449CASE STUDY III-3
ERP Purchase Decision at Benton
Manufacturing Company, Inc.
Benton Manufacturing Company, Inc., is a U.S. manufacturer
of a varied line of consumer durables. Although its stock
is publicly traded, a single family holds a controlling interest
in the company. In 1998 Benton had net sales of almost
$1 billion and an operating profit of about $180 million.
Benton’s 5,200 employees operate seven factories
and 57 distribution centers located throughout North
America. In the past few years Benton has acquired sever-
al companies, and two of Benton’s factories have been
added as the result of acquisitions that broadened Benton’s
product line. Benton’s products are sold through thousands
of independent dealers who may sell both Benton’s and
competitors’ products.
Benton is the leader in its industry with its products
claiming some 40 percent of the market. However, indus-
try demand is growing very slowly while the structure of
the industry is undergoing rapid change as formerly inde-
pendent dealerships are being acquired by large chains.
This consolidation is changing the power relationships
between Benton and its dealers and causing Benton’s tra-
ditional profit margins to erode.^1 Benton has responded
to this pressure by pursuing a Continuous-Improvement
strategy that so far has increased productivity more than
25 percent, reduced in-process inventory 30 percent,
freed up thousands of square feet of factory space, and
reduced new product development cycle times.
Benton has a history of continuous growth in sales
and profits. In order to continue this growth in today’s
increasingly competitive environment, Benton management
has focused on growth through the following strategies:
(1) customer-driven new product development, (2) the
acquisition of new businesses that complement existing
ones, (3) international expansion, and (4) emphasis on the
Continuous-Improvement approach.
Enterprise Resource Planning Systems
As one response to growing competitive pressure, Benton
management is considering acquiring an Enterprise
Resource Planning (ERP) system. 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 systems,
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 inter-
vention. An ERP system can replace many separate poorly
integrated computer applications systems that a company
has purchased or developed over the years. During the
1990s the use of purchased ERP packages exploded among
Fortune 500 companies, making the leading vendor,
Germany’s SAP, the fastest-growing software company in
the world.
Thomas H. Davenport^2 explains why ERP systems—
sometimes called Enterprise Systems (ES)—are so popular:An ES streamlines a company’s data flows and pro-
vides management with direct access to a wealth of
real-time operating information. For many compa-
nies, these benefits have translated into dramatic
gains in productivity and speed.
Autodesk, a leading maker of computer-aided
design software, used to take an average of two weeks
to deliver an order to a customer. Now, having
installed an ES, it ships 98 percent of its orders within
24 hours. IBM’s Storage Systems division reduced the
time required to reprice all of its products from
5 days to 5 minutes, the time to ship a replacement
part from 22 days to 3 days, and the time to complete
a credit check from 20 minutes to 3 seconds. Fujitsu
Microelectronics reduced the cycle time for fillingCopyright © 2000 by E. W. Martin. No part of this case study
may be reproduced, stored in a retrieval system, or transmitted in any
form or by any means without the permission of the author.
(^1) This is a disguised case. Because of confidentiality issues, further
details about Benton’s products or its industry cannot be disclosed.
(^2) Thomas H. Davenport, ”Putting the enterprise into the enterprise
system,” Harvard Business Review, July–August, 1998, pp. 123–4.