While globalization was once the exclusive domain of the large multi-billion dollar companies, today even small to medium size enterprises cannot escape the issues associated with global trade and offshore manufacturing. Whether you view the world as flat or round, it is definitely shrinking.
ERP March, 2007
Global ERP Functionality Delivered: The delivery differences between products and vendors explained
Putting it into Context While globalization was once the exclusive domain of large multi-billion dollar companies, today even small to medium size enterprises cannot escape the issues associated with global trade and offshore manufacturing. Whether you view the world as flat or round, it is definitely shrinking. North American and European companies have been challenged by the introduction of lower priced products coming into their markets from countries with inexpensive labor, causing the trend in recent years toward offshore manufacturing operations and the procurement of materials from low cost country sources, which in turn introduces a higher level of complexity into the supply chain. Enterprise Resource Planning (ERP) is a mission critical component of any globalization strategy. Yet this is often overlooked while focus is concentrated on supply chain issues. As a result, the majority of companies today still rely on some element of manual effort and/or spreadsheets in order to consolidate financial reporting and fulfill global trade management, legal and reporting requirements.
Defining Requirements
Enterprises looking to compete in a global marketplace must be able to comply with international financial and legal requirements - they must be able to think globally but at the same time act (and comply) locally. Enterprises can't focus on gaining a competitive advantage if they struggle to integrate their own international operations. Internal operations must be integrated before interoperability can be achieved on a global scale. The more seamless the integration, the easier it is to manage governance, risk, and compliance.
What is globalization? Globalization is the interaction and integration of people, companies, and governments of different countries, a process driven by international trade and investment and aided by information technology. Globalization is not new. For thousands of years, merchants have been buying from and selling to each other in countries separated by great distances. Yet some things have changed, and they have changed very dramatically, including: . The time factors associated with communicating and transporting goods and services across varying distances . The level of legal and financial reporting requirements . The technology that supports international businesses A recent Aberdeen study, The Role of ERP in Globalization, explored the extent to which companies have global operations and engage in global trade, and whether these global operations
The Role of ERP in Globalization benchmark report is now Announcement available from Aberdeen Group. Click here to download it today. ERP Functionality Delivered
Enterprise Strategies Page 2 are expanding or shrinking. In spite of the increased complexities a global supply chain introduces, research shows that 83% of respondents were planning to expand international operations. Supply Chain and Global Trade Management applications are at the forefront of discussions that center on globalization. But ultimately, corresponding transactions are captured in the back office which means that ERP must be able to deal with issues such as currency exchange, multi-site and multi-company transfer of inventory, consolidations, localization, and translation. Aberdeen found the ability to support a multi-national implementation from a single instance of ERP and the global consolidation of financial data across multi-site and multi-database implementations are clearly viewed as the two highest ERP priorities for global companies (Figure 1).
Figure 1: Priorities of Global ERP Implementations
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