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Every day, manufacturers around the world face numerous challenges managing their subsidiaries. Real-time communication between Corporate Headquarters and their subsidiaries is required to seamlessly align the overall manufacturing ecosystem.  Exchanging accurate and timely financial and
supply chain information can often be difficult as manufacturers must contend with:

  • Heterogeneous technology tools across subsidiaries
  • Inconsistent business processes, governance, and compliance
  • Limited visibility to timely and accurate analytics
  • Minimal Corporate influence and control over subsidiaries
  • High cost of incorporating new acquisitions into the Corporate infrastructure

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Manufacturers need subsidiaries to act as if they were just another department within the corporate organization and not behave as if they were
entirely different companies.  If manufacturers get their relationships with their subsidiaries right, they can reduce global costs and increase operational efficiency while investing in the parts of the industrial ecosystem that are growing the fastest.  Additionally, with the proper subsidiary alignment, manufacturers can improve the ROI associated with mergers, acquisitions, divestitures, and joint ventures.

So the big question is how do manufacturers get the right alignment?  One of the first things that usually happen when trying to assimilate a new subsidiary is Corporate initially focusing on tools like IT systems.  This approach can be problematic.  Instead of focusing on technology, the first steps in aligning subsidiaries with the global manufacturing ecosystem should be:

  • Enforcing company-wide governance and compliance
  • Optimizing intra-company business processes
  • Leveraging corporate services
  • Increasing standardization and best practices
  • Gaining access to real-time analytics, anytime, anywhere

Industrial manufacturers must understand how these initial steps are going to affect the culture of the various subsidiaries being assimilated into the overall ecosystem.  In order to optimize change management for all stakeholders, each of the bullet points above needs to be analyzed in regard to how they may impact the culture of each subsidiary.

Once Corporate has the cultural alignment frame work in place, they can then start looking at the various IT systems, tools, and infrastructures that are already in place across all the different subsidiaries.  The key is to look at what data is needed to align the subsidiaries across the ecosystem and what systems have this necessary data.  In many cases there will already be an ERP or financial system in place at the various subsidiaries, but Corporate will also need to gain access to and control of the systems that store all of the supply chain information as well.  Aligning financial and supply chain
information across the ecosystem is definitely hard work, but the goal of gaining real time access to subsidiary data so all stakeholders have complete visibility is well worth the effort.

With access to subsidiary data in mind, industrial manufacturers may leave existing IT systems in place or identify the need to replace them because they do not provide the information necessary to meet the needs of the global ecosystem in a timely manner.  When replacing IT systems, manufacturers need to find solutions that can be installed quickly and that can scale across all stakeholders.  Global manufacturers cannot afford to spend months on a technology
implementation or waste efforts trying to install a system that will not scale appropriately across an ever-changing supply and demand network.

Cloud and Big Data solutions can vastly improve an industrial manufacturer’s ability to access subsidiary data by providing the necessary alignment across the entire ecosystem.  Manufacturers should look for technology tools that are flexible, easy to consume, and easily turned on or off depending on the business processes required for Corporate and all subsidiaries to succeed.  The right technology solutions provide the flexibility needed to
effectively and efficiently manage the mergers, acquisitions, divestitures, and joint ventures that are so prevalent today in industrial manufacturing
environments around the world.

Aligning a global ecosystem can certainly be a challenge for any industrial manufacturer, but if they stay focused on aligning processes, governance, and compliance first and subsequently find the right technology solutions to support the needs of all stakeholders, this challenge can be turned into a formidable
competitive advantage.

Jay Krueger –    Solution Manager

                           Industrial Machinery & Components

                           SAP America

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As a Solution Manager for SAP, Jay’s main focus is to align SAP solutions with today’s business needs. Jay’s experience includes over 35 years of designing, developing and implementing business processes and systems for manufacturing companies in addition to extensive experience with SAP ERP and SAP Cloud solutions.  His experience with business processes and SAP gives Jay a unique perspective of the value SAP can bring to a company.

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