Integrating Shared Services with the Strategy and Operations of MNEs

Abstract

A growing number of multinational enterprises (MNEs) are reaping advantages from consolidating functions into regional shared service centres (SSCs). Some of the benefits include more efficient transaction processing, better systems integration, more uniform policy administration, improved co-ordination of marketing and better supply chain management. This article describes the varied uses of SSCs by MNEs in different regions of the world. It examines the origins, development and management of SSCs. Shared service centres (SSCs) are becoming an essential component of the global and regional strategy of MNEs (multinational enterprises) (Forst, 1997). An increasing number of MNEs are now integrating their operations in different countries through a centrally located SSC (Hirshfield, 1996; Jarman, 1998; Miller, 1999). SSCs are helping MNEs achieve economies of scale and scope across the business units of the firm and realise synergies in the supply chain. This article traces the development of regional SSCs in North America, Europe, Asia and Latin America, as well as the emergence of global SSCs. It explains the diverse functions that they perform. The conversion of decentralised services to a centralised shared services unit is a complex organisational change project. The steps that leading MNEs have taken to set up regional SSCs are described. They provide useful guidelines for other firms to follow.