Manufacturing enterprises today are commonly spread around the globe, to serve local markets, leverage lower labor costs, be close to supplies of raw materials, and for a myriad other reasons. Multiple push pins in your world map, however, requires a real-time network to track inventory, production and scheduling across multiple time zones, give management acute visibility into operations and performance and, at the end of the day, roll-up financials in a variety of combinations.  Some companies may be structured as a single entity with multiple locations, or as multiple entities, subsidiaries, joint ventures, etc. within an enterprise. Either way, if they are unable to share data across their networks, they find themselves working less efficiently, living with duplication and redundancies  and failing to achieve true benefits of scale.    

ERP system

Link your far-flung factories with an online ERP system.

Online, or cloud ERP, is a cost-effective way to break down the barriers to communication and data sharing while giving each facility a measure of autonomy. It is sort of a best of both worlds proposition, with each factory gaining all the benefits of the larger structure and most of the benefits of acting locally. Purchasing, for example, can be consolidated for greater volume discounts. Customers with similarly widespread operations can be treated as a single entity, with fulfillment at a more local level. A single currency can be established for corporate purposes, yet each factory can operate business in the local language and with the local currency. Corporate standards for global fair labor practices can be enforced while factories also comply with local regulations and tax environments.

When all factory locations are contained in a single entity corporate structure, the right cloud ERP solution can give personnel in individual locations access to data limited to their operation, while headquarters personnel can see the bigger picture. Inventory transactions can be controlled by pre-established rules and minimum/maximum inventory restrictions can be managed centrally. All transactions for each location are isolated, simplifying record collection, yet customer orders and supplier purchase orders, inventory and production data can be consolidated in a single entity.

For some corporations, it may be advantageous to treat facilities in different states or countries, or that are part of joint ventures or wholly owned subsidiaries, as different legal entities. In this model, cloud ERP can enable each entity to have its own chart of accounts, so that each can be closely monitored on its own. Productions costs for each entity are maintained separately, and transactions, such as inventory transfers, are treated the same as with external customers. On the other hand, all manners of rollup of financials into consolidated reports should be supported and cross-entity journal entries are permitted. Reporting options in this model enable HQ financial management to see and control cross-entity AR and AP aging, consolidate both supplier and customer invoices and view project accounting on a standalone or consolidated basis.

The advantage of cloud ERP solutions in either the single entity or multiple entity model is that it provides the ultimate flexibility without the rigidity of a single, complex ERP system administered  from HQ and imposed on remote locations, yet creates a standard, interoperable system that can be implemented again and again.

Written by :

SkipStein