Hershey's faced significant challenges during its ERP implementation due to issues with legacy systems, a rushed 'big bang' approach, and data inaccuracies, resulting in delayed product deliveries and lost sales. After overcoming these setbacks, the company improved its inventory accuracy to 99.96% and reduced order fulfillment times to 24-48 hours. Today, Hershey's has successfully leveraged its ERP system to enhance operational efficiency and maintain its market dominance.

1. ERP IMPLEMENTATION FAILURE
IN HERSHEY’S

2.  Introduction
 Existing IT infra
 The Plan
 Actual Outcome
 What went wrong?
 Learning(what could have done)
 Hershey today – The turnaround
Presentation Agenda

3. One of the leading chocolate manufacturer across
world
Large chunk of sales from Valentine’s Day, Easter,
“back to school,” Halloween and Christmas
40% of profit
Need of an efficient and reliable logistics system to
cater to these large no. of seasonal requirements
Brief Overview – Hershey’s
Reliable product availability is critical

5. 1
2
3
The company was running on legacy systems, and
with the impending Y2K problems, it chose to replace
those systems and shift to client/server environment
A network of 19 manufacturing plants, eight contract
manufacturers and more than 20 co-packers
To tackle Y2K problem Hershey decided to replace
existing legacy systems
EXISTING SYSTEM

6. Production forecasting,
Scheduling and TM:
Manugistics Group Inc.
Managing CRM and
tracking effectiveness of
marketing activities:
Siebel CRM
A $112 million worth of
combination of S/W for
CRM, ERP & Forecasting
Tasks
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it with your own text.
Replace existing mainframe
based legacy systems by
SAP R3 – Accenture
IT PARTENERS

7. April 1999
Enterprise 21 went live
Jan 1997
Replaced 5000 desktop computers Installed new TCP/IP network hardware
Jan 1996-Roll out of the plan
Tackle Y2K issue byJan
2000
Replace Mainframe with
SAP R/3
Advanced final date to
April 1999

8.  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

9. Unable to deliver $100 million worth of
Kisses and Jolly Ranchers for Halloween
in 1999
Stock price down 35%
Earnings drop 18%

10. Order fulfillment time doubled to 12
days!
Lost prominent shelf space for the
season!!!
Several consignments were shipped
behind schedule, and even among those,
several deliveries were incomplete

12. Squeezed
Deadlines
Wrong
Timing
Big-Bang
Approach
Un-
entered
Data

13. Successful
ERP
• The evolutionary way
• Test each module before
release
Go Slow
• Data migration is
important
• Discipline in inventory
Data is King
• Management should keep
a close watch
• Work for a common goal
Oversight
Matters

15. Hershey now has
an inventory
location accuracy
of 99.96 % and can
turn orders within
24 to 48 hours of
receiving an order
Hershey built a 1.2
million sq. ft.
distribution center,
to align its
distribution
function with the
new ERP system
Began work on the
upgrade to mySAP
in July 2001, and
check all the
system after
installing
it..successful !

16.  Revenues of nearly $5 billion and almost 13,000 employees
worldwide.
 In 2005 & 2006, Hershey acquired the Berkeley, California-
based boutique chocolate-maker Scharffen Berger, Joseph
Schmidt Confections, the San Francisco-based Chocolatier and
Dagoba Organic Chocolate, a boutique chocolate maker in
Oregon
 Again Hershey's, Reese's, Hershey's Kisses, Kit Kat, Twizzlers,
and Ice Breakers are ruling the Market!!!

17. Prepared By:
Yuvraj Zala