Enterprise Resource Planning for the Outsourced World

As businesses vie for pieces of the increasingly global marketplace, the complexities of their supply chains become ever more challenging. Time-tested enterprise resource planning software designed for vertical integration of locally organized companies may no longer be up to snuff. Whereas a car may once have been conceptualized, designed, prototyped, proofed, manufactured, and assembled all in one place, globalization has changed the game. Modern products are often designed in one place and prototyped in another. Manufacturing and assembly could occur hundreds, even thousands of miles apart in different countries, and under varying regulatory structures.

Adapting With the Cloud

The pharmaceutical industry, in particular, has had to rapidly evolve its approach to ERP in order to grapple with the difficulties inherent to creating and distributing products all over the world. To compete more effectively in emerging markets with higher profit margins, pharmaceuticals have been outsourcing more of their operations. In years to come, the practice is anticipated to account for more than 80 percent of the pharmaceutical industry’s business. With outsourcing on the rise, it has become ever more difficult for organizations to maintain total supply chain visibility and control. Traditional ERP systems have demonstrated functional weaknesses when it comes to addressing the needs of globally distributed operations.


As a result, pharmaceuticals are more frequently employing ERP services that leverage the power of the cloud and are designed specifically for operations that involve many moving parts in multiple locations. The idea is that the cloud approach would allow more complete pictures of the overall supply chain and enable quicker responses and reorganization. This would be achieved through greater insight into factors impacting individual components within the larger structure, such as local regulatory issues and the performance of manufacturing partners in widely separate locations.

Adopting a distributed, cloud-based ERP solution could benefit an organization in the following ways:

Redundancy — Suppliers of cloud-based solutions maintain distributed systems to avoid interruptions that could result with on-site ERP.
Better control — Solutions allow for tighter controls over the sharing of information to help elevate operational security.
Always current — Compliance validation, upgrades, and ongoing maintenance are taken care of by the cloud ERP provider.
Deeper supply-chain visibility — Information could be gathered and distributed to the correct individuals to help ensure complementary operation of different providers such as distributors, brokers, and suppliers of raw materials.

An Acquisition Aimed at the Future
The challenges faced by the pharmaceutical industry are not unique and are likely to increase as global integration becomes more important. Doubtless in response to the ever-growing need for ERP solutions that can accommodate widely distributed supply chains, Infor recently acquired GT Nexus. The deal, valued at $675 million, incorporates GT Nexus’ cloud-based offerings into Infor’s highly respected ERP solutions.

Some of the key gains GT Nexus brings to Infor include:

Information distribution to freight carriers, suppliers, logistic components, and financial institutions
Direct supplier and purchaser order management system integration
Payment protection and financing from financial institutions and purchasers through the cloud
Support for transactions in 8 currencies across 90 countries

Both GT Nexus and Infor were independently seen as top-shelf providers of cloud-based commerce and traditional ERP solutions, respectively. Infor’s clients are expected to benefit from the potential for novel, future-ready approaches the combined capabilities could offer as the company moves toward what it calls multi-enterprise ERP.

A New Approach to ERP

Multi-enterprise ERP is a way of describing an approach to handling the resource planning challenges of production systems made up of individual companies working together. It is a bit like having a single company, except that what would have been different departments, in the past, would now be entirely separate businesses.

Charles Phillips CEO of Infor explains that traditional ERP just wasn’t designed to handle the realities of this globally outsourced approach.  Increased specialization is expected as the global distribution paradigm continues to evolve, with more individual companies serving as single-purpose arms of much larger organizations. Such distributed supply chains, in which a product’s manufacture may be divided between multiple distinct companies, required a new approach.

Phillips envisions the multi-enterprise ERP model as the way of the future. It would offer the visibility and responsiveness necessary to achieve a tight integration of individual businesses. Each would operate with complete, shared knowledge of the locations and statuses of every product in real time.

The cloud-based ERP model incorporating GT Nexus’ commerce platform is likened to social media. Unlike the old system in which an important piece of information might be sent individually to many people, there would be a single source to which all concerned would have access. In such a system, decision-making would be improved and the need to carry inventory would be reduced. Clients would be able to see the status of orders from beginning to end and respond across the value chain in a way that replicates the integrated operation of a single company.

All Together Now

Globalization shows no signs of slowing down as companies hunt for fresh opportunities to improve their bottom lines. With the emergence of cloud-based, distributed ERP solutions, the increasing reliance on outsourced supply chains could start being managed in ways that more closely resemble cohesive organizations.

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