ERP Selection for Make-to-Order manufacturers - What actually matters
- John Hannan
- Aug 28
- 4 min read
Updated: Sep 9
If you build to a customer order—whether that’s classic Make-to-Order (MTO), Configure-to-Order (CTO) with a rules-driven options set, or Engineer-to-Order (ETO) for one-off designs—you already know that an “average” ERP selection checklist doesn’t cut it. Over the last few years I’ve helped multiple custom manufacturers choose and implement ERP. Below is how I think about selections for MTO/CTO/ETO shops, written as field notes rather than a software commercial. My goal is simple: help you run a rigorous, reality-based selection that sets up a successful implementation—because many systems can fit, but the partner and the process make the difference.
First, name your flavor: MTO vs. CTO vs. ETO
MTO - You build from defined designs after the order hits. Variability is mostly at the finished-good level (size, color, minor options).
CTO - A product configurator/CPQ captures options and rules; ERP explodes that into a variant BOM & routing per order.
ETO - Engineering work is part of the order. You’ll
Most companies straddle two buckets. Be honest about where each major product family sits; your selection scenarios should mirror that mix.
The non-negotiables for MTO/CTO/ETO ERP
These are capabilities that repeatedly separate smooth programs from painful ones:
Configurator ↔ ERP handshake (quote-to-cash)
Native or integrated CPQ must pass a fully specified structure (not just a SKU string) into ERP - configuration code, exploded multi-level BOM, and routing with option-driven operations.
Lead-time math should be constraint-aware (not a static table) so quotes promise realistic dates (ATP/CTP).
Versioned BOMs & Routings + Engineering Change
True revision control, effectivity dates, and where-used.
Smooth CAD/PLM integration (e.g., SolidWorks/Inventor) to create/update items and BOMs without re-keying.
Support for phantoms, alternate operations, and optional components driven by configuration rules.
Finite capacity scheduling
Work center calendars, queue times, and constraints must produce actionable schedules—not just Gantt art.
Planners need drag-drop tools and exception lists to juggle rush orders, rework, and long-lead shortages.
Procurement for long-lead items
Pegging from sales order → job → purchase order.
Early release of critical components, vendor calendars/ack dates, substitutions/alternates, and supplier collaboration.
Job costing & WIP control
Accurate labor capture (clock, mobile, barcode), machine/burden rates, actual vs. standard variances, and operation-level cost visibility.
Clean handling of rework, scrap, and partial completions.
Quality & traceability
Serial/lot tracking with NCR/CAPA workflows tied to jobs and suppliers.
In-process inspections and certificate management when required.
Order-to-cash for custom work
Deposits/prepayments, progress billing or milestone invoicing, and tax handling for configurable goods.
For channel models - dealer portal for quoting, status, and order changes with rules-based pricing.
Service, warranty, and installed base (if you ship complex assemblies)
Register the as-built serial, track field history, parts lists, and warranty reserves.
Data model decisions to make early (before vendor demos)
These choices drive both selection and implementation success:
Item & attribute strategy - What’s a “part” vs. an “option value”? Which attributes belong in the item master vs. CPQ?
Configured identifiers - Will you create unique item numbers per variant, or store a configuration code against a parent?
Units of measure & conversions: common pain area for fabrications, finishes, cut-lengths, and kit/pack sizes.
Source of truth for rules - CPQ, ERP, or PLM? Decide where rules live and how changes are governed.
Chart of accounts & project codes - If jobs are also “projects,” define how you’ll roll up cost and revenue for visibility.
Document these as selection guardrails so vendors show how they’d implement your reality, not a demo toy.
Why the implementation partner matters more than the logo
In MTO/CTO/ETO, you’re buying two things: software and the method to shape it to your business. Here’s how I evaluate partners:
Named team, by role - Meet the people who will actually do the work—solution architect, manufacturing lead, data lead, tech/integration, and change/training.
Industry IP - Look for accelerators like prebuilt CPQ rule libraries, PLM connectors, shop-floor dashboards, finite scheduling playbooks, test scripts for CRP/UAT, and data-migration templates.
Scripted scenario depth - Can they run your end-to-end scenario live: quote → configure → variant BOM/routing → scheduled work → long-lead PO → job moves → quality event → ship/invoice → cost & margin?
Fit-to-standard bias - Will they start with standard features and only extend where business value is clear?
Reference stories - Talk to customers with your mix (MTO/CTO/ETO), asking about: configurator rule changes post-go-live, schedule reliability, ECO throughput, and job-cost accuracy.
Run a selection that proves “how,” not just “can”
My go-to structure:
Requirements catalog focused on MTO/CTO/ETO specifics (the non-negotiables above), with weights.
Scripted demos using your items, options, lead times, and work centers. Timebox general slides; spend time in transactions.
Hands-on CRP (mini-pilot) with your data subset: two or three representative orders run end to end.
Scorecards tied to the scripts (traceable back to requirements).
References & site visits when possible.
SOW clarity - data responsibilities, integration boundaries (CPQ, CAD/PLM, ecommerce, dealer portal), migration cycles, training approach, and cutover plan.
Common pitfalls (and how to avoid them)
UI over reality - Beautiful screens don’t fix capacity or lead-time math. Validate scheduling under stress.
Configurator as a silo - If CPQ can’t produce a manufacturable structure, operations will rebuild it every time. Demand proof.
Variant explosion - Without a strategy, you’ll drown in item numbers or, worse, ship the wrong thing. Decide identifiers early.
Data hand-waving - Item attributes, routings, vendor lead times, and cost rolls are slow to clean. Start before contract.
Ignoring deposits & taxes - Custom work often needs nuanced prepayment and tax handling; test these in the demo.
Underinvesting in change & training - Shop-floor adoption depends on simple role-based flows, handhelds/barcodes, and quick reference guides—not a 200-page manual.
A quick evaluation checklist
Use this to frame your scripts and vendor Q&A:
Can the solution configure an order, explode a variant BOM/routing, and generate a realistic promise date?
Do ECR/ECO updates flow cleanly from CAD/PLM to ERP with effectivity and where-used analysis?
Does finite scheduling respect constraints and provide actionable rescheduling tools?
Are long-lead components pegged from order to PO with visibility to slips and alternates?
Is labor capture easy on the floor (barcode/mobile), and do we get operation-level actual vs. standard cost?
Are deposits/progress billing and dealer/customer portals handled without bolt-on gymnastics?
Can we track serial/lot history, NCR/CAPA, and warranty on the installed base?
Does the partner show accelerators (rules, templates, migration packs) that reduce risk and calendar time?
Are we aligned on data ownership, integration scope, and a realistic cutover plan?
I’ve seen great outcomes on very different platforms when the selection centered on the work you actually do—configuring options with rules, controlling revisions, scheduling to real capacity, procuring long-lead parts early, and measuring true job cost—and when the partner brought proven methods and industry IP to the table. If this perspective helps you shape your own process and you want to compare notes, you know where to find me.