Hershey’s Food Corporation: Erp Failure

REAL CASE STUDY IHershey Foods mountain Failure and Success with study Technology Point of View managerial Point of View Objective To allow in apart the reasons behind the SAP AGS R/3 ERP executing misfortune at Hersheys Food croupe Problem What could present siree opposite than to avoid the SAP AGS R/3 ERP executing trial at Hersheys Food commode? Areas of Consideration In late 1996, Hershey Foods Corporation the leading manu incidenturer of chocolates, confectionaries and beverages in get together States of America began modernizing hardwargon and calculator software remainss in the follow.In an attempt to manage Y2K issues, it chose to regenerate those schemas and convert to client/server environment, which suggest that the comp all had pressing take ins which forced the capital punishment. It was to dislodge over to the in the altogether ERP governance by April 1999 as per original plan. It chose three software vendors SAP, Manugistics, and Siebel for implementing different software modules. The company spend $112 million and 30 months on their ERP consider. The toil was running as per schedule till January 1999, and when it came to the final phase of the capital punishment, the company faltered.Time pressed, they went conk come in in July 1999 which led the company experienced several(prenominal) problems pushing orders through the trunk, resulting in shipping delays and deliveries of incomplete orders. The retailers who ordered for Hersheys products could non get them on term, even though the company had ample supplies stocked at its warehouses. However, it was too late for Hershey to respond to this problem. As a result, Hersheys revenues dropped. Many reasons have been cited for the Hershey ERP failure. One, the determine was originally scheduled to take quatern historic period, but the company forced the implementation to go live in retributory 30 months.Two, the company simultaneously apply a customer-relati ons package and a logistics package, for the most part increasing the overall complexity and employee tuition curve. Three, the company went live at their busiest time of the year, fitting out front Halloween, and the resulting delays caused profits to fall. though SAP was blamed for Hersheys disaster, the companys circumspection viewed it differently. Hence, the slip away centering of the company as salutary as indus seek analysts began looking at other reasons for the problems at Hershey.Alternative Courses of Action 1. in the protrudening opting to position a new ERP musical arrangement, try to consider upgrading your old adjustment of system rather than instantly launching for a new one. Before trying to replace those systems and shifting to new ones, try to experience the factors affecting or contributing to succeeder and failures that you might encounter along the implementation. label the drives low gear before devising a decision. Also before opting to depl oy a new system, try to calm first the phases of its implementation before red on live.Make sure that the old version of system is running stand cool off during the first phase of implementation of the new system. Lest the new system suddenly fall short, you still have the old version of system to back you up during mid-operations. 2. never have multiple vendors within one estimate. ERP systems essential be installed in a much staged manner, especially when applications from multiple vendors are involved. Roll out the modules in stages and dont attempt to implement other applications simultaneously. 3. Choose the right time for implementation.Implementing it in a wrong time is a messed up. The company would have very thoroughly avoided this trouble if only they thought of leaving ahead with ERP during those occasions when the craft assist in the whole market experiences a slow chance uponment. And never went to the extent of disbursal the whole time and efforts on implem enting ERP. This leave disrupt the normal functioning of the stock and creates confusion in the company. Since attention was only diverted to ERP it was not possible to determine the uncertainties that emerged in the argumentation as a result of ERP. . hard-hitting testing and scheduling. stiff testing in an ERP implementation tidy sum lessen exposure to failure risks and damages. Never opt to quicken the implementation surgical operation, where several modules are implemented simultaneously. The company mustiness ensure that the system is fully well-tried and ready for implementation. If possible, plan the ERP project to go-live go steady during the companys slow periods. Effective scheduling is important in ERP implementations because the process is lengthy, complicated and delays can increase huge costs.However, counselling must review almost the need for extending the timeline to ensure success of the project. TOWS Threats ERP carrying into achieve in Hershey Fo ods Corporation can be a difficult, time-consuming, and expensive project for the company. The technology is tightly integrated and requires a committal from all division. It can take years to complete and cost risks. Moreover, there is no guarantee of the outcome. If not properly be after for, the investment may drive Hershey out of business. Opportunities Hershey made efforts to stabilize SAP and other systems. Hersheys recent upgrade of its ERP system to R/3 version 4. was correct 20 percent under cipher and without any of the order processing and product-shipment disruptions that impair the initial $112 million rollout in 1999. It was fitted to make more than 30 improvements to its upshot business processes within 60 old age of going live.The company cited enhancements such as the automation of pick-list processing and materials management greenback verification, plus credit processing for distributors to soldiery customers. These improvements have helped reduce costs and speed up up processing times. It has in like manner achieved a near-zero-defect production environment with R/3 4. and is using SAPS business analysis tools to measure the impact of gross sales and marketing programs as they happen. Weakness Hershey wouldnt specify whether the problems stemmed from its configuration of the system or the software itself. The top management of the company as well as industry analysts began looking at the reasons for the problems at Hershey. Though SAP was blamed for Hersheys disaster, the companys management viewed it differently Hershey decided to take shortcuts since the project was originally scheduled to take quaternary years, but the company forced the implementation to go live in just 30 months.Thus, Hersheys experiences illustrate the fact that most troubled ERP rollouts are caused by project management issues, not untimely software. Strengths By experiencing this kind of failures Hershey Foods Corporations IT Staff was able to exceed its oral communication commitments for the project because of strong program management and executive leadership, diligent planning and an massive testing and training plan. This time the implementation underwent extensive testing. Hershey made sure to take the time and resources to thoroughly test the computer systems.Conclusion Consider alternative course of action no. 1 Failures in major(ip) business/IT projects continue to occur to bountiful companies like Hershey Foods Corporation with so much IT expertise and financial resources. These mistakes cost the set in the long run. Hershey has learned precious lessons from their SAP implementation and these lessons are to move slower and be more methodical. The lessons learnt can as well serve as indication for failure or failure by driving you out of the business path.Hersheys failure should caution any company that chooses to implement such commodious application and make sure that system will function smoothly before entering peak sales period. there is one final aspect to be considered in any degree of project failure. All success is rooted in either luck or failure. If you come out with luck, you learn nothing but arrogance. However, if you begin with failure and learn to evaluate it, you also learn to succeed. Failure begets association. Out of knowledge you gain wisdom, and it is with wisdom that you can beget truly successful.Recommendation Before committing to a special ERP software package, companies like Hershey Foods Corporation need to take the time to evaluate their ERP needs. They need to define in advance 1. How they lack to run their business? 2. What problems need to be resolved? 3. What are their priorities? 4. What are the flow processes what works and what doesnt in the implementation plan? 5. What software will high hat resolve their problems, meet their goals and priorities?