, Australian manufacturers and distributors are facing a whirlwind of change—supply chain disruptions, shifting consumer demand, and new financial realities. For many, Make to Stock (MTS) remains a cornerstone production strategy, but the rules of the game are evolving fast. Whether you’re running a family-owned factory or a national distribution centre, understanding how to optimise MTS can mean the difference between lean profits and mounting losses.
What Is Make to Stock (MTS)?
MTS is a classic production approach where goods are manufactured and stocked in anticipation of future orders. Rather than waiting for a sale before making a product, businesses produce items based on demand forecasts, historical data, and seasonal trends. It’s the system behind everything from supermarket staples to electronics lining big-box retail shelves.
While MTS can deliver rapid order fulfilment and economies of scale, it also comes with risks—chiefly, the danger of overstocking, obsolescence, and tying up working capital. In Australia’s current economic climate, these risks are amplified by shifting consumer behaviour and unpredictable global supply chains.
MTS in 2025: Economic Context and Policy Shifts
Recent policy changes and economic conditions are reshaping how Australian businesses approach MTS:
- Interest Rate Outlook: The Reserve Bank of Australia (RBA) has signalled a cautious approach to rate cuts in 2025, keeping the cost of business finance higher than the pre-pandemic era. This makes holding excess inventory more expensive due to increased interest on working capital loans.
- Supply Chain Resilience: Federal initiatives, such as the National Supply Chain Strategy update, are encouraging local sourcing and diversified suppliers. While this reduces dependency on overseas shipments, it also means businesses need to rethink buffer stock levels and lead times.
- Tax Incentives: The extension of the instant asset write-off for eligible businesses in the 2024-25 Federal Budget provides some relief. Firms investing in advanced inventory management systems or automation can immediately deduct costs, freeing up cash for smarter stock management.
These policy shifts put a premium on accurate forecasting, nimble inventory controls, and flexible financing options.
Financial Implications: Cash Flow, Profitability, and Risk
The biggest financial challenge with MTS is balancing stock availability against the cost of holding inventory. Here’s what’s at stake for Australian businesses in 2025:
- Working Capital Pressure: With finance costs elevated, tying up cash in unsold goods can erode profit margins fast. For example, a Melbourne-based electronics wholesaler that increased inventory by 15% in 2024 saw a $200,000 jump in annual holding costs, eating into expansion plans.
- Demand Forecast Volatility: AI-powered forecasting tools are now standard, but unpredictable economic conditions (think: consumer sentiment swings, global supply shocks) still lead to costly stockouts or overstocking. Many food and beverage producers are shifting to shorter forecast horizons and more frequent inventory reviews.
- Obsolescence and Waste: In fast-moving sectors—like fashion or consumer tech—obsolete stock can turn into a write-off. The recent wave of end-of-season discounting among major retailers in Sydney and Brisbane underscores the risks.
On the upside, optimised MTS can unlock bulk purchasing discounts, streamlined production schedules, and happier customers through faster delivery.
Best Practices: Streamlining MTS for 2025
Australian manufacturers and wholesalers are adapting their MTS strategies with a mix of tech, finance, and process upgrades. Here’s how:
- Data-Driven Forecasting: Leverage cloud-based ERP and AI analytics to predict demand, spot trends, and adjust production schedules in near real-time. Case in point: A Queensland-based packaging firm reduced excess stock by 18% after adopting predictive analytics in 2024.
- Flexible Financing: Explore inventory finance products that allow you to borrow against your stock, smoothing cash flow without resorting to expensive overdrafts. New fintech entrants in Australia are offering tailored solutions for SMEs in 2025.
- Lean Inventory Principles: Apply lean management to eliminate waste—think: just-in-case stock, redundant SKUs, and inefficient warehouse layouts. Regular stock audits and cross-functional planning sessions are key.
- Supplier Collaboration: Build closer relationships with local suppliers to shorten lead times and reduce the need for large safety stockpiles. Many Australian firms are now using vendor-managed inventory (VMI) agreements to keep shelves full without overcommitting capital.
Conclusion: MTS in 2025—Adapt and Thrive
For Australian businesses, Make to Stock remains a powerful model—but only if it’s managed with precision and agility. The winners in 2025 will be those who harness data, embrace flexible finance, and treat inventory as a strategic asset—not a cost centre. In an era of higher borrowing costs and rapid market shifts, now is the time to review your MTS approach and ensure it’s fit for the future.
