15 MAY 2013
Many organizations are becoming increasingly global. To support these efforts, they have established multiple sites or locations—manufacturing plants, branch and regional sales offices, distribution warehouses and national, regional, and even global headquarters—that may be distributed within a country, a region, or around the world.
As organizations expand into new territories, they face a number of operational challenges. They need to adapt to the business rules of foreign countries, including government regulations, reporting requirements and variations in tax and labor laws. They must accommodate multiple languages, multiple currencies and varying local best practices. And because companies operating in multiple countries are required by law to create separate legal entities, inventory transactions become more complex with intercompany movements being treated as purchases and sales between legal entities.
Cre8tive Technology & Design (www.ctnd.com) will be posting a three-part series on “Choosing the Right ERP Solution to Support a Global Business”
Part One Each Business Unit Chooses its Own Solution
Part Two Consolidating the Entire Business on a Single ERP Solution
Part Three Using a Combined Solution
Part Two – Consolidating the Entire Business on a Single ERP Solution
Organizations now recognize that internal operations must be integrated on a global scale to achieve global visibility and transactional interoperability, as well as ensure governance, risk management and compliance. As a result, there is a growing trend among mid-sized to large organizations to consolidate applications, with many organizations attempting to deploy a single ERP worldwide. This strategy promises to provide a single repository for accounting, order processing, manufacturing, human resources and data from other functions as well as including advanced financial management reporting and analysis. According to Gartner, roughly 70 percent of companies with multiple ERPs stated a desire to operate a single global ERP system.
The primary advantage of consolidating on a single ERP solution is that it integrates resources and eliminates redundancy. A single database for all accounting, manufacturing and supply chain functions provides consolidated information from the head office down to the most remote subsidiary. This enables managers and executives to drill down from the consolidated profit and loss statement to the underlying transactions at the point of entry, anywhere in the world.
In addition, when rolling out an ERP to several sites, costs can mount. By reusing the same skill set, process models, methodologies, and deployment strategies at multiple sites, organizations can keep deployment costs under control. At the same time, globalization requires standardized business processes whenever possible. It’s simpler to harmonize and standardize business processes on a smaller number of production systems.