Hershey Foods ERP Implementation Lora Cherrybon Infsy 489

The Beginning • 1996 – Enterprise 21 Project • 1999 – January- Implementation Began – April- Hershey planned to switch to the new systems – July- actual time that switch was made

Effects • “As few as 10 percent to 15 percent of ERP implementations have a smooth introduction that delivers the anticipated benefits” ~ A. Blanton Godfrey- Chairman and CEO of the Juran Institute. • Hershey missed its fourth-quarter numbers, and its stock price plummeted. • $150 million in lost sales.

What went wrong? • The “Big Bang” • Unentered Data • No Leadership

The “Big Bang” • Big Bang Theory- Tells us the Universe sprang into being in an instant, wiping out everything that went before • Trying to do too much at once – SAP & companion packages activated simultaneously

• Hershey squeezed what was originally envisioned as a four-year project into just 30 months before going live with the full ERP system in July. • Direct cut-over strategy • September 1999 - too late to go back.

Unentered Data • Product inventories up 29% • “Hershey had always, over the years, been very good at crisis management, and they would put candy everywhere they could to store it in anticipation of the peak-season. They weren’t used to having to tell the computer about it. ” ~ Alan Stenger- professor at Penn State’s Center for Supply Chain Research

No Leadership • Management needed to understand how much effort, both in systems development and organizational change, would be required for success. • They lacked this understanding. • Overwhelming details

Decision to Upgrade • Fall 2000 - Hershey said it had fixed most of the initial problems with the ERP system. • 3. 1 H to 4. 6 C • June 2001 • Goals of testing process: – Ensure functionality – New methodology & repository for testing future SAP projects – No negative Impact

Success!!! • Upgrade finished in May 2002 – 11 month time frame – 20% under budget • 30 improvements within 60 days • “Near-Zero Defect” production environment • IT staff able to exceed its delivery commitments

References • • • Carr, David F. (2002). Hershey’s Sweet Victory. In Baseline: The Project Management Center. Retrieved February 14, 2005, from http: //www. baselinemag. com/print_article 2/0, 2533, a=34733, 00. asp Commonwealth of Pennsylvania, Office of Administration (2002, June). Imagine PA June Communique – Edition, 2002. Retrieved February 14, 2005, from http: //www. ies. state. ps. us/imaginepa/cwp/view. asp? A=7&Q=127242 Hoffman, Kurt C. (2001). Hershey Kisses Its Supply-chain Inefficiency Good-bye. In Supply. Chain. Brain. com. Retrieved February 14, 2005, from http: //www. glscs. com/archives/4. 01. hersheys. htm? adcode=5 Stedman, Craig. (1999). Failed ERP Gamble Haunts Hershey. In Computer World. Retrieved February 14, 2005, from http: //www. computerworld. com/printthis/1999/0, 4814, 37464, 00. html Weiss, Todd R. (2002). Hershey Upgrades R/3 ERP System Without Hitches. In Computer. World. Retrieved February 14, 2005, from http: //www. computerworld. com/printthis/2002/0, 4814, 74008, 00. html Wheatley, Malcom. (2000). ERP Training Sti. Nk. S. In CIO Magazine. Retrieved February 14, 2005, from http: //www. cio. com/archive 060100_erp. html