Companies that both trade and manufacture face particular challenges: purchasing, warehousing, production, sales and finance must work seamlessly together. An ERP system designed for pure trading companies quickly reaches its limits here – as do traditional production solutions. In this article, we show what companies in manufacturing and distribution should look out for when choosing an ERP.
Manufacturing and distribution is a sector with its own characteristics. Unlike pure traders who buy goods and resell them, value is added here: raw materials are processed, components assembled, products refined or packaged. At the same time, it lacks the complexity of a full manufacturing operation with multi-level bills of materials and extensive production planning.
It’s precisely this middle ground that makes ERP selection challenging. Many systems are either too simple (pure trading solutions without a manufacturing component) or too complex (full MES systems for series production). The art is finding the right balance.
What makes manufacturing and distribution different
Before we dive into the selection criteria, it’s worth looking at the typical processes and challenges in this sector:
Complex material flows
There aren’t just traded goods, but also raw materials, semi-finished goods and finished products. These must be managed, valued and planned separately. An item can be sold and at the same time used as a component in another product.
Simple to mid-level manufacturing
Production is often manageable: assembly, packaging, refinement or simple transformation. Multi-level bills of materials are rare, but bills of materials themselves are indispensable. Machine-level work scheduling is usually not required.
Make-to-order production
Often, production is not for stock but make-to-order. A customer order triggers procurement and manufacturing. That requires tight integration between sales, purchasing and production.
Variants and configurations
Products often exist in many variants: different sizes, colours and versions. Variant management must be efficient without creating a separate item for every combination.
Costing and actual costing
What margin are we really achieving? Pre-costing an order and post-calculating after completion are key to profitability. Material costs, labour time and overheads must come together.
The 7 most important selection criteria
1. Integrated bill of materials management
The absolute minimum for manufacturing and distribution: the ERP must support bills of materials – i.e. linking finished products to their components. The solution should also be flexible enough for different scenarios:
- Simple bills of materials (one finished product, multiple components)
- Variant bills of materials (basic structure with interchangeable components)
- Header bills of materials (for sets or bundles that are not physically assembled)
Important: Some trading solutions offer “bill of materials simulation” – i.e. when selling, components are automatically reserved. That’s enough for simple bundling, but not for real manufacturing with stock movements.
2. End-to-end order process
The path from customer order to delivery should be mapped in the system – without media breaks and without manual transfer between modules.
The ideal process:
Customer order → Check stock availability → Automatic generation of production orders and/or purchase suggestions → Production/assembly → Put finished product into stock → Picking → Delivery → Invoicing
Each of these steps should be visible and traceable in the system. Where is the order right now? Which components are still missing? When can we deliver?
3. Flexible warehouse management
In manufacturing and distribution, there are typically several types of warehouses: raw material warehouse, semi-finished goods, finished goods warehouse, possibly consignment stock at customers. The ERP must be able to reflect this structure.
Key features:
- Multi-warehouse capability with different valuation methods
- Bin/location management (at least at zone level)
- Batch/lot management for traceable materials
- Serial number management for high-value products
- Minimum stock management with automatic purchase suggestions
4. Order-level costing
In manufacturing and distribution, the margin per order determines business success. The ERP should enable end-to-end costing:
- Pre-costing: What will the order likely cost? Material costs (from purchase prices), planned labour time, proportional overheads.
- Ongoing costing: How are costs developing during processing? Are there deviations from the plan?
- Post-calculation: What did the order actually cost? What margin was achieved?
Without this transparency, you’re flying blind. You may know the company is profitable overall – but not which orders are profitable and which are dragging results down.
5. Purchasing integration
In manufacturing and distribution, purchasing is more than ordering traded goods. Materials must be available in time for production – not too early (tying up capital) and not too late (delivery delays).
What matters:
- Requirements planning from customer orders and production orders
- Automatic purchase suggestions taking lead times into account
- Framework agreements and call-offs for recurring requirements
- Supplier evaluation (reliability, quality, prices)
6. Scalability and modularity
Your company will change. Maybe you’ll expand production, open new markets or integrate an online shop. The ERP should be able to grow with you without having to change systems.
“An ERP system is implemented for 10–15 years. During that time, your requirements are guaranteed to change. Choose a solution that fits today and can be expanded tomorrow.”
Look for a modular structure: can you add modules later (e.g. CRM, e-commerce, BI) without replacing the core system? Is the manufacturer actively developing it further?
7. Swiss standard and support
For Swiss SMEs, the local anchoring of the ERP system is more important than it seems at first glance:
- Legal requirements: Swiss accounting, VAT handling, QR-bill, payroll accounting in line with Swiss requirements
- Language: Not just translation, but true localisation with correct terminology
- Support: Availability in your time zone, understanding of local practices
- Data hosting: Servers in Switzerland for data protection and performance
Typical pitfalls when selecting an ERP
Pitfall 1: Focusing too much on price
A cheap system that doesn’t meet your requirements will end up costing more than a more expensive one that fits. Calculate the total cost of ownership over at least 5 years: licences, implementation, training, maintenance, customisations, productivity losses due to workarounds.
Pitfall 2: Wanting to map today’s process 1:1
An ERP implementation is an opportunity to question processes. Not everything you do today is optimal. Be open to best practices that come with the system – rather than forcing it to fit your established structures.
Pitfall 3: Only talking to sales
The vendor’s sales team will paint the system in the best possible light. Insist on reference visits to companies in your industry. Ask critical questions: what didn’t go smoothly during implementation? What would you do differently today? Which functions do you use daily, and which not at all?
Pitfall 4: Underestimating the implementation effort
The best software is useless if it’s implemented poorly. Evaluate the implementation partner just as carefully as the product. How much experience do they have in your industry? What is their project methodology? Who will actually work on your project?
Why Abacus for manufacturing and distribution?
Abacus is neither a pure trading solution nor a full MES – it hits exactly the sweet spot for manufacturing and distribution:
| Requirement | Abacus solution |
|---|---|
| Bill of materials management | ✓ Integrated into order processing, single- and multi-level |
| Production orders | ✓ Generated automatically from customer orders |
| Warehouse management | ✓ Multi-warehouse, batches, serial numbers, storage locations |
| Costing | ✓ Pre-, ongoing and post-calculation at order level |
| Purchasing | ✓ Requirements planning, purchase suggestions, blanket orders |
| Swiss standard | ✓ Fully localised, servers in Switzerland |
| E-commerce | ✓ AbaCommerce for B2B and B2C |
| Cloud option | ✓ AbaWeb as SaaS or private cloud |
Especially important: all modules are natively integrated. There are no interfaces between inventory management and accounting, and no separate systems for warehousing and purchasing. This significantly reduces sources of error and maintenance effort.
Conclusion: the right solution for your requirements
Selecting an ERP for manufacturing and distribution requires care. Systems that are too simple quickly reach their limits, while overly complex ones tie up resources in features you’ll never use. The key is precise requirements analysis: what do you need today, and what will you likely need tomorrow?
Take the time to evaluate. Involve the specialist departments – not just IT. And assess the implementation partner at least as thoroughly as the software itself.
Looking for an ERP for your manufacturing and distribution business?
In a no-obligation conversation, we’ll analyse your requirements and show you what a suitable Abacus solution could look like. With our experience in manufacturing and distribution, we know the challenges – and the solutions.
