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
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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
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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
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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
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ERP & Information System Framework
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
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ERP & Information System Framework
ERP
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ERP & Information System Framework
How ERP software plays important role in success of a business ?
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ERP & Information System Framework
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
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ERP & Information System Framework
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
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ERP & Information System Framework
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
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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.”
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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.
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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)
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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
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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)
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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
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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
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Cost and Benefit Analysis
The Costs
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Cost and Benefit Analysis
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
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Cost and Benefit Analysis
The Benefits
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Cost and Benefit Analysis
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.
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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.
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Thank You