You need a global ERP system to expand to other geographical areas.
The three most essential characteristics of a global ERP include its ability to perform multi-currency and multi-language operations along with a deep understanding of local taxation rules. Companies need to consider new business realities and reconfigure their supply chain models and business operations accordingly. A global ERP system provides the required methods and processes to do so.
Here are three things managers should consider before implementing a global ERP system.
1. Global ERP system must provide for both the regional and global requirements.
When a business expands to other territories — city, state, or country — it needs to comply with the laws, rules, and regulations of that place. A global ERP system is designed to take care of local and international needs.
For example, if you decide to expand in France, you will have to record your inventory figures as a moving average. Thus, the French branch’s ERP system’s general ledger must comply with the regional requirements. As far as the parent company is concerned, the ERP should report a standard set of figures that are made in accordance with the rules and regulations of the home country. Another example is printing pamphlets and other marketing collaterals in different languages, for example, Chinese in China, Russian in Russia, and English in the United Kingdom.
Moreover, global ERP software should also support operational and financial data considering regional and international views. For example, a business manager in Northern India should be able to view his dashboard — consisting of parameters like total sales, total dues, estimated profits, etc. — in Hindi. Furthermore, every report and customer-centric data should be available in a repository accessible to all business stakeholders — frontline executives, C-suite managers, vendors, suppliers, distributors, etc.
Another essential attribute of a Global ERP software is its ability to meet the local regulatory compliances. For example, suppose you have a branch in a European country. In that case, the ERP system should respect the General Data Protection Regulation (GDPR), EU Privacy Directive, and the Health insurance Portability and Accountability Act (HIPPA) down to the data item level. The ERP system should maintain a transaction log, which shows that the company has been consistently complying with local laws if required by an audit.
2. Global ERP system performs both — centralization and decentralization — of services.
A company that is deciding to expand globally will want to standardize its operations. It’s possible only by centralizing a string of services, including material planning, order management, inventory control, support services, transaction logs, etc. This increases operational and functional accuracy and betters the coordination between various business departments spread over different geographies.
On the contrary, the company may also want to decentralize a few of its services to address the local client needs — including accounts payable, accounts receivable, invoicing, shipping, order changes, order promising, etc. — on time.
A global company must possess the ability to centralize and decentralize its services as per need. This ability allows businesses to reduce their workload, comply with regional taxation systems, and offer customers the best value.
3. Global ERP system requires the expertise of local ERP vendors
Companies looking to install a global ERP system for managing their international operations require local ERP vendors’ help. Most ERP vendors lack the expertise to design an ERP system from the ground-up. Moreover, they don’t have any partner networks in their kitty to deploy such extensive and complex systems. Furthermore, many fail to provide support services during local working hours leading to communication failure between the vendor and the company. These factors increase the risk and cost associated with the deployment.
A global ERP system should maintain pace with the changing situations and significant developments happening in the industry. It should monitor any change in governmental rules and regulations and modify itself accordingly.
The world is changing rapidly. Companies require efficient and top-notch ERP software to keep pace with the current developments and manage business processes conveniently. A global ERP system will take care of the business needs no matter where you operate or plan to expand. It is a valuable business planning and management tool that allows companies to achieve success globally.
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