Manufacture-to-Order - That's a concept, or is it?

Manufacture-to-order: A production management technique in which goods are produced to meet firm orders, rather than being produced for stock.
I was talking to our Enesco sales representative the other day when, out of the blue, she mentioned that Enesco manufactures to order. We've been dealing with Enesco since late 2009 when it was announced that they would be taking over the license to manufacture Trail of Painted Ponies figurines. It's now May of 2010 and this is the first I've heard of this. We're not used to dealing with manufacturers who operate this way, so it will be a "BIG" adjustment for us. What this means is, we place our order with Enesco, and only then do they place their order to the production facility in China. In the past I've been told that it typically takes 3 months from the time an order is placed with the production facility in China, until it arrives here, on the boat. In thinking through the whole "manufacture-to-order" concept, this is what I've come up with. While I'm no expert, I could see where "manufacture-to-order" could be a great business strategy, here's why. If Enesco is only manufacturing what is currently on order, they are carrying virtually no inventory. By doing this they are getting a greater number of turns on their inventory, which means more money in the bank and more money to invest in other ventures. So, they're getting a greater ROI, (return on investment). It almost seems perfect. The problem is that when a manufacturer operates this way they are, in some respects, asking the retailer to warehouse there inventory for them. If you're a retailer and you know that once the items you have in stock have sold out, it'll take you 3 months to get the next shipment in, you may be inclined to order a lot more than your immediate demand dictates. You would know that you'd have to have a 3 month supply on hand to get you from when you place your next order until the time it arrives. The problem with this is that most retailers are trying to increase their inventory turnover and ROI as well. Most likely, this desire by manufacturers and retailers to improve ROI will result in product scarcity. Now, you might think that Enesco would not want this because it reduces the amount of merchandise they will ultimately sell. This is, of course, why most manufacturers don't operate this way. But, if you believe the work of Dr. Robert Cialdini president of Influence At Work, and his six universal principles of persuasion, then you believe that "If I cant have it, I want it". You believe that perceived scarcity will generate more demand. And if you subscribe to that principle then you could easily believe that, in the long run, Enesco will be selling far more product under it's business model than any number of other manufacturers. I know, just what you wanted to hear, more scarcity of Trail of Painted Ponies figurines. As a seller of Painted Ponies figurines, I'm not really thrilled with the idea either. I've been working on a plan to make sure LAGH Members can get the Painted Ponies figurines they want, when they want them. Of course, we are several months behind, because we just found out about this. There's not much we're going to be able to do about that. We do have a plan moving into the future. We are pushing up orders this week, and we're working on a way to give you more timely information regarding when your pre-orders will arrive. We'll get through this together.