Case Study Compilation

ERP Purchase Decision at Benton Manufacturing Company

Case Study

Presented By

Ahmad Ardiansyah Zein

Araro Jireh Tulus

Bambang Wijarnako

Raja Badal Muda Sedang

Bagus Tirtayasa

ERP Purchases Decision at Benton Manufacturing Company Inc.Case Study

The Content

2

About Company

ERP & Information System Framework

ERP Study

The Proposal

The Pros

Cost and Benefit AnalysisRecommendation

The Contras

ERP Purchases Decision at Benton Manufacturing Company Inc.Case Study3

About Company

U.S. manufacturer of a varied line of customer durablesNet sales almost $1 billion (1998)Operating profit about $180 million (1998)5,200 employees 7 factories 57 distribution centers locate(North America)40% Market Share


About Company

The Industry deman is growing slowly and the structure of the Industry is undergoing rapid change as formerly independent dealerships are being acquired by large chains.

Business Challenge


Customer-driven new product development

The acquisition of new business which

complement existing ones

International expansion

Emphasis on the Continoues – improvement

approach

About Company

Benton’s Strategic Focus



An ERP system is a comprehensive set of softwaremodules that integrate a company’s financial,human resources, operations and logistics, andsales and marketing information system, storingthe data for all these systems in a central database sothat data are entered only once and the results ofeach transaction flow through the system withouthuman intervention

ERP – Enterprise Resource Planning



ERP



How ERP software plays important role in success of a business ?



Manufacturing : engineering, capacity, workflow management, quality control, bills of material, manufacturing process, etcFinancials : Account payable, account receivable, fixed assets, general ledger and cash management, etcHuman Resources : Benefit, training, payroll, time and attendance, etcSupply Chain Management : Inventory, supply chain planning, supplier scheduling, claim processing, order entry, purchasing, etcCustomer Relationship management : To processes implemented by a company to handle its contact with its customer

ERP Modules



A Totally integrated systemThe ability to streamline different processes and workflowsThe ability to easily share data across various departments in an organizationImproved efficiency and productivity levelsBetter tracking and forecastingLower costsImproved customer service

Advantages of ERP system



Customization in many situations is limitedThe need to reengineer business processesERP systems can be cost prohibitive to install and runTechnical support can be shoddyERP’s may be too rigid for specific organizations that are either new or want to move in a new direction in the near future

Disadvantages of ERP system


ERP Study

Walter S. Henry (Benton President and CEO) to Adam T. Meyer and Jerry L. Cook

“ERP seems to be the direction that our industry is going, and we probably need one too. However, I don’t know the specifics of what an ERP system involves or what it might bring to the company, so I want you to do a quick study and determine whether ERP is for us, and if so how we should approach it.”


ERP Stiudy

4 Major ERP Software vendor (SAP, JD Edwards, Oracle and PeopleSoft)

financially stableSupport Global Companies

Full line of Highly Integrated ModulesLeader in Research and DevelopmentThere are a number of “Tier 2” vendors Not suitable for long-term partnership.


The Proposal

The Study team is convinced that Benton Should Replace their legacy “Back Office” system with an ERP System.

“We believe that information technology is crucialto survival in today’s competitive environment. Ourpresent systems are growing old and hard tomaintain, and will have to be replaced in the nextfew years. ERP systems have much morefunctionality and much better integration than ourinternal IT staff can possibly provide, so we have touse them just to keep up with our competitors whoare starting to install them” (Meyer)


The Proposal

Additional Reason, Benton management hasestablished strategic-business plan that cannotbe realized without an ERP System.

International expansionMergers and acquisitionsUse of IT as a strategic weaponIntegration with suppliers and customersReduction of operational costsProduct line expansionProcess standardization across different units of the company


The Pros

Various ModulesFinance/ Accounts, Human Resource Management, Manufacturing, Marketing / Sales, Supply Chain / Warehouse Management, CRM, Project Management, etc

Can be used across all-departments

Automatic and coherent work-flow

More SecureUsing centralized security policies, and can tracks all occured transactions

E-commerce Integration

Can be integrated with other systems through an API (Application Programing Interface)


The Contras

The cost of ERP Software is too highPlanning – Customization – Configuration – Testing – Implementation

Take a long time to be deployed1 – 3 years

ERP systems are generally difficult to use and learn

Difficult to migrate existing data to the new ERP systems


Cost and Benefit Analysis

The purchase price of the applicationInvesting in new hardwareInstalling the program on a company’s computersPerforming technical tests to ensure compatibility and performanceTraining all employees on how to use the systemAltering working proceduresImporting files into the new systemMaintenance costs

The Costs



The Costs



Streamlining processes, reducing labor costsReducing the size of inventory needed in stock, freeing capital up for other investmentsImproving reliability, creating better customer experiencesImplementing technology, possibly reducing the number of employees neededCrafting a scalable solution, letting a business capitalize on future growth

The Benefits



The Benefits



Cost And Benefit Analysis

Because the IRR is equal to 20% (Match with Benton’s criteria for Investment) and the NPV is Positive (=US$ 156,046.83) so the proposal should be proceed to the implementation phase.


Recommendation

Acquired an ERP system as quickly as possibleSetup clear requirement for the ERPInterview the ERP vendors Prepare employee for the all possibilityTrain and re-Train staff

Recommendation

11/26/2013ERP Purchases Decision at Benton Manufacturing Company Inc.

Case Study24 24

Thank You

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