With a distributed enterprise solution, companies with multiple distribution centers can use industry-specific ERP systems at local divisions without changing the corporate ERP.
Many industrial equipment manufacturers and rental distribution companies have several smaller operations and distribution channels. These operations could be the result of mergers and acquisitions, expansion into new geographies, or the outcome of a need to serve customers of a large geographical area.
Managing a company with multiple entities is not easy. To add to the complexity, multiple ERP systems with disparate compliance and reporting structures make it more difficult to get a unified view of financial data. So how do you track and manage financial reporting and workflows across multiple entities efficiently? The answer is to adopt the distributed enterprise ERP system.
Why do companies adopt Distributed Enterprise ERP systems?
Companies adopt the distributed enterprise or multi-layered ERP system to connect ERPs across multiple entities. Under this system, they have a centrally located standard ERP at the parent organization and smaller ERPs at local divisions and distribution centers.
Let’s say you are a company with the parent organization corporate office located in Europe, but you have a smaller equipment rental division in North America. Your corporate office uses SAP as the global standard, but it may not be suited to meet the local budget requirements, compliance standards, or size of the division in North America.
In such a situation, companies opt for a smaller, localized ERP system for their distribution centers for the following reasons:
- Easy to integrate and use: Localized ERP provides the autonomy to smaller divisions to work in a local setup with functions required explicitly for a particular business. It can help you integrate your parent ERP with the ERPs of your local division, allowing the divisions to share data and exchange information with the parent ERP.
- More practical: On the operational side, it is more practical to use a lower cost, smaller footprint solution in local divisions. It also gives these divisions more autonomy and freedom to try out additional Independent Service Vendor solutions to meet local regulations and compliance standards.
- Unified view of financial data across entities: The integration helps communicate monthly financial and operational data, such as revenue, costs, and net profitability, as well as rental-specific data to the parental organization.
Factors to consider when selecting ERP for local divisions
If you are a rental organization looking to deploy an easy-to-use, rental-specific ERP at your distribution centers, here’s what you should keep in mind when choosing your ERP.
Functional Fit: You should consider whether the ERP addresses all your operational needs. Look for features to help you manage your equipment manufacturing, rental, and distribution processes.
Budget: How much can you possibly spend on the new ERP? While creating your budget, consider the consulting charges, along with the support and maintenance, and training costs. Add up the prices the ERP might incur and the benefits that it might bring to determine whether the return on investment would be worth the investment.
Underlying Processes: Check whether the system requires significant customization to address equipment rental-specific processes. Does the solution have business process maps for manufacturing, rental, and distribution? If you select a solution without industry-specific business process models, you might have to make extensive customizations, which could be a lengthy, complex, and expensive process. It’s best to look for a solution that has defined rental processes
ERP Integration: Find out, in detail, about the integration process. Ask questions like: Can the ERP communicate with the parent ERP and use its data? How do you share data between two entities? What integration tools can you use with the ERP to transfer and share data between entities?
Simple and easy to use: Corporate ERPs are complex and expensive for smaller and mid-sized organizations. Select an ERP that can exchange information with other third-party organizations and share financial and operating data with the parental organization.
Suitable for smaller operations: Pick an ERP that works well for smaller functions and divisions best suited for the nature and size of your local business.
Why should you employ an integration solution?
Integrating data between the centralized parent ERP and the smaller distribution center localized ERPs provides an accurate 360-degree view of information across your organization, resulting in the efficient management of finance, people, supply chain, and operation processes. A unified view helps you access sales and revenue data in real time and get complete visibility of operations across all distribution centers.
Although these distributed channels ERP solutions are located in different geographies and operate independently, they are integrated with the centralized ERP and report their operational and financial data to the corporate entity (See illustration below).
Integrating the parent ERP with the local ERP systems and making them communicate is a complex process that requires expertise and can only be done by experienced system integrators. There are a number of system integration solutions, including To-Increase’s Connectivity Studio.
A global Independent Service Vendor for Microsoft Dynamics 365 business applications with over 16 years of experience, To-Increase has developed Connectivity Studio ― a highly configurable solution in Dynamics 365 F&SCM to help you rapidly configure, execute and manage data migration and integration projects.
Microsoft Dynamics 365 F&SCM works well for smaller operations and divisions because it can exchange information with any Corporate ERP and share financial and operating data with the parental organization. It also provides subsidiaries and local divisions a better operating system at a lower cost while still integrating and communicating with the central ERP.
How does the integration work?
With the help of Connectivity Studio, which operates inside Dynamics D365 F&SCM, every table and related fields from the manufacturing, operations, and rental divisions can be exchanged by setting up a mapping between the local ERP system and the parent ERP systems.
You can report all the appropriate data ― such as rental, manufacturing, sales, procurement, and supply chain ― of the division to the parent. Connectivity Studio provides field-level integration and security and does not require any development.
To-Increase has over 600 customers using Connectivity Studio solution, a platform to integrate Microsoft Dynamics 365 F&SCM and other third-party disparate solutions. Here’s how McLane Global, a global food distributor and one of To-Increase’s clients, facilitated integrations with Microsoft Dynamics via Connectivity Studio.
You may use ERPs like SAP and ORACLE as the primary corporate ERP at your parent organization to manage global financial and accounting. However, if you are an industrial equipment manufacturer or rental company with multiple entities, you should be able to connect your operations and rental-specific business data from your local ERPs to the parent ERP to get an accurate view of your overall financials. Integration of corporate and local ERPs is critical to ensuring a 360-degree view of company data, which results in the smooth and efficient management of your business.