By Jamie Stewart, Managing Director, Exact UK
The globalization of markets and businesses can turn even relatively small organizations into multinational entities. Multinationals of all sizes achieve economies of scale and international presence through networks of subsidiaries. Managing these subsidiaries across multiple countries, languages, currencies, cultures and legislations poses a significant challenge for the corporate headquarters. Failure to monitor, govern and control subsidiaries can cause inefficiencies in the value chain due to poor coordination and planning and in the worst case, threaten the future of the entire business.
From the point of view of top management at the headquarter level, the number one challenge is typically a lack of business transparency. What are the business benchmarks of a particular country office, such as inventory levels, days sales outstanding, cost of sales, product margins, product mix?
Reporting is in many instances monthly and often with a delay of weeks. The reported information is typically relatively aggregated and might be based on definitions and procedures that differ from those used in other subsidiaries. Apple-to-apples comparison is therefore often not possible or highly complex and time-consuming.
In their quest for subsidiary transparency, small to medium sized multinationals can choose between three main approaches:
1. Do nothing
This option avoids the costs of new IT and implementation efforts, but often hides even higher costs resulting from value chain inefficiencies.
2. Implement an ERP application across the entire organisation
This can help companies to advance their international business, improving control, flexibility and transparency — freeing business leaders to focus on new opportunities.
3. Implement a central consolidation solution
This pragmatic approach has the virtue of leaving local applications as they are, as all local data is translated into the data format required at the corporate level. However, local applications are sometimes unstable, unsupported, and non-compliant, demanding replacement. Moreover, the translation of multiple local data formats into one corporate data warehouse represents a significant project in itself.
Exact commissioned International Data Corporation (IDC) — a global provider of advisory services — to create a White Paper that looks at the experiences of four multinational companies. It offers insight and guidance to other businesses that may face similar challenges of controlling their international operations. It presents lessons learned from the cases and concrete advice for international companies. This can be downloaded at: www.exact.com
Exact are one of the leading providers of scalable solutions which cover all key business processes, allowing your people to share information and collaborate in real-time on a single platform. As well as helping organisations grow, Exact's solutions consolidate the processes of companies conducting business internationally.
Business on an international scale heightens the need for precise reporting and visibility; Exact offer a solution that is dedicated to giving a company's HQ total clarity on the entire business, from foreign subsidiaries to localised trading silos. With many businesses still performing a lot of tasks manually, or utilising IT systems that don't work together this provides complete process visibility and helps ensure employees work together to add value to the business.
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