HERSHEY’S ERP IMPLEMENTATION

 SAP R/3 ERP software

 Supply chain management (SCM) software 
 Customer relationship management (CRM) software

By 1999, Hershey’s Food had a market capitalization of $5billion. As a leading

confectionary company, Hershey’s receives many orders every year. Despite this, Hershey’s
hadn’t invested or innovated in its IT systems. It didn’t take long for Hershey’s to be
pressured by the retailers to create better scheduling delivery systems. To avoid this
pressure, Hershey’s rolled out an ERP system that should have taken 4 years instead of 30
months. Hershey’s ended up being behind schedule during the Halloween season and lost
on sales to Mars and Nestle. Despite Hershey’s having both the on-hand supply and strong
demand, a lack of implementation caused this disaster. Most of the analysis behind the case
stresses the fact that Hershey’s tried implementing too many changes without a well-
planned change management program. An interesting observation in this case has the
importance of IT in the supply chain industry. IT now plays a very significant role in the
successful implementation of a business strategy.

THE KEY FACTS OF THE ERP FAILURE

The Hershey Company began upgrading its patchwork of legacy IT systems into an
integrated ERP system in 1996. Despite a recommended implementation time of 48
months, Hershey’s demanded a 30-month turnaround so that it could roll out the systems
before Y2K. Based on these scheduling demand, the cutover was planned for July of 1999.
In this instance, Hershey’s go-live coincide with the company’s busiest periods – Halloween
and Christmas, when the company received the majority of its orders. In order to meet
Hershey’s aggressive schedule, the implementation team has to compromise on critical
testing of systems phases. During the systems launch in July, 1999, orders failed to flow due
to unforeseen issues. Due to this, Hershey’s could not fulfill orders worth $100 million for
Kisses and Jolly Ranchers, even though it had the majority of the inventory.

Questions
1. What are the problems encountered?
2. What are its implications?
3. What are the reasons for the problem?
4. How they can recover?
5. Conclusion