The implementation of a new distribution computer system by Hershey's was considered a failure for several reasons: - It occurred during their peak sales season for Halloween, disrupting supply for $100 million in products. - Investors were scared by the change and Hershey's stock dropped 8%, signaling market perception of failure. - Hershey's portrayed issues caused by the implementation as reasons for revenue loss, rather than an inevitable transition, damaging confidence.

1. (A) Supply Chain: Hershey's Bittersweet Lesson
1. From an organizational viewpoint, why was the implementation considered a failure?
The implementation of distribution computer system from Hershey’s point of view was an
interim debacle and Hershey’s saw it coming at the wrong time of the year when the scope of
sales was pitch-high. The CEO of Hershey Foods, Kenneth L. Wolfe opened up to Wall Street
analysts in a conference call back in September 1999 that the company is going through turmoil
with its new distribution computer system, which in-turn is going to affect the supply of
Hershey’s products worth $100 million for Halloween and until the following fall.
Additional hits taken by Hershey Foods came from the perspective of invertors as they were
petrified by the implementation of enterprise software which led to an eight percent fall in the
stock price, thus drawing a vivid implication of failure of implementation of enterprise software
and how a fortune 500 company can be taken down without considering all the irregularities
that come with the post implementation of enterprise software.
From Hershey Foods point of view the implementation of enterprise software was a failure as it
was the beginning of enterprise software era and it became a myth that every company that
installs enterprise software would be doomed to incur temporarily losses with the change in
the business process.
The aspect of enterprise software implementation was inevitable from Hershey’s viewpoint as
the information system will furnish heaps of necessary data that will enable efficient and
effective business and organization processes as compared to what they were generating back
then. Hershey’s did realize that the implementation of enterprise software will hit the business
revenue for a short while and may seem as a failure to the outside world.
The biggest mistake that Hershey did was they portrayed the irregularities caused by the
implementation of enterprise software as the reason for loss in business. As the
implementation of enterprise software was the future of Hershey’s way of doing business they
should have never justified it as reason for missing earnings instead Hershey Foods should have

2. tried their level best to win the confidence of Wall Street analysts, investors etc. by instilling
faith in people as this implementation will take the company to the next level in terms of
production, increased revenues etc., since they failed to communicate this commotion in a
proper way which resulted in failure of enterprise software implementation.
Thus from Hershey’s viewpoint the implementation was a failure as they were naive in handling
the outcome of the implementation, they did comply by the business ethic by conveying the
true facts to their investors and the analysts at Wall Street but the CEO should have employed
CIOs to handle this issue for addressing this problem in an opt way. (Chandrasekaran)
2. Based on the article, any additional research, and your personal insights, identify and
describe the 3 major reasons the implementation was a failure.
According to the article “Supply Chain: Hershey's Bittersweet Lesson” the three major reasons
the implementation was a failure are –
Dawn of enterprise software era – The time was right and Hershey’s could not deny the fact of
evolving to the enterprise software era but this wasn’t the case with Wall Street business
analysts and investors as they were not in the same page with the evolving business needs. The
rapid advancement in technology for a better way of doing business petrified the people
associated with Hershey’s and they eventually lost confidence in Hershey Foods which further
added to the grievances against the company.
Hershey’s could not change the notion that companies adopting to enterprise software systems
are doomed to go out of business as they would rack heavy loss, since the system was new in
the market so people had hypersensitive belief regarding it which made it unworkable for
Hershey Foods to implement the enterprise software system successfully while withholding the
belief and confidence of people associated with Hershey’s.

3. Ambiguity in communicating the system implementation – The need to understand the
importance of CIOs to tackle such situation was not in the agenda of Hershey Foods CEO
Kenneth L. Wolfe. The blunder committed from Hershey’s end while opening up to the Wall
Street analysts to address the ongoing issue back then in 1999 raised a lot of questions about
the company’s growth. The investors were taken aback by the loss of $100 million due to the
implementation of enterprise software which in turn led to the inability to deliver Hershey’s
products to the market for Halloween and until the following fall.
The serious implications of these consequences added to the grievances against the company,
the biggest mistake that Hershey did was they portrayed the irregularities caused by the
implementation of enterprise software as the reason for loss in business which merely gave
hopes to anyone for the good days to come after this interim debacle.
Perspective of Investors, Analysts and Press – The evolution of new way of doing business with
the implementation of enterprise software was not precisely perceived by the investors,
analysts and press as they were not in the same page with the need of technological
advancement to approach the business in a better way.
Hershey’s had to shell out $112 million for the enterprise software which was a big nay from
the investors, analysts bird’s-eye view back then in 1999. The uncertainty to bounce back from
the economic catastrophe was perceived as one of the foremost slant for investors, analysts
and press. (Gross)

4. 3. If you were assigned to lead a new implementation effort, what 3 specific
implementation steps would be your highest priority? Please justify your answer.
Three specific implementation steps that would be of highest priority to lead a new
implementation effort are –
Efficacious thought process – The planning phase fuses the strategic and managerial process of
decision making, formation of strategies to take on the upcoming challenges with an insight for
management. To have a rational approach after identifying the problem by developing various
alternatives, assessing all the alternatives and picking the best possible alternative, finally the
implementation part comes into play where the actual decision and the thought process is
scrutinized.
Changes in the tactics to lead a new implementation effort would also ensemble flexibility for
unbidden issues, getting the right person for the right job for an efficacious thought process
possessing the aptness to carry out correct business decisions under extreme pressure.
Rational contingency theory – High up in the priority to lead a new implementation entails the
understanding and implementation of rational contingency theory, first aspect of contingency
theory being Path-Goal theory evaluates the different facets of leader behavior which can in
turn inspire and encourage the subordinates, secondly the Leadership Substitutes theory where
different facets of the events occurrence can inculcate redundant behavior in a Leader i.e. CEO,
Manger etc.
Rational contingency theory also assimilates the normative decision theory where decision
procedures, decision quality is taken into account and foremost aspect of this theory is
Cognitive Resource theory where intelligence, experience and technical expertise are blended
to compare against the performance of the group or unit working within the organization.
Businesslike coordination and plausible reporting – In a professional environment the
coordination between every unit of the organization should be effective and must have an open
two way channel, Businesslike coordination facilitates a competent leadership where issues can

5. be discussed and conveyed from the subsequent levels of the organization to the higher levels
to achieve the goals and objectives of the company.
Plausible reporting is a way to scrutinize all the departments functioning in the organization and
to get to the depth of the problem and solve it from the grass root level rather than solving it
superficially. The reporting is done in a systematic way i.e. by reporting to the person above in
the layers of management. (Waldron, Vsanthakumar, & Arulraj)