Compiled By:

Anubhav Sood 139278056

Kapil Saini 139278009
Kaustubh Kirti 139278054
Rakesh Devadas 139278069
Rohan Shukla 139278059

Milton S. Hershey founded it in 1894 as Hershey Chocolate Company..
By 1895, Hershey Chocolate Company was manufacturing more than 114 different varieties of chocolates.
By 1960s, the company became one of the renowned chocolate producers in US.
Moreover, to achieve its target the company needed to sell huge quantities of its products that were only
possible with highly efficient logistics and supply chain systems.
During that period of early 1990s, Hershey was using their legacy systems to support their business processes
such as order proceeding and shipment.
In order to make their business processes more efficient and managed; the company needed a different
approach. Therefore, it decided to implement a new system called Enterprise Resource Planning (ERP)
system.




Unisys Mainframe System
The Hershey System consists of one or more mainframe units
In addition to the mainframe unit, the Hershey System may consist of one or more satellite units
Disadvantages Unisys Mainframe System:
Looming Y2K Problem
Repairing Legacy Systems is not Cost-Effective
Poor documentation of programs in Legacy Systems
COBOL language a relic of the Sixties
High maintenance and usage costs
Problem of Silos will persist
Lack of integration of different systems



Suite of integrated applications, used to store and manage data from every stage of business
ERP provides an integrated real-time view of core business processes, using common databases maintained by
a database management system
ERP facilitates information flow between all business functions, and manages connections to outside
stakeholders
Pros-
By keeping a company's internal business process running smoothly, ERP can lead to better outputs that
benefit the company
ERP supports upper level management, providing critical decision making information
ERP makes a company more flexible and less rigidly structured so organization components operate more
cohesively, enhancing the businessinternally and externally
A common control system, such as the kind offered by ERP systems, allows organizations the ability to
more easily ensure key company data is not compromised
ERP provides a collaborative platform that lets employees spend more time collaborating on content
rather than mastering the learning curve of communicating in various formats across distributed
systems
ERP Cons-
Customization is problematic
Re-engineering business processes to fit the ERP system may damage competitiveness or divert focus
from other critical activities
ERP cost more than less integrated or less comprehensive solutions.
High ERP switching costs can increase the ERP vendor's negotiating power, which can increase support,
maintenance, and upgrade expenses.
Overcoming resistance to sharing sensitive information between departments can divert management
attention.
Integration of truly independent businesses can create unnecessary dependencies.
Due to ERP's architecture (OLTP, On-Line Transaction Processing) ERP systems are not well suited for
production planning and supply chain management (SCM).
Harmonization of ERP systems can be a mammoth task (especially for big companies) and requires a lot
of time, planning, and money (which we will se in the case)

Pre-selection Process
Package Evaluation
Project Planning
Gap Analysis
Reengineering Configuration
Implementation Team
Training
Testing End- user Training
Going Live
Post implementation
Phase
Hersheys ERP
implementation Life Cycle
Pre evaluation screening Package Evaluation Project planning
Decision for perfect package

Number of ERP vendors

Screening eliminates the
packages that are not at all
suitable for the companys
business processes.

Selection is done on best few
package available.

Package is selected on the basis of
different parameter.

Test and certify the package and
also check the coordination with
different department

Selected package will determine
the success or failure of the
project.

Package must be user friendly

Regular up gradation should
available.

Cost

Designs the implementation
process.

Resources are identified.

Implementation team is selected
and task allocated.

Special arrangement for
contingencies.

Gap analysis Reengineering Team Training
Most crucial phase.

Process through which company
can create a model of where they
are standing now and where they
want to go.

Model help the company to cover
the functional gap

Implementation is going to
involve a significant change in
number of employees and their job
responsibilities.

Process become more automated
and efficient.

Takes place along with the
process of implementation.

Company trains its employees to
implement and later, run the
system.

Employee become self sufficient
to implement the software after
the vendors and consultant have
left
Testing Going Live End User Training Post Implementation

This phase is performed
to find the weak link so
that it can be rectified
before its implementation
The work is complete,
data conversion is done,
databases are up and
running, the configuration
is complete & testing is
done.

The system is officially
proclaimed.

Once the system is live
the old system is removed


The employee who is
going to use the system
are identified and trained.
This is the maintenance
phase.

Employees who are
trained enough to handle
problems those crops up
time to time.

The post implementation
will need a different set of
roles and skills than those
with less integrated kind of
systems.

An organization can get
the maximum value of
these inputs if it
successfully adopts and
effectively uses the
system.

The company was going to face the problems of Y2K bug by 2000
Growing demand from retailers for client/server environment
Retailers wanted to Hershey's to data share data about product deliveries
Retailers wanted to maintain optimum inventory levels and reduce cost (low inventory levels,
less holding cost and better service)

Implementation was made to keep customer in mind
1) enhance our competitiveness
2) enhance customer service
3) system to manage change

Project Enterprise 21 was launched to bring about the above mentioned changes.

Objective Modernisation of hardware and software used by the company
Goals:
- Upgrade and standardize the hardware
- Shift to client/server environment from existing mainframe based environment
- Move to TCP/IP network

The new ERP software was expected to help Hershey reorganise its business process
1) SAP AGs R/3 Enterprise Resource Planning finance, purchasing, material management,
warehousing, order processing and billing
2) Manugistics transport management, production, forecasting and scheduling
3) Siebel- managing customer relationship, pricing module and tracking products.

