Hershey's Food Corporation: Erp Failure
REAL CASE STUDY I
Hershey Foods Corporation:
Failure and Success with Information Technology
Point of View
Managerial Point of View
Objective
To examine the reasons behind the SAP AG’S R/3 ERP implementation failure at Hershey’s Food Corporation
Problem
What could have done otherwise to avoid the SAP AG’S R/3 ERP implementation failure at Hershey’s Food Corporation?
Areas of Consideration
In late 1996, Hershey Foods Corporation the leading manufacturer of chocolates, confectionaries and beverages in United States of America began modernizing hardware and software systems in the company. In an attempt to manage Y2K issues, it chose to replace those systems and shift to client/server environment, which suggest that the company had pressing needs which forced the implementation. It was to switch over to the new ERP system by April 1999 as per original plan. It chose three software vendors - SAP, Manugistics, and Siebel for implementing different software modules. The company spent $112 million and 30 months on their ERP project. The project was running as per schedule till January 1999, and when it came to the final phase of the implementation, the company faltered.
Time pressed, they went live in July 1999 which led the company experienced several problems pushing orders through the system, resulting in shipping delays and deliveries of incomplete orders. The retailers who ordered for Hershey's products could not get them on time, 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, Hershey's revenues dropped.
Many reasons have been cited for the Hershey ERP failure. One, the project was originally scheduled to take four years, but the company forced the implementation to go live in just 30 months. Two, the company simultaneously implemented a customer-relations package and a logistics package, largely increasing the overall complexity and employee
Hershey Foods Corporation:
Failure and Success with Information Technology
Point of View
Managerial Point of View
Objective
To examine the reasons behind the SAP AG’S R/3 ERP implementation failure at Hershey’s Food Corporation
Problem
What could have done otherwise to avoid the SAP AG’S R/3 ERP implementation failure at Hershey’s Food Corporation?
Areas of Consideration
In late 1996, Hershey Foods Corporation the leading manufacturer of chocolates, confectionaries and beverages in United States of America began modernizing hardware and software systems in the company. In an attempt to manage Y2K issues, it chose to replace those systems and shift to client/server environment, which suggest that the company had pressing needs which forced the implementation. It was to switch over to the new ERP system by April 1999 as per original plan. It chose three software vendors - SAP, Manugistics, and Siebel for implementing different software modules. The company spent $112 million and 30 months on their ERP project. The project was running as per schedule till January 1999, and when it came to the final phase of the implementation, the company faltered.
Time pressed, they went live in July 1999 which led the company experienced several problems pushing orders through the system, resulting in shipping delays and deliveries of incomplete orders. The retailers who ordered for Hershey's products could not get them on time, 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, Hershey's revenues dropped.
Many reasons have been cited for the Hershey ERP failure. One, the project was originally scheduled to take four years, but the company forced the implementation to go live in just 30 months. Two, the company simultaneously implemented a customer-relations package and a logistics package, largely increasing the overall complexity and employee