ERP IMPLEMENTATION FAILURE AT HERSHEY FOODS CORPORATION
Hershey is one of the oldest chocolate companies in the United States, and an American icon for its chocolate bar. The Hershey Company, known until April 2005 as the Hershey Foods Corporation and commonly called Hershey's, is the largest chocolate manufacturer in North America. Its headquarters are in Hershey, Pennsylvania, which is also home to Hershey’s Chocolate World. Milton S.Hershey founded it in 1894 as the Hershey Chocolate Company. Hershey's products are sold in about sixty countries worldwide.
In the third quarter of 2000, Hershey Foods Corporation announced that its revenues increased to 1.197$ billion as compared to 1.097$ billion in the third quarter of 1999 an increase of 12%. During the same period, profits increased by 23% from 87.6$ million to 107.4$ million. Revenues and profits for the third quarter of 1999 as well as for the year 1999 as a whole had been adversely affected due to problems related to ERP systems implementation in the company. Hershey had started changing its hardware and software infrastructure in 1997.Hershey had selected the services of three vendors: SAP AG, SIEBEL SYSTEMS and MANUGISTICS for the project. They overlapped with the time when the company usually started huge orders for Halloween and Christmas seasons and in order to quicken the implementation process, Hershey chose Big Bang implementation were several modules were implemented simultaneously. Due to lack of time some of them could not be tested property and this led to several problems related to order management and fulfillment, also the order from many distributors could not be fulfilled. The ERP implementation failed, with significant drop of 12% in the revenues for third quarter of 1999.
* Background note:
Hershey was founded by Milton Hershey as Hershey Chocolate Company (HCC) in 1894. Before establishing HCC, Milton underwent a for year apprenticeship with a candy...
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