The three system was integrated by IBM Global Services.
Project management Cost US $110million




1. Big Bang Transition Strategy
Installation of ERP systems of all modules happens across the entire organization at once
All the business functions across the entire enterprise are concurrently transferred to the new
legacy system over a period of few days
It promises to reduce the integration cost in the condition of thorough and careful execution
One of the drawback being it consumes too many resources to support the go-live of the ERP
system




2. Phased Transition Strategy
Autonomous modules of ERP systems are installed in each unit while integration of ERP modules is
done at a later stage of the project
Most commonly used method of ERP implementation where each business unit may have its own
instances of ERP and database
3. Parallel Transition Strategy
It keeps both the inheritance system and the new ERP system active concurrently for a length of
time
Advantageous because the industrys business process will not break if the new ERP system
breakdowns

4. Process Line Transition Strategy
Similar product lines are transferred from inheritance system to the new ERP system one after the
other
This step-by-step success helps to build industrial faith in the new ERP system thereby increasing
its overall prospect of being successful
5. Hybrid Transition Strategy
Combination of any of the implementation strategy like process line, parallel and phasing
implementation strategy
Flexible in adapting to the specific needs of the situation
Industries can exclusively adjust implementations for their needs

Finish date of implementation was kept at April 1999 (offseason for confectionary market)
Hershey installed bar coding system across its products and plants to reduce production cost and track goods
flow
January 1999 financials, material management, purchasing and warehousing have been implemented
Other SAP modules and Manugistics modules were behind schedule
Post April orders started filling in Hersheys transferred from a phased approach to Big Bang approach to
meet Halloween orders
By July orders were twelve days late and by August orders were 15 days late
There were problems in order entry , processing, fulfilment and inventory. In spite of having high inventory at
warehouse the company was facing issues.
What Hersheys did was since it was not able to meet deadlines it shifted to Big Bang
approach
It could not meet orders and the market share and the goods availability was being affected

1. Idealistic Anticipations
Hershey Foods Corporation assumed the new system to perform excellent and made idealistic
expectations.
The company must have miscalculated the time, resources and other key factors to implement the new
system.
The management of Hersheys should have realized that the new system is complicated and tricky.
2. Poor Management
In order to implement ERP system in a perfect approach, the management team should be properly
familiar with scope and dimension of an ERP implementation.
Hersheys did not have a CIO position and nobody to overlook the implementation
Industry analysts of Hershey Foods Corporation concurred that problems in project management were to
blame for the debacle (Gupta and Perepu 2008).
3. Wrong Timing
Hershey Foods Corporation implemented the ERP system at the time of peak season. So the company
did not have enough time to resolve the errors that were produced during the implementation process.
If the company planned to implement the ERP system during normal season and before Halloween then
they would have been able to manage time to solve the problems concerned with the new system.


4. Big Bang Approach
Unlike phased approach, the big bang approach merges all the system together for quick processing
without any testing.
Whereas, phased approach helps in identifying exact mistakes by performing every task thoroughly.
5. Compatibility Issues
The employees were unable to enter data in the new system and the company was facing problems
with the flow of data from the old system to the new one.
This clarifies that the mismatch of some technical components were causing significant blunders in the
business processes of Hershey Foods Corporation.
6. Insufficient Training and Knowledge
In the case of Hershey Foods Corporation, the personnel performing the implementation task might not
have been trained properly.
Since the proper training and knowledge were inadequate, the company failed to recognize errors and bugs
appeared during the implementation process.
Also, the employees were working under a lot of pressure since it occurred during the peak season of
Halloween.
7. Lack of Implementation and Integration Strategy
Three parallel project implementation instead of single focused implementation.
This approach lead to confusion and failed implementation
Also, top management failed to correctly gauge the scope of the project


L. Mohan 27
Case Study - Big Bang Strategy Failure
Nike Says Profit Woes Due To IT
Philip Knight, Nikes Chairman and CEO, blamed the complications arising from the impact
of implementing our new demand-and-supply planning systems and processes for the
shortages of some products and excess amounts of others as well as late deliveries.
Result: Profits Fell Short of Estimate by 33%
I guess my immediate reaction is: This is what we get for $400 million?
Source: Computerworld, March 5, 2001
L. Mohan 28
Some Causes for the Nike Problem
BIG Global Supply-Chain Project
Suppliers in Indonesia, Malaysia, China. A Real Challenge
High degree of Customization
i2s Supply Chain application had to be linked with SAPs ERP and Siebels CRM systems
Wide range of footwear products in a multitude of styles and sizes
Complexity in mapping the supply-chain software to the companys internal business
processes

Source: Computerworld, March 5, 2001

L. Mohan 29
A Success Story: Asian Paints
IT Funded Global Acquisitions
$20M investment in IT
Benefit:
$80M operating cash flow generated over 3 years
Implemented SCM from i2 before ERP from SAP
Inventory Turns: 11.6 in 2002 vs. 6.5 in 1998


Source: Computerworld, March 5, 2001

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SUCCESS

---------
FAILURE

@ ASIAN PAINTS



FACTOR


@ NIKE

Restricted to India

Number of locations

Suppliers across the globe

Decided to install SCM
software before ERP
software

Top management insight

Did not recognize the
complexity of a global Supply
Chain Project

Phased First SCM, then
ERP, last CRM
Implementation strategy

Three packages
simultaneously Nike IT staff
spread thin
Restructured in 1998,
before SCM Project only
modest customization
needed in the software
Organization issues Heavy customization of i2
software to fit Nikes business
processes no pilot test due
to aggressive time-table
i2 played a proactive role -
suggested implementing
smaller modules one at a
time.
i2s role

i2 did not adhere to what it
did usually it adopted a big-
bang rollout approach