Hershey
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Hershey's 1999 implementation of an ERP system was not successful and led to financial losses. The ERP go-live was delayed by 3 months until July 1999 due to integration issues. This caused delivery delays of up to 15 days, loss of credibility with suppliers who found alternatives, and a 25% increase in excess inventory. The key reasons for failure included an unrealistic schedule with no buffer for testing, implementing during the peak season, integrating 3 different vendor systems, lack of IT leadership, insufficient preparation, and overloading employees during training. Lessons included allowing adequate time for implementation, thorough testing and integration, avoiding peak seasons, and establishing proper IT management.
Hershey
- 1. Definitely Not a Sweet Experience for Hershey Submitted By Abhijeet Dash UM14001 Abhinaba De UM14002 Abhineet Sudhendra UM14003 Abinash Mallick UM14004 Abul Hasnain Zaidi UM14005
- 2. INTRODUCTION
- 3. In 1999 Hersheys ERP was implemented by The remaining modules were delayed from April to July 1999
- 4. …. to QUICKEN the implementation process IMPLEMENTATION… Simultaneous of modules lead to Implementation PROBLEMS NO MODULE TESTs UNFULFILLED ORDERS
- 5. Hersheys Financials for 3rd quarter of 1999 DROP in REVENUES
- 7. LATE 1996 “PROJECT ENTERPRISE 21” MODERNIZATION of IT SYSTEMS to Solve Y2K Problem and have better coordinated deliveries to retailers
- 8. ERP SOFTWARE to help reorganize business processes Initial plan of the project Shift to the new ERP system By April 1999
- 9. January 1999 April 1999 Other modules were behind schedule Planned to switch over to NEW SYSTEMS 3 Months behind schedule Y2K problem was looming + large Orders from Retailers JULY 1999
- 10. EXPECTED BENEFITS Fine-tune deliveries to suppliers. Upgrade and standardize companies business processes. Efficient customer driven processes capable of managing changing customer needs. Reduce order cycle times and boost inventory accuracy. Reduce inventory costs. Better execution of business strategy of emphasizing core mass market candy business
- 11. THE PROBLEMS
- 12. PROBLEM # 1 “delivery delays” can’t keep their usual 5 day delivery still 15 days behind order schedule JULY 1999 AUGUST 1999
- 13. PROBLEM # 2 “Loss in Credibility” Because they failed to supply products in time “Loss of Market Share” Because suppliers looked for reliable alternatives “if you don’t have my toothpaste, I’m walking out. But for a chocolate bar, I’ll pick another one.
- 14. PROBLEM # 3 “Inventory” Warehouse was piled up with products In September 2000 Inventory was 25% more than in previous years
- 16. REASON # 1 “unrealistic schedule” No Buffer planned for the systems to be tested Not Sticking to the deadlines
- 17. REASON # 2 Hershey implemented the ERP during a peak season and could not rectify the implementation “PEAK SEASON”
- 18. REASON # 3 “3 vendors” It was not possible to test each component carefully Roll out each system and successively and then check the integration issues IMPLEMENTATION…
- 19. REASON # 4 “ERP Suite Complexity” Inevitable implementation related problems due to high number of interfaces of the software packages Problems integrating SAP R/3 with the software from Siebel and Manugistics
- 20. REASON # 5 NO CIO appointed + the board did not have any representative with IT competence “IT DEPARTMENT”
- 21. REASON # 6 Top management did not conduct enough groundwork Before implementing the ERP solution “INEXPERIENCE”
- 22. REASON # 7 Employees were overloaded with learning with 3 new systems during peak season “Employees Training”
- 23. LESSONS LEARNT TO AVOID FAILURES ERP implementation should be given adequate time Testing and integration of the softwares should not be compromised Change in technology should not be done in peak business seasons Proper management structure should be present to handle the IT issues