If you’ve felt the pressure mounting on your manufacturing operation this year, you’re not alone. The combination of persistent tariff uncertainty, tightening labor markets, and rapidly accelerating AI adoption is reshaping what manufacturers expect from their ERP systems—and what the best ERP platforms must deliver in return.
This post unpacks the current forces reshaping manufacturing and how purpose-built ERP software, like Frontier from Friedman Corporation, is helping make-to-order manufacturers stay competitive, agile, and profitable through the turbulence.
Tariffs Are Forcing a Rethink of Supply Chain Strategy
Trade policy volatility defined 2025 for most manufacturers, and that uncertainty has not dissipated heading into spring 2026. According to the Institute for Supply Management, U.S. manufacturing activity declined for nine straight months through late 2025, driven in large part by rising material costs tied to tariff exposure. ISM data shows that 86% of manufacturers planned to pass at least some tariff-related costs to customers just to sustain margins.
The downstream effects are significant for make-to-order manufacturers in particular. When raw material prices shift mid-quote cycle—whether for cabinet components, window profiles, door hardware, or metal fabrications—your ERP system either absorbs that complexity or exposes your business to costly pricing errors.
That’s why manufacturers are increasingly prioritizing supply chain visibility and real-time cost accuracy within their ERP environments. A system with integrated product configuration, dynamic pricing rules, and live material cost tracking doesn’t just help you quote accurately—it helps you survive volatile markets.
At Friedman Corporation, we’ve seen this firsthand among our customers. Frontier ERP’s built-in CPQ capabilities and real-time cost estimation tools give manufacturers the ability to recalculate pricing on the fly, so quote accuracy isn’t sacrificed when tariff conditions shift overnight.
What you can do now: If your current ERP relies on static price lists or manual spreadsheet updates, now is the time to evaluate whether your quoting process can absorb tariff-driven cost changes in real time. The answer to that question may define your margin performance for the rest of 2026.
AI Is Moving From Pilots to Production—And ERP Is the Delivery Vehicle
Perhaps the most significant shift happening across manufacturing right now is the transition from AI as an experiment to AI as an operational standard. A January 2026 survey by Rootstock Software of 520 manufacturing leaders found that 94% of respondents now use some form of AI, with the largest gains among predictive AI, supply chain planning, and process optimization.
Critically, the survey found that predictive AI adoption jumped 12 percentage points in just one year, reaching 48% of respondents. That’s not a niche technology anymore—it’s a mainstream competitive tool.
But here’s the finding that matters most for ERP decision-makers: where AI is delivering value in 2026 is inside enterprise systems, not alongside them. As Manufacturing Dive recently reported, the shift is from analytical AI—which generates insights—to operational AI that helps teams move faster by automating classification, routing, and decision-triggering directly within ERP workflows.
For make-to-order manufacturers, this means your ERP should be the foundation AI works through—not a separate application you bolt AI onto. Systems that natively connect product configuration, production scheduling, shop floor tracking, and financial management give AI the unified data it needs to actually improve outcomes.
At Friedman Corporation, our ongoing commitment to IBM Power technology and integration with intelligent partner tools reflects this direction. Frontier ERP users benefit from a connected data environment where production performance, order accuracy, and financial results are visible in one place—the foundation on which AI-driven decision-making is built.
ERP Is Now a Workforce Strategy, Not Just a Business System
Here’s a shift that may surprise some operations leaders: ERP is increasingly being evaluated for its impact on employee retention—not just operational efficiency.
Rootstock’s 2026 survey data reveals that the share of manufacturers expecting ERP to improve employee retention jumped from 18% in 2024 to 30% in 2026—a 12-point increase in a single survey cycle. Meanwhile, 45% of respondents now expect ERP to improve staff productivity.
This trend makes sense in the context of manufacturing’s ongoing labor challenge. An aging workforce, a demographic “retirement cliff” of experienced operators, and persistent difficulty recruiting skilled workers are all placing enormous pressure on manufacturers to do more with existing teams. When your ERP system is intuitive, integrated, and reduces manual data entry, workers spend less time fighting systems and more time building products and serving customers.
For manufacturers running Frontier ERP, features like automated workflow routing, MES shop floor visibility, and role-specific dashboards directly support this goal. Employees gain confidence when they’re not constantly toggling between disconnected tools or relying on tribal knowledge to check order status or production priority.
If you’re struggling with turnover or onboarding delays, it may be worth asking whether your ERP is part of the problem—or whether the right platform could be part of the solution.
Supply Chain Resilience Requires Connected, Real-Time Data
According to a 2026 supply chain analysis by Dataiku, 78% of supply chain leaders anticipate disruptions to intensify over the next two years, yet only 25% feel prepared. The gap between awareness and readiness is striking—and it often comes down to the quality of data manufacturers have at their disposal when a disruption hits.
Leading manufacturers are moving away from reactive supply chain management and toward what SAP describes as a model of continuous orchestration—connecting planning, logistics, procurement, and production on a common, real-time data foundation. The goal isn’t just to know when a disruption occurs; it’s to already have a contingency in motion before the disruption reaches your floor.
For make-to-order manufacturers, this level of readiness requires more than spreadsheets or legacy ERP reporting. It requires real-time inventory visibility, supplier performance tracking, and the ability to model cost and lead time scenarios quickly. These aren’t theoretical capabilities—they are live advantages for Frontier ERP users who leverage the supply chain management and MES modules built into the platform.
At Friedman Corporation, we’ve long emphasized the value of a fully integrated ERP—where sales, configuration, production, and supply chain share the same data foundation. That architecture becomes mission-critical when your supply chain is under pressure and fast, accurate decisions are the difference between a profitable quarter and a scrambling one.
Cybersecurity Is a Top-Three ERP Priority in 2026
No discussion of current ERP trends is complete without addressing security. The Rootstock survey found that cybersecurity ranked second only to operational and production performance as a driver of IT investment in 2026, cited by 34% of respondents. A separate mid-market manufacturing outlook from Eide Bailly placed cybersecurity investment even higher, with 75% of manufacturers increasing spending on AI-enabled security tools.
For IBM i users running Frontier ERP, this means the underlying security architecture of your platform matters as much as the application features. IBM Power Systems have long been recognized for enterprise-grade security, and maintaining that foundation requires ongoing compliance vigilance—particularly against CIS benchmark standards, as we explored in our recent post on IBM i security risks.
Manufacturers who treat security as an ongoing operational priority—rather than an annual audit event—are better positioned to protect their data, their customers, and their business continuity.
The Bottom Line: Your ERP Either Keeps Pace or Falls Behind
The forces shaping manufacturing in 2026—tariff volatility, accelerating AI adoption, workforce pressure, supply chain disruption, and rising security requirements—are not short-term headwinds. They reflect a structural shift in what it means to be a competitive manufacturer.
The right ERP platform doesn’t just manage today’s transactions. It gives you the real-time visibility, integrated intelligence, and flexible configuration capabilities to operate confidently in a market that won’t slow down.
