Hershey Chocolate Company Yurah Jo Heeyeon Kim Inge

Hershey Chocolate Company Yurah Jo Heeyeon Kim Inge Slijpen

TABLE OF CONTENT ü About Hershey ü Production process ü Operational Issues ²Hershey’s Supply Cain ²Inventory Management and Logistics ²Hershey’s Kisses Packaging Process ü Technological Failure ü Q&A

About Hershey ü 1894: start up to produce sweet chocolate as a coating for his caramels ü 1907: Starts to produce the famous HERSHEY’S KISSES ü 1939: Hershey’s goes to war!! ü Present: ²Leading North American Chocolate manufacturer, non-chocolate confectionery and grocery products ²Exports to over 90 countries ²Approximately 13, 700 employees ²Net sales in excess of $4 billiom

Production Process ü Born in the jungle ü Liquid Chocolate ü Mixing it up ü Perfecting the product ü HERSHEY’S KISSES

Operational Issues

Cocoa Production and Harvesting ü Labor intensive process Working policies are met, especially because cocoa grows large in undeveloped countries with harsh circumstances Related to Hershey’s Corporate Social Responsibility

Supply Chain ü Hershey’s Supplier code of conduct ²Legal Compliance and Business integrity ²Social and Working conditions ²Environment and Sustainability ²Verification and Compliance ²Supplier’s Certification of Compliance

Supply Chain ü Corporate Social Responsibility Framework

Cocoa Production and Harvesting ü Cocoa harvesting industry is famous about its child labor ü Hershey has been accused for exploiting its migrant workers in domestic plants Hershey must take actions!

Dairy industry ü Importance showed by the fact that Hershey first had its own Dairy farm ü Most Dairy farms produce the cattle’s food themselves and grow their own cows ü Milking is done by machines

Dairy industry Concerns ü Animal waste ü Use of hormones ü Animal welfare Hershey has to be very cautious and has to make sure that every supplier is using a rightful regulation and supplier code of conduct in a proper way

Inventory Management and Logistics, problems ü 1996: After acquiring Leaf Candy co. Hershey’s got distribution problems. ü Inefficient distribution process due to small truckload lots increasing inventory inflexible distribution could not support customers needs

Inventory Management and Logistics, solutions ü They decided to open EDCIII ü Taking care of “co-packing” ü Advantages ²Closing of warehouses save money Invested this money in funds to raise flexibility and establish a better distribution network ²By opening new EDC efficiency increased

Hershey’s Kisses Packaging Process

Hershey’s Kisses Packaging Process

Hershey’s Kisses Packaging Process ü Problems ²No mechanisms to align the Kisses ²The knocking of could create damages increase in number of defects increase costs ²A lot of iteration ineffective

Hershey’s Kisses Packaging Process ü Solutions ²Line chocolates beforehand in the process ²Rebuilding the plant

Technological Failure ERP System

Technological Failure Problems Solutions ü Failed to implement its costly ERP system ü 19% drop in profits and 8% decline in stock price ü Overlap with Halloween and Christmas ü Thorough testing ü Pre-implementation ü Create a learning environment to become familiar with the system

Technological failure ü New ERP system SAP was implemented. Integration happened following steps ² Though EDI receiving information about customers ² Delivery data is sent to the TM. It provides also the needed transportation means for the product ordered ² When transportation is settled data is processed to the SAP system ü Increases efficiency and leads to higher customer satisfaction

Any Questions Left? ? Thanks for listening and good luck with your exams