Business process and systems issues caused operational paralysis, leading to a percent drop in quarterly profits and an eight-percent decline in stock price.
Areas of Consideration In lateHershey Foods Corporation the leading manufacturer of chocolates, confectionaries and beverages in United States of America began modernizing hardware and software systems in the company.
It was to switch over to the new ERP system by April as per original plan. The project was running as per schedule till Januaryand when it came to the final phase of the implementation, the company faltered.
Time pressed, they went live in July which led the company experienced several problems pushing orders through the system, resulting in shipping delays and deliveries of incomplete orders. However, it was too late for Hershey to respond to this problem.
Many reasons have been cited for the Hershey ERP failure. One, the project was originally scheduled to take four years, but the company forced the implementation to go live in just 30 months.
Two, the company simultaneously implemented a customer-relations package and a logistics package, largely increasing the overall complexity and employee learning curve. Three, the company went live at their busiest time of the year, just before Halloween, and the resulting delays caused profits to fall.
Hence, the top management of the company as well as industry analysts began looking at other reasons for the problems at Hershey. Alternative Courses of Action 1. Before opting to deploy a new ERP system, try to consider upgrading your old version of system rather than instantly launching for a new one.
Before trying to replace those systems and shifting to new ones, try to know the factors affecting or contributing to success and failures that you might encounter along the implementation. Evaluate the needs first before making a decision. Also before opting to deploy a new system, try to stabilize first the phases of its implementation before going on live.
Make sure that the old version of system is running standstill during the first phase of implementation of the new system. Lest the new system suddenly fall short, you still have the old version of system to back you up during mid-operations.
Never have multiple vendors within one project. ERP systems must be installed in a more staged manner, especially when applications from multiple vendors are involved.
Choose the right time for implementation. Implementing it in a wrong time is a messed up. The company would have very well avoided this trouble if only they thought of going ahead with ERP during those occasions when the business process in the whole market experiences a slow movement.
And never went to the extent of spending the whole time and efforts on implementing ERP. This will disrupt the normal functioning of the business and creates confusion in the company.
Since attention was wholly diverted to ERP it was not possible to rectify the uncertainties that emerged in the business as a result of ERP.
Effective testing and scheduling. Effective testing in an ERP implementation can lessen exposure to failure risks and damages. Never opt to quicken the implementation process, where several modules are implemented simultaneously.
The company must ensure that the system is fully tested and ready for implementation.
Effective scheduling is important in ERP implementations because the process is lengthy, complicated and delays can increase large costs. However, management must review closely the need for extending the timeline to ensure success of the project.
The technology is tightly integrated and requires a commitment from all division. It can take years to complete and cost risks. Moreover, there is no guarantee of the outcome.
If not properly planned for, the investment may drive Hershey out of business. Opportunities Hershey made efforts to stabilize SAP and other systems. It was able to make more than 30 improvements to its core business processes within 60 days of going live.Hershey had selected theservices of three vendors SAP AGs (SAP), Siebel Systemsulsiebell and ManugisticsTIn January ,the remaining modules which were to be implemented by April were delayed and were implemented only in July (when huge orders for the impending Halloween and Christmas Seasons received).
Hershey Foods Corporation: Failure and Success with Information Technology Point of View Managerial Point of View Objective To examine the reasons behind the SAP AG’S R/3 ERP implementation failure at Hershey’s Food Corporation Problem What could have done otherwise to avoid the SAP AG’S R/3 ERP implementation failure at Hershey’s Food.
Had Hershey’s put the systems through appropriate testing, it could have mitigated significant failure risks. ERP Implementation Scheduling Hershey’s made another textbook implementation mistake – this time in relation to project timing.
Hershey'sdistribution system,which includedseveralregionalwatehouses,someof which were operatedby third parties,was one of the primary reasonsfor the problemspertainingto the first major ERP at Hershey.
In order to addressthis issue,Hershey built a million sq. ft. distribution center, to align its distribution function with the new ERP system. The case examines in detail the reasons behind the failure of ERP implementation at the US based Hershey Foods Corporation. In late , Hershey began .
Erp implementation failure at hershey food skybox2008.com case examines in detail the reasons behind the failure of ERP implementation at the US based Hershey Foods Corporation. A Case Study on Hersheys ERP.