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Understanding the importance of localization - Part 3: Leaping legal hurdles

ERP can help businesses reduce risks

Regulatory and legal considerations must be made when operating a business at global scale. Organizations need to be able to standardize their processes across geographical boundaries as possible while giving local branches the freedom to adjust workflows based the specific laws and regulatory guidelines that govern them. This, the third part in our series on the importance of localization, will focus on how you can establish an effective framework for legal and regulatory success in a global business.

We've already delved into managing relationships and overcoming language barriers. As we move into this exploration of legal challenges, it is key to remember that a common theme underpins all of these issues - global businesses must be able to act locally in each area they operate. People drive business success, and your processes need to empower the individuals at your local branches to successfully interact with the communities around them. Global organizations must balance their international internal corporate community while freeing each branch to engage their local partners and employees in the most meaningful ways possible.

ERP solutions hold the tools you need to maintain a global-local balancing act. When it comes to legal issues, everything from workflow design capabilities to invoicing functions come together to impact operations. ERP can protect your people, as Marko Becker, vice president of Operations for abas USA, explained, noting that you need to create structure around any local processes that can have legal ramifications.

To fully understand the legal situation facing global organization, let's look at a hypothetical example.

Learning through examples - a U.S.-Mexico global organization

Imagine you are a pharmaceuticals company based in the United States, and you just opened a new branch office to expand operations into Mexico. You are already using ERP systems to standardize inventory management workflows, automatically document data gathered during inspections, create audit trails that verify materials have been sourced properly and handled correctly and enforce these best practices across every phase of operations. Now you must do the same in Mexico.

Ideally, you will have the same processes, to the greatest extent possible, in both branches. You want the operational excellence you established in the U.S. to extend into Mexico. So you take the workflow design you've created in the United States, use translation tools built into the ERP system to communicate them (and your entire ERP interface) into Spanish and you're set. The only problem is the legal differences between the two environments.

The black market is a major problem in Mexico. If you print an invoice in the United States, you would simply create an invoice number by taking the next number in your invoice series across your customers. In Mexico, you have to file those invoice numbers with the authorities before you can use them.

Law enforcement agencies in Mexico have policies in place to prevent bribery and fraud by having businesses register invoice numbers in advance. If you want to legally produce and get paid through invoices, you can only use invoice numbers that are already registered. You need to create a custom workflow to ensure your employees in Mexico handle invoicing correctly. An ERP platform empowers you to generate that process roadmap and integrate it smoothly into existing practices that have already been standardized to maximize efficiency, ensure smooth process functions across your global operations and comply with Mexico's specific legal requirements.

Localization success hinges on details

Every part of the world will have its own legal and regulatory considerations that must be kept in mind when managing operations on a global scale. You can't afford to have an employee who spends most days working in one part of the world operate from another country for a month and end up facing legal issues because a process that worked just fine in one location caused problems in another. The personal and corporate reputation damages that could come from such a mistake are huge. This issues extends to matters like training - you can not teach employees in a branch office to follow workflows that would cause regulatory breaches - supply chain management, accounting and human resources – in other countries.

Every part of a business can be impacted by localized laws and regulatory measures, and your global organization must be prepared to adjust processes and workflows on the fly to make sure employees comply at all times. ERP solutions take care of the small details that individuals may not be aware of, protecting your employees and organization from legal challenges. Looking back at our hypothetical example, you could use the ERP system to set up a process workflow that ensures invoices in Mexico are limited to pre-registered numbers. You can also set the software to automatically send new invoice numbers to be registered based on time or invoice number availability parameters.

Building these detailed capabilities into the localized versions of the ERP platform lets you think globally in the way that you structure your business while maintaining confidence that your local branches are taken care of. abas ERP lets you take this balance between local and global operations down to the smallest details, ranging from the ordering of date notifications (day/month/year or month/day/year) to invoicing processes, without spending so much time managing rules that you can't focus on people. The convenient, detailed localization available through sophisticated ERP tools frees your business to emphasize relationships instead of policies without having to worry about regulatory or legal problems down the line.

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