With a distributed enterprise solution, companies with multiple distribution centers can use industry-specific ERP systems in local departments without changing the corporate ERP.
Many industrial equipment manufacturers and rental distribution companies have many small operations and distribution channels. These operations may be the result of mergers and acquisitions, expansion into new geographical areas, or the result of the need to serve customers in a large geographical area.
It is not easy to run a company with multiple entities. To add to the complexity, multiple ERP systems with disparate compliance and reporting structures make it difficult to have a unified view of the financial statements. So how do you efficiently track and manage financial reporting and workflow across multiple entities? The answer is to adopt a distributed ERP system.
Why do companies adopt distributed ERP systems?
Enterprises adopt distributed enterprise or multi-layer ERP to link ERP systems across multiple entities. Under this system, they have modular ERP in a central location in the parent organization and smaller ERP systems in departments and local distribution centers.
Let’s say you’re a company with a parent company’s corporate office located in Europe, but you have a smaller equipment rental division in North America. Your corporate office uses SAP as a global standard, but it may not be suitable to meet local budget requirements, compliance standards, or North American department size.
In such a situation, companies choose a smaller ERP system for their distribution centers for the following reasons:
- Easy to integrate and use: Local ERP provides autonomy for smaller departments to operate in a local setting with the functions explicitly required for a particular business. It can help you integrate the native ERP system with your local department’s ERP systems, allowing departments to share data and exchange information with the parent ERP system.
- More practical: On the operational side, it is more practical to use a solution that is less costly and less space in the local departments. It also gives these departments more autonomy and freedom to experiment with additional independent service provider solutions to meet local regulations and compliance standards.
- Consolidated presentation of financial statements across entities: The integration helps communicate monthly financial and operating data, such as revenue, costs, and net profitability, as well as lease-specific data to the parent organization.
Factors to consider when choosing ERP for local departments
If you are a rental organization looking to deploy easy-to-use, customized ERP for rental in your distribution centers, here is what you should keep in mind when choosing your ERP system.
Functional fit: You should consider whether an Enterprise Resource Planning (ERP) system meets all of your operational needs. Find features that help you manage equipment manufacturing, leasing, and distribution operations.
Income: How much can you spend on a new ERP? As you create your budget, consider consulting fees, along with support, maintenance, and training costs. Add the prices that an ERP system might incur and the benefits it might bring to determine if the return on investment is worth the investment.
Basic operations: Check if the system requires significant customization to handle equipment rental operations. Does the solution have business process maps for manufacturing, leasing and distribution? If you select a solution without industry-specific business process models, you may have to make extensive customizations, which can be a lengthy, complex and costly process. It is better to look for a solution select rentals
ERP Integration: Learn more about the integration process. Ask questions like: Can the ERP communicate with the original ERP and use its data? How do you share data between two entities? What integration tools can you use with ERP to transfer and share data between entities?
Simple and easy to use: Enterprise ERP systems are complex and costly for small and medium-sized enterprises. Select an Enterprise Resource Planning (ERP) system that can exchange information with other external organizations and share financial and operational data with the parent organization.
Suitable for small operations: Choose an ERP system that works well for smaller jobs and departments that are best suited to the nature and size of your local business.
Why should you use the integration solution?
Data integration between a central master ERP and local ERP sources for a smaller distribution center provides an accurate 360-degree view of information across your organization, leading to effective management of finance, people, supply chain, and operations. The unified view helps you access real-time sales and revenue data and have a complete view of operations across all distribution centers.
Although distributed channel ERP solutions are located in different geographies and operate independently, they integrate with central ERP and report their operational and financial data to the corporate entity (see illustration below).
Integrating a native ERP system with on-premises 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-Surge Connection Studio.
A globally independent service provider of Microsoft Dynamics 365 Business applications with over 16 years of experience, To-Zoom Connectivity Studio – a highly configurable solution in Dynamics 365 F & SCM to help you configure, implement and manage data migration and integration projects.
Microsoft Dynamics 365 F & SCM works well for smaller operations and departments because it can exchange information with any ERP company and share financial and operational data with the parent organization. It also provides subsidiaries and local divisions with a better operating system at a lower cost while still integrating and communicating with the central ERP.
How does integration work?
With the help of Connectivity Studio, which operates within Dynamics D365 F & SCM, each schedule and related areas of the manufacturing, operations, and leasing departments can be exchanged through a mapping setup between the on-premises ERP system and native ERP systems.
You report all the appropriate data—such as leasing, manufacturing, sales, purchasing, and supply chain—for the department to the parent. Connectivity Studio provides domain-wide integration and security and requires no development.
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You can use ERP systems such as SAP and ORACLE as the primary ERP system in your parent organization to manage global finance and accounting. However, if you are an industrial equipment manufacturer or leasing company with multiple entities, you should be able to link your operations and leasing business data from your local ERP to your original ERP to get an accurate view of your overall financial information. Integration of local corporate and ERP systems is critical to ensuring a 360-degree view of corporate data, resulting in smooth and efficient management of your business.
Request a demo today to discover how To-Ex can help you integrate your parent and local ERP.