ERP Implementation Failure at Hershey Foods Corporation

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Case Details:

Case Code : ITSY059
Case Length : 14 Pages
Period : 1997-2002
Pub Date : 2008
Teaching Note :Not Available
Organization : Hershey Foods Corporation
Industry : Confectionary
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Background Note

Hershey was founded by Milton Hershey (Milton) as Hershey Chocolate Company (HCC) in 1894. Before establishing HCC, Milton underwent a four year apprenticeship with a candy maker in Lancaster . In 1876, he established a candy store in Philadelphia, which was closed by 1882. He then moved to Denver, where he learnt making caramel using fresh milk...

IT and Systems Case Studies | Case Study in Management, Operations, Strategies, IT and Systems, Case Studies

Implementing ERP

Hershey priced its products low, and to achieve sales of almost US$ 5 billion, huge quantities of the products needed to be sold. This called for highly efficient logistics and supply chain systems duly supported by information technology (IT). In the early 1990s, the spending on IT in the food and beverage industry was among the lowest...

The Problems

Initially, the rollout appeared to be smooth. But slowly, problems pertaining to order fulfillment, processing and shipping started to arise. Several consignments were shipped behind schedule, and even among those, several deliveries were incomplete. However, it was too late for Hershey to respond to this problem...

What Went Wrong?

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 Hershey's debacle, the company's management viewed it differently...

Bouncing Back

After the debacle, Hershey made efforts to stabilize SAP and other systems. The company appointed a CIO, George Davis from Computer Sciences Corporation. Under his leadership, a rigorous software testing program was implemented...

Exhibits

Exhibit I: Hershey's Products
Exhibit II: Hershey - Stock Price Chart (1998 - 2002)
Exhibit III: Hershey Foods Corporation - Statement of Income

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