• IntroductionIntroduction• Need for an ERP implementationNeed for an ERP implementation• IT PartnersIT Partners• The PlanThe Plan• Actual OutcomeActual Outcome• What went wrong?What went wrong?• LearningsLearnings• Hershey today – The turnaroundHershey today – The turnaround

• One of the leading chocolate manufacturer across world.One of the leading chocolate manufacturer across world.

• Large chunk of sales from Valentine’s Day, Easter, “back to Large chunk of sales from Valentine’s Day, Easter, “back to school,” Halloween and Christmas – 40% of profit.school,” Halloween and Christmas – 40% of profit.

• Need of an efficient and reliable logistics system to cater to Need of an efficient and reliable logistics system to cater to these large no of seasonal requirements .these large no of seasonal requirements .

• Reliable product availability is critical.Reliable product availability is critical.

• A network of 19 manufacturing plants, eight contract A network of 19 manufacturing plants, eight contract manufacturers and more than 20 co-packers.manufacturers and more than 20 co-packers.

• The company was running on legacy systems, and with the The company was running on legacy systems, and with the impending Y2K problems, it chose to replace those systems impending Y2K problems, it chose to replace those systems and shift to client/server environment.and shift to client/server environment.

• To tackle Y2K problem Hershey decided to replace existing To tackle Y2K problem Hershey decided to replace existing legacy systems.legacy systems.

• A $112 million worth of combination of softwares for CRM, A $112 million worth of combination of softwares for CRM, ERP and forecasting.ERP and forecasting.

• Replace existing mainframe based legacy systems by SAP R3 – Replace existing mainframe based legacy systems by SAP R3 – Accenture.Accenture.

• Production forecasting, scheduling and transportation Production forecasting, scheduling and transportation management – Manugistics Group Inc.management – Manugistics Group Inc.

• Managing customer relations and tracking effectiveness of Managing customer relations and tracking effectiveness of marketing activities– Siebel CRM.marketing activities– Siebel CRM.

• Fine-tune deliveries to suppliers.Fine-tune deliveries to suppliers.

• Upgrade and standardize companies business processes.Upgrade and standardize companies business processes.

• Efficient customer driven processes capable of managing changing Efficient customer driven processes capable of managing changing

customer needs.customer needs.

• Reduce order cycle times and boost inventory accuracy.Reduce order cycle times and boost inventory accuracy.

• Reduce inventory costs.Reduce inventory costs.

• Better execution of business strategy of emphasizing core mass Better execution of business strategy of emphasizing core mass

market candy business.market candy business.

Unable to deliver $100 million worth of Kisses and Jolly Ranchers Unable to deliver $100 million worth of Kisses and Jolly Ranchers

for Halloween in 1999.for Halloween in 1999.

Stock price down 35% Stock price down 35%

Earnings drop 18% Earnings drop 18%

Order fulfillment time doubled to 12 days! Order fulfillment time doubled to 12 days!

Lost prominent shelf space for the season!!! Lost prominent shelf space for the season!!!

Several consignments were shipped behind schedule, and even Several consignments were shipped behind schedule, and even

among those, several deliveries were incomplete.among those, several deliveries were incomplete.

““Enterprise software isn’t just software. It Enterprise software isn’t just software. It requires changing the way you do business.”requires changing the way you do business.”

Squeezed deadlines:Squeezed deadlines:– Project originally scheduled for 4 yearsProject originally scheduled for 4 years– Company forced the implementation to 30 monthsCompany forced the implementation to 30 months

Wrong timing:Wrong timing:– The company went live at their busiest timeThe company went live at their busiest time– Released the solution just before the HalloweenReleased the solution just before the Halloween

Big-Bang Approach:Big-Bang Approach:– To quicken the implementation process, Hershey opted for Big Bang To quicken the implementation process, Hershey opted for Big Bang

implementation.implementation.– Simultaneously implemented a customer-relations package and a logistics Simultaneously implemented a customer-relations package and a logistics

package even without testing some of the modulespackage even without testing some of the modules– Increased the overall complexity and employee learning curveIncreased the overall complexity and employee learning curve

Un-entered data:Un-entered data:– ““Surge Storage” capacity not recorded as storage points in the ERPSurge Storage” capacity not recorded as storage points in the ERP– Orders from many retailers and distributors could not be fulfilled, even though Orders from many retailers and distributors could not be fulfilled, even though

Hershey had the finished product stocked in its warehouses.Hershey had the finished product stocked in its warehouses.

Successful Successful ERPERP

Hershey made sure to take the time and resources to thoroughly Hershey made sure to take the time and resources to thoroughly test the computer systems. test the computer systems.

Testing included putting bar codes on empty pallets and going Testing included putting bar codes on empty pallets and going through the motions of loading them onto trucks so that any kinks through the motions of loading them onto trucks so that any kinks would be worked out before the distribution center opened for would be worked out before the distribution center opened for business.business.

Began work on the upgrade to mySAP in July 2001.Began work on the upgrade to mySAP in July 2001. Hershey Foods said it had completed an upgrade to mySAP.com — Hershey Foods said it had completed an upgrade to mySAP.com —

completed in 11 months, 20% under budget… completed in 11 months, 20% under budget… Hershey now has an inventory location accuracy of 99.96 % and can Hershey now has an inventory location accuracy of 99.96 % and can

turn orders within 24 to 48 hours of receiving an order as opposed turn orders within 24 to 48 hours of receiving an order as opposed to the previous 10-plus days that it took.to the previous 10-plus days that it took.

Opened in 2000, to help custom pack some products at its Opened in 2000, to help custom pack some products at its distribution centers, removing co-packers from the chain.distribution centers, removing co-packers from the chain.

To strengthen the overloaded physical logistics infrastructure.To strengthen the overloaded physical logistics infrastructure.

To help with errors in forecasting. To help with errors in forecasting.

Enabled by WMS from Mc Hugh DM+.Enabled by WMS from Mc Hugh DM+. In its few short months of operations, EDC III nearly has In its few short months of operations, EDC III nearly has

halved the company’s order-cycle times of a year ago while halved the company’s order-cycle times of a year ago while dramatically boosting inventory accuracy. dramatically boosting inventory accuracy.

Revenues of nearly $5 billion and almost 13,000 employees Revenues of nearly $5 billion and almost 13,000 employees worldwide.worldwide.

In 2005 & 2006, Hershey acquired the Berkeley, California-In 2005 & 2006, Hershey acquired the Berkeley, California-based boutique chocolate-maker Scharffen Berger, Joseph based boutique chocolate-maker Scharffen Berger, Joseph Schmidt Confections, the San Francisco-based chocolatier and Schmidt Confections, the San Francisco-based chocolatier and Dagoba Organic Chocolate, a boutique chocolate maker in Dagoba Organic Chocolate, a boutique chocolate maker in Oregon.Oregon.

Markets Markets Hershey's, Reese's, Hershey's Kisses, Kit Kat, Hershey's, Reese's, Hershey's Kisses, Kit Kat, Twizzlers, and Ice Breakers. Twizzlers, and Ice Breakers.