There has been much discussion in the trade press recently about the impact of ERP in decentralized enterprises. The discussion has revolved around the advantages and disadvantages of adopting either style of ERP implementation. The first and most obvious observation is that the discussion only applies to decentralized enterprises or those that are planning to decentralize.

At first sight advantages include flexibility in operation, a better appreciation of local customer needs, better and timelier information, improved employee satisfaction, and the ability to manage operating costs by taking advantage of different labor costs in different countries.

1. Flexibility

A decentralized model moves an enterprise closer to its customers at each location. There may be particular local legislative or administrative requirements that need to be handled in requisite timescales. Customers will be happier knowing that the majority of their queries and concerns will be dealt with locally by local staff familiar with local requirements and constraints.

2. Local Customer needs

An enterprise may have a defined basket of products and services it offers to diverse customers. The ability to modify a product or service to meet a particular local demand is better met with a decentralized ERP system.

3. Employee Empowerment

The opportunity to make local decisions without reference to a central authority improves employee job satisfaction. Studies have shown that local decision making by managers and lower tier employees improves efficiency, creativity and motivation.

4. Information Availability

In the modern environment, a decentralized plant may need to justify its own existence. Some decentralized enterprises require remote plants to submit bids to manufacture products. This is common in the Automotive Industry. In order for a plant to prepare the best bid, it needs access to specific local management information that can only come from a decentralized ERP system.