ERP Purchase Decision at Benton Manufacturing Company Presented By Ahmad Ardiansyah Zein Araro Jireh Tulus Bambang Wijarnako Raja Badal Muda Sedang Bagus Tirtayasa The Content About Company ERP & Information System Framework ERP Study The Proposal The Pros The Contras Cost and Benefit Analysis Recommendation 2
About Company U.S. manufacturer of a varied line of customer durables Net sales almost $1 billion (1998) Operating profit about $180 million (1998) 5,200 employees 7factories 57 distribution centers locate(north America) 40% Market Share 3 About Company Business Challenge 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. 4
About Company Benton s Strategic Focus Customer-driven new product development The acquisition of new business which complement existing ones International expansion Emphasis on the Continoues improvement approach 5 ERP & Information System Framework ERP Enterprise Resource Planning An ERP system is a comprehensive set of software modules that integrate a company s financial, human resources, operations and logistics, and sales and marketing information system, storing the data for all these systems in a central database so that data are entered only once and the results of each transaction flow through the system without human intervention 6
ERP & Information System Framework ERP 7 ERP & Information System Framework How ERP software plays important role in success of a business? 8
ERP & Information System Framework ERP Modules Manufacturing : engineering, capacity, workflow management, quality control, bills of material, manufacturing process, etc Financials : Account payable, account receivable, fixed assets, general ledger and cash management, etc Human Resources : Benefit, training, payroll, time and attendance, etc Supply Chain Management : Inventory, supply chain planning, supplier scheduling, claim processing, order entry, purchasing, etc Customer Relationship management : To processes implemented by a company to handle its contact with its customer 9 ERP & Information System Framework Advantages of ERP system A Totally integrated system The ability to streamline different processes and workflows The ability to easily share data across various departments in an organization Improved efficiency and productivity levels Better tracking and forecasting Lower costs Improved customer service 10
ERP & Information System Framework Disadvantages of ERP system Customization in many situations is limited The need to reengineer business processes ERP systems can be cost prohibitive to install and run Technical support can be shoddy ERP s may be too rigid for specific organizations that are either new or want to move in a new direction in the near future 11 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. 12
ERP Stiudy 4 Major ERP Software vendor (SAP, JD Edwards, Oracle and PeopleSoft) financially stable Support Global Companies Full line of Highly Integrated Modules Leader in Research and Development There are a number of Tier 2 vendors Not suitable for long-term partnership. 13 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 crucial to survival in today s competitive environment. Our present systems are growing old and hard to maintain, and will have to be replaced in the next few years. ERP systems have much more functionality and much better integration than our internal IT staff can possibly provide, so we have to use them just to keep up with our competitors who are starting to install them (Meyer) 14
The Proposal Additional Reason, Benton management has established strategic-business plan that cannot be realized without an ERP System. International expansion Mergers and acquisitions Use of IT as a strategic weapon Integration with suppliers and customers Reduction of operational costs Product line expansion Process standardization across different units of the company 15 The Pros Various Modules Finance/ 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 Secure Using centralized security policies, and can tracks all occured transactions E-commerce Integration Can be integrated with other systems through an API (Application Programing Interface) 16
The Contras The cost of ERP Software is too high Planning Customization Configuration Testing Implementation Take a long time to be deployed 1 3 years ERP systems are generally difficult to use and learn Difficult to migrate existing data to the new ERP systems 17 Cost and Benefit Analysis The Costs The purchase price of the application Investing in new hardware Installing the program on a company s computers Performing technical tests to ensure compatibility and performance Training all employees on how to use the system Altering working procedures Importing files into the new system Maintenance costs 18
Cost and Benefit Analysis The Costs 19 Cost and Benefit Analysis The Benefits Streamlining processes, reducing labor costs Reducing the size of inventory needed in stock, freeing capital up for other investments Improving reliability, creating better customer experiences Implementing technology, possibly reducing the number of employees needed Crafting a scalable solution, letting a business capitalize on future growth 20
Cost and Benefit Analysis The Benefits 21 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. 22
Recommendation Recommendation Acquired an ERP system as quickly as possible Setup clear requirement for the ERP Interview the ERP vendors Prepare employee for the all possibility Train and re-train staff 23 Thank You 24 11/26/2013 24