In 1999Hersheys ERPwas implemented by The remaining modules were delayed from April to July 1999
IMPLEMENTATION… …to QUICKEN the implementation process!
Simultaneous implementation of modules lead toIMPLEMENTATION… …to QUICKEN the implementation process!
Simultaneous implementation PROBLEMS! of modules lead to NO MODULE TESTsIMPLEMENTATION… …to QUICKEN UNFULFILLED the implementation ORDERS process!
HersheysFinancials for3rd quarter of 1999
Hersheys DROPFinancials for in3rd quarter of REVENUE$ 1999
Founded by Milton Hershey in1 st known for several innovations + company to make chocolate variations
Hersheyprice$ its low
Hersheyprice$ its low Efficient IT systems HUGE necessaryquantities to support logistics and supply chain
Late 1996“PROJECT ENTERPRISE 21”MODERNIZATION of IT SYSTEMS to solve and have Y2K better Problem coordinated deliveries to retailers
ERP softwareto help reorganizebusiness PROBLEMS!processes!
ERP software to help reorganize business PROBLEMS! processes!initial plan of the project: shift to system by April 1999
other modules were BEHIND SCHEDULEJanuary1999
other modules were BEHIND SCHEDULE Planned to switchJanuary over to NEW1999 SYSTEMS April 1999
other July modules were 1999 BEHIND SCHEDULE Planned Planned to switch 3 to switch Months over to behind NEWJanuary over to NEW schedule SYSTEMS1999 SYSTEMS April 1999
other July modules were 1999 BEHIND SCHEDULE Planned Planned to switch 3 to switch Months over to behind NEW Y2KJanuary over to NEW schedule SYSTEMS problem was1999 SYSTEMS looming + large Orders from April retailers 1999
other July modules were 1999 BEHIND SCHEDULE Planned to switch 3 Months behind Y2KJanuary over to NEW schedule problem was1999 SYSTEMS looming + large Orders from April retailers 1999
Problem # 1 “delivery delays” July can’t keep their usual 1999 5 day delivery August still 15 days 1999 behind order schedule
Problem # 2 “Loss in Credibility” because they failed to supply products in time “Loss of Market Share”because suppliers looked for reliable alternatives
“ lf you dont have my toothpaste,Im walking out. But for a chocolate bar,Ill pick another one. ”
Problem # 3 Warehouse was piled up with products. “Inventory” In September 2000 inventory was 25% more than in previous years.
Analysts say the cause of the problem was…MISSING INVENTORYDATABASE inSAP R/3 ERP software
THE REASON FOR THE lack of coordination between technical personnel and people involved in operations, who did not update Inventory data.
WHAT WENT WRONG
there are 9 reasonsfor the failure.
reason #1NO BUFFER plannedfor the systems to be tested NOT sticking to the deadlines
reason #2Hershey implemented theERP during a peak season andcouldn’t rectify the implementation
3 VENDORSreason# 3 It was not possible to test each component IMPLEMENTATION… Roll out each system successively and then carefully check the integration issues
Inevitable implementationrelated problems due to highnumber of interfaces of thesoftware packagesProblems integratingSAP R/3 with thesoftware from Siebeland Manugistics reason #4 “ERP Suite Complexity”
IT Department No CIO appointedreason #5 + the board did not have any representative with IT competence
Inexperience Top management did not conductenough groundwork before implementing the ERP solution #6 reason
Employees Training #7reason
Lack of technological Right processes werethe in place savviness at not top To keep senior management informed 8reason # Top management failed to understand the scope of the project
reason #9 “Lack of Evaluation” Hershey …was missing the infrastructure to support the project …did not check the impact on their network to identify potential problems
Hershey made efforts to stabilize SAPand other systems “…rigorous software testing program” - George Davis (CIO)
SEPTEMBER 1999 Most of the initial problems with the ERP systems were fixed
SEPTEMBER 1999 Most of the initial problems with the ERP systems were fixed 2000 $ales reaching US$ 4.2
SEPTEMBER 1999 Most of the initial problems with the ERP systems were fixed July 2001 Redesign of the process and start to work with SAP N3 4.6 2000 $ales reaching US$ 4.2
SEPTEMBER 1999 Most of the initial problems with the ERP systems were fixed July 2001 Redesign of the process and start to work with SAP N3 4.6 2000 June 2002 began using SAP for marketing analysis an $ales reaching brand management order management US$ 4.2
Hersheys new distribution centerERP and the newdistribution center reducethe order cycle times byhalf 1.2 million sq. ft. = 14 Football fields
Hersheyshould that …ensure mistakes committed earlier are not repeated …provide adequate training to employees