ERP Implementation Failure at Hershey Foods Corporation
| Case Code: ITSY059 Case Length: 19 Pages Period: 1980-2007 Pub Date: 2007 Teaching Note: Not Available |
Price: Rs.400 Organization: McKinsey & Company Industry: Consulting Countries: US Themes: Knowledge Management |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In the third quarter of 2000, Hershey Foods Corporation (Hershey), the US based manufacturer of chocolates and sugar confectionary, announced that its revenues increased to US$ 1.197 billion as compared to US$ 1.097 billion in the third quarter of 1999 - an increase of 12%.
During the same period, profits increased by 23% from US$ 87.6 million to US$ 107.4 million.
The company's management and shareholders were pleased at this announcement, as Hershey's 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.
According to Kenneth L. Wolfe (Wolfe), CEO and Chairman, Hershey, "Admittedly, we were in the depths of our shipping difficulties during last year's third quarter.
ERP system, as well as a revamped distribution facility in the Eastern US, were both much improved during this period of high demand for our domestic confectionery business."
Hershey had started revamping its hardware and software infrastructure in 1997. In 1999, Hershey faltered during the final leg of the ERP implementation. Hershey had selected the services of three vendors SAP AG5 (SAP), Siebel Systems6 (Siebel) and Manugistics7 for the project, and some of the modules were implemented as per the schedule by the company in January 1999.
However, the remaining modules which were to be implemented by April 1999 were delayed and were implemented only in July 1999. This overlapped with the time when the company usually started receiving huge orders for the impending Halloween and Christmas seasons.
In order to quicken the implementation process, Hershey opted for Big Bang implementation, where several modules were implemented simultaneously. Some of them could not be tested properly due to lack of time...
Buy this case study (Please select any one of the payment options)
| Price: Rs.300 |
Price: Rs.300 | PayPal (7 USD) |
