ERP system strategies in parent‐subsidiary supply chains

Purpose – Many companies are part of parent‐subsidiary supply chains, i.e. organisations where a parent company receives products from its subsidiary or the other way around. Having this close relationship in a supply chain network opens the possibilities for different setups of enterprise resource planning (ERP) systems across such companies. This paper clarifies the different ERP system strategies for companies in parent‐subsidiary supply chains and the consequences of choosing the different strategies. Design/methodology/approach – In order to position the contributions of the paper, literature on the use of ERP systems in supply chain management (SCM) is investigated. Next, four archetypical ERP system setups across parent‐subsidiary supply chains are defined. The consequences of the four defined setups are deduced. Three case studies are presented to justify the relevance of the defined four ERP system strategies and to further investigate the consequences of choosing these (one case study represents two strategies). Findings – The paper shows that there are significant impacts of choosing one of the four ERP system setups across parent‐subsidiary supply chains, e.g. quality of communication, degree of local management, synergy effects, etc. Furthermore, the paper shows that extant literature dealing with ERP systems and SCM fails to consider this aspect, which may at worst lead to incorrect generalisations. Research limitations/implications – The paper clarifies the importance of considering different ERP system setups in parent‐subsidiary relationships. Future research in ERP systems and SCM needs to focus more on this aspect. Practical implications – The paper provides an improved basis for companies in parent‐subsidiary supply chains that are to implement ERP systems or are to rethink their current ERP strategy. Originality/value – The definition of ERP system setups across parent‐subsidiary supply chains and the clarification of the consequences of these strategies represent new and useful contributions to the SCM and the ERP literature.