Louisville Slugger – Hillerich & Bradsby
What do Babe Ruth’s 60th home run, Joe DiMaggio’s 56-game hitting streak, Ted Williams’ .406 season, and Hank Aaron’s record-breaking 715th home run have in
common? They all were accomplished with Louisville Slugger bats manufactured on the Ohio River at Hillerich & Bradsby.1 The company makes about 300 models for major league baseball and has about 60% of the major league market.2 Best known for its wooden bats, the Louisville, Kentucky–based firm also manufactures a variety of baseball, golf, and hockey equipment for amateur and professional athletes.
The company was founded in 1857 as J F Hillerich & Son to manufacture butter churns. It entered the baseball market when one of Hillerich’s sons, Bud, promised a star player he could make a bat for him. H&B began producing aluminum bats in 1928 and today
relies on the wooden and aluminum bat business for nearly three-quarters of annual revenues.
The company remains family-run; John Hillerich IV is the fourth-generation CEO, taking over the private company from his father. He feels the pressure heading a successful company more than 120 years old, as competition in the industry has intensified as never before. The Louisville Slugger bat now competes with bats made by a host of others ranging from carpenters to Amish craftsmen. To gain an advantage, H&B looked at its internal system in order to streamline operations. The company needed to address everything from order entry problems to production deficiencies to returns. The overview led to discussion of a new system to handle the flow of information.
H&B had a big decision to make; it could either reconfigure its information system or start over. A new system would need to streamline information flow in support of the sales operation and supply chain management, as well as accounting, finance, and marketing.
Management realized it needed a new system to improve its dismal shipping record; about 40% of its orders were being shipped on time. They opted for the enterprise resource planning (ERP) system, designed to simplify all processes by storing all information in one common database and automatically updating the information in every stage of production.
Implementation of the new ERP system usually takes years, and the transition from the old system to the new one is difficult. Since the ERP system uses real-time information, the production department manufactures only the inventory that the sales department has requested, and the shipping department has the proper amount of inventory to send to customers.
The benefits of ERP are bottom-line savings for the company and improved morale as frustration from repetitive tasks and missing information dissipates.
H&B managers thought that the cost of implementing the new system was worth the potential savings. Communication between production and sales had been inefficient, as well as that with management. Getting an answer to one simple question could take a week. The first step in streamlining production was to identify problems and devise the needs of the new ERP system. Then, the German company SAP was chosen to provide the software. SAP is a system in which a common server holds all the company’s information.
Every personal computer (PC) is connected to the server. Once data is entered, it is stored in the server where everyone can access it from a PC. During the 18-month configuration process, morale sagged as longtime employees struggled to change the way they worked. Some employees left during training class, stress levels temporarily increased, and some production processes failed.
H&B managers thought about halting the new system, but after struggling through implementation, the company began seeing benefits. It took five years to see quantifiable results. Now the company ships 85% of its orders complete and on time, compared to 40% before SAP. Top customers surveyed rate H&B in the 90–95% satisfaction category.
Questions for Discussion
1. What role do information systems play at H&B? What were the internal and external trade-offs between reconfiguring the old information system and designing a new one?
2. Why was the transition to the new system difficult? How could Kotter’s eight steps be used to facilitate such a transition?
3. Why did some people resist change and experience stress? What strategies could H&B have used to overcome resistance to change?
1 Monte Burke, “Carry a Big Stick,” Forbes, April 14, 2003, p 220.
2 Mark Yost, “Ballpark Figure: He’s a Hit Pitching Bats to Major
League Players,” The Wall Street Journal, March 31, 2005.