ERP Implementation Failure at Hershey Foods Corporation

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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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Case Details:			Price:
Case Code	:	ITSY059	For delivery in electronic format: Rs. 300; For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges Themes Enterprise Resource Planning
Case Length	:	14 Pages
Period	:	1997-2002
Pub Date	:	2008
Teaching Note	:	Not Available
Organization	:	Hershey Foods Corporation
Industry	:	Confectionary
Countries	:	US

Abstract:

The case examines in detail the reasons behind the failure of ERP implementation at the US based Hershey Foods Corporation. In late 1996, Hershey began modernizing hardware and software systems in the company. The company was running on legacy systems, and with the impending Y2K problems, it chose to replace those systems and shift to client/server environment. As per the original plan, it was to switch over to the new ERP system by April 1999. It chose three software vendors - SAP, Manugistics, and Siebel for implementing different software modules. The project was running as per schedule till January 1999, and when it came to the last leg of implementation, the company faltered and could switch over to the new system only in July 1999.

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Hard pressed for time, Hershey went in for Big Bang ERP implementation which led to several problems pertaining to order fulfillment, processing and shipping. 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. Hershey's revenues dropped by 12% during the third quarter of 1999 compared to the third quarter of 1998. The case explains in detail, the events leading to the failure of ERP implementation and examines the reasons behind it.

Issues:

» Understand the process of ERP implementation in a large organization.

» Study the circumstances that led to ERP implementation failure at Hershey.

» Evaluate the role played by top management in ERP implementation.

» Examine the factors that lead to success or failure of ERP projects.

Keywords:

Hershey Foods, Enterprise Resource Planning, Enterprise-wide Information System, mySAP.com, Legacy Systems, Enterprise 21 Project, Manugistics, SAP Modules, Big Bang Approach, SAP R/3 Software, Inventory Problems, Integration Issues, Program Management, Executive Leadership, Testing and Training Plan

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ERP Implementation Failure at Hershey Foods Corporation

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