The Three Pitfalls of Business Expansion-And How You Can Avoid Them

Growing businesses run into some classic difficulties that can be avoided with some foresight and the right technology. Learn about the three major problems you're likely to run into if your company is expanding--and how you can head them off before they cause serious damage.

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Expansion is often one of the most daunting challenges a successful business will face, whether its growth is organic, or via merger and acquisitions (M&As). Regardless of the form expansion takes, businesses can struggle with management and visibility issues across three areas in particular: 

  • business processes (including localization and compliance requirements)
  • analytics
  • information systems
This report explores these pitfalls—including warning signs and impacts—and identifies approaches you can take to avoid them.

Pitfall #1: Business Processes, Localization Requirements, and Compliance Requirements

Expanding companies typically look to consolidate activities such as accounting and customer service. Similarly, supply chain restructuring often goes hand in hand with business expansion. Regardless of your growth path, your business will face challenges in managing processes as well as the various compliance requirements that come along with doing business in multiple locations.

Warning Signs and Impacts

From the business process side, process gaps have a habit of becoming more pronounced as operations expand (this is especially true if local operations are centralizing around expertise or raw material proximity). For example, inaccurate inventory can cascade down to an inability to make accurate forecasts, while other difficulties can include failed quality control or shipment delays, ultimately leading to growing dissatisfaction among your customers.

How to Avoid This Pitfall

There’s a lot that an integrated enterprise resource planning (ERP) system can do to help you manage the pitfalls associated with business processes affected by company expansion.

TEC data shows that the greater the size of the company, the more it requires systems that support collaborative processes and data integration. As companies grow they more frequently need functionality to support workflow, visibility into their operations, role-based system usage, and other features supporting the business process challenges outlined here.

For example, the frequency of respondents requiring workflow management functionality in their ERP system rises from 19.9% to 23.8% as company size grows from small to medium. If all ERP requirements for growing companies are aggregated, workflow management functionality is identified as a requirement 28 times more often than the average.*

Integrated ERP solutions offer tremendous support for defined business processes via workflows. They allow you to design best-practice processes spanning from the procurement of raw materials through to customer returns.

With integrated workflows, you can embed corporate governance into operational activities, such as automatic forwarding of supplier invoice approval requests to buyers (as opposed to cumbersome, error-prone e-mail–driven processes).

As for business processes, an integrated enterprise system can help you maintain overall visibility for all locations, and embed compliance requirements by, for instance, establishing automated safeguards to prevent materials from being shipped if they do not meet location-specific requirements.

You can also provide your various business units with better insight into their roles within the chain. With an integrated platform, production planners have complete access to all inventory and shipment information in all locations, and can adjust schedules as needed, when needed. In fact, TEC’s data shows that demand frequency for advanced planning and scheduling (APS) functionality rises from 15.5% to 19.5% with business growth.

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