Erp Implementation at Hersheys: Case
ITSY/0059
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IBS Center for Management Research
ERP Implementation Failure at Hershey Foods Corporation
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This case was written by P. Indu, under the direction of Vivek Gupta, IBS Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
2008, IBS Center for Management Research. All rights reserved.
To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.org
ITSY/059
ERP Implementation Failure at
Hershey Foods Corporation
“The Hershey debacle is not an indictment of ERPs per se, but it should caution any company that chooses to implement such a broad suite to make sure that system will function smoothly before entering a peak sales period.”1
– Chain Store Age, in 1999.
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“There is no doubt that 1999 was a most difficult and disappointing year for Hershey Foods
Corporation. While the year got off to a slow start due to excessive retail inventories, we fully expected a strong finish in the second half of the year. Instead, the implementation of the final phase of the Corporation’s enterprise-wide information system created problems in the areas of customer service, warehousing and order fulfillment. These difficulties were exacerbated by our growth in recent years which had resulted in shipping capacity constraints. As a result, Hershey’s sales and earnings fell well short of expectations for the year.”2
– Kenneth L Wolfe, Chairman & CEO, Hershey Foods Corporation, in 1999.
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INTRODUCTION
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In the third quarter of 2000, Hershey Foods Corporation3 (Hershey), the US based manufacturer of chocolates and sugar confectionary,
CO
PY
IBS Center for Management Research
ERP Implementation Failure at Hershey Foods Corporation
D
O
N
O
T
This case was written by P. Indu, under the direction of Vivek Gupta, IBS Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
2008, IBS Center for Management Research. All rights reserved.
To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally,
Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org
www.icmrindia.org
ITSY/059
ERP Implementation Failure at
Hershey Foods Corporation
“The Hershey debacle is not an indictment of ERPs per se, but it should caution any company that chooses to implement such a broad suite to make sure that system will function smoothly before entering a peak sales period.”1
– Chain Store Age, in 1999.
CO
PY
“There is no doubt that 1999 was a most difficult and disappointing year for Hershey Foods
Corporation. While the year got off to a slow start due to excessive retail inventories, we fully expected a strong finish in the second half of the year. Instead, the implementation of the final phase of the Corporation’s enterprise-wide information system created problems in the areas of customer service, warehousing and order fulfillment. These difficulties were exacerbated by our growth in recent years which had resulted in shipping capacity constraints. As a result, Hershey’s sales and earnings fell well short of expectations for the year.”2
– Kenneth L Wolfe, Chairman & CEO, Hershey Foods Corporation, in 1999.
T
INTRODUCTION
D
O
N
O
In the third quarter of 2000, Hershey Foods Corporation3 (Hershey), the US based manufacturer of chocolates and sugar confectionary,
References: 1. Mary E. Thyfault, Stuart J. Johnston, Jeff Sweat, The Service Imperative, www.informationweek.com, April 01, 1999. 2. Goodbye, Willy Wonka; Hello, R/3, Computerworld, October 04, 1999. 3. Emily Nelson, Kiss Your Hershey Treats Goodbye, ZDNet News, October 29, 1999. 4. Craig Stedman, Failed ERP Gamble Haunts Hershey, Computerworld, November 01, 1999. 6. Andrew Osterland, Blaming ERP, CFO Magazine, January 01, 2000. 7. Jake Sanchez, Don’t Let Systems Melt in your Hands, Inter@ctive Week, March 27, 2000. 8. Marc L Songini, Halloween Less Haunting for Hershey this Year, Computerworld, November 06, 2000. 12. Eric Wahlgren, The Digital Age Storms the Corner Office, BusinessWeek Online, September 06, 2001. 13. Jim Romeo, ERP: On the Rise Again, www.networkcomputing.com September 17, 2001. 14. Information Systems Upgrade at Hershey Foods Powers Business Transformation, Hershey Foods Corporation, Press Release, August 29, 2002. 15. Cliff Saran, Hershey Succeeds with SAP at Second Try, September 05, 2002. 16. Todd R Weiss, Marc L Songini, Hershey Upgrades R/3 ERP System Without Hitches, Computerworld, September 09, 2002. November 15, 2002. 22. The Hershey Company Annual Reports, 1999-2002.