MIS Hersheys

8/12/2019 MIS Hersheys

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Compiled By:Anubhav Sood 139278056Kapil Saini 139278009Kaustubh Kirti 139278054Rakesh Devadas 139278069Rohan Shukla 139278059


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Milton S. Hershey founded it in 1894 as Hershey Chocolate Company..By 1895, Hershey Chocolate Company was manufacturing more than 114 different varieties of chocBy 1960s, the company became one of the renowned chocolate producers in US.Moreover, to achieve its target the company needed to sell huge quantities of its products that were opossible with highly efficient logistics and supply chain systems.During that period of early 1990s, Hershey was using their legacy systems to support their business such as order proceeding and shipment.In order to make their business processes more efficient and managed; the company needed a differe

approach. Therefore, it decided to implement a new system called Enterprise Resource Planning (ERsystem.


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Unisys Mainframe System

The Hershey System consists of one or more mainframe unitsIn addition to the mainframe unit, the Hershey System may consist of one or more satellite un

Disadvantages Unisys Mainframe System:Looming Y2K ProblemRepairing Legacy Systems is not Cost-EffectivePoor documentation of programs in Legacy SystemsCOBOL language a relic of the SixtiesHigh maintenance and usage costsProblem of Silos will persistLack of integration of different systems


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Pros-By keeping a company's internal business process running smoothly, ERP can lead to bettebenefit the companyERP supports upper level management, providing critical decision making informationERP makes a company more flexible and less rigidly structured so organization components opcohesively , enhancing the business internally and externallyA common control system, such as the kind offered by ERP systems, allows organizations the amore easily ensure key company data is not compromisedERP provides a collaborative platform that lets employees spend more time collaborating rather than mastering the learning curve of communicating in various formats across distributedsystems


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ERP Cons-Customization is problematicRe-engineering business processes to fit the ERP system may damage competitiveness from other critical activitiesERP cost more than less integrated or less comprehensive solutions.High ERP switching costs can increase the ERP vendor's negotiating power, which can incmaintenance, and upgrade expenses.

Overcoming resistance to sharing sensitive information between departments can divert mattention.Integration of truly independent businesses can create unnecessary dependencies. Due to ERP's architecture (OLTP, On-Line Transaction Processing) ERP systems are not wproduction planning and supply chain management (SCM).Harmonization of ERP systems can be a mammoth task (especially for big companies) aof time, planning, and money (which we will se in the case)


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Pre-selection Process

Package Evaluation

Project Planning

Gap Analysis Reengineering

Implementation TeamTraining Testing E

Going Live

Post implementationPhase

Hersheys ERPimplementation Life Cycle


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Gap analysis Reengineering Team Training Most crucial phase.

Process through which company

can create a model of where theyare standing now and where theywant to go.

Model help the company to coverthe functional gap

Implementation is going toinvolve a significant change innumber of employees and their job

responsibilities. Process become more automatedand efficient.

Takes place along process of impleme

Company trains iimplement and latesystem.

Employee becometo implement the sothe vendors and coleft


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Testing Going Live End User Training Post Impl

This phase is performedto find the weak link sothat it can be rectified

before its implementation

The work is complete,data conversion is done,databases are up andrunning, the configuration

is complete & testing isdone.

The system is officiallyproclaimed.

Once the system is livethe old system is removed

The employee who isgoing to use the systemare identified and trained.

This iphase.

Empl

trainedprobletime to

The pwill neroles awith le

system An othe mathese isucceseffectisystem


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The company was going to face the problems of Y2K bug by 2000Growing demand from retailers for client/server environmentRetailers wanted to Hershey's to data share data about product deliveriesRetailers wanted to maintain optimum inventory levels and reduce cost (low invless holding cost and better service)

Implementation was made to keep customer in mind1) enhance our competitiveness2) enhance customer service3) system to manage change

Project Enterprise 21 was launched to bring about the above mentioned changes.


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Objective Modernisation of hardware and software used by the company

Goals:- Upgrade and standardize the hardware- Shift to client/server environment from existing mainframe based environment- Move to TCP/IP network

The new ERP software was expected to help Hershey reorganise its business process1) SAP AGs R/3 Enterprise Resource Planning finance, purchasing, material management,

warehousing, order processing and billing2) Manugistics transport management, production, forecasting and scheduling3) Siebel- managing customer relationship, pricing module and tracking products.

The three system was integrated by IBM Global Services .Project management Cost US $110million


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2. Phased Transition StrategyAutonomous modules of ERP systems are installed in each unit while integration of ERPdone at a later stage of the projectMost commonly used method of ERP implementation where each business unit may havinstances of ERP and database

3. Parallel Transition StrategyIt keeps both the inheritance system and the new ERP system active concurrently for a letimeAdvantageous because the industrys business process will not break if the new ERP sysbreakdowns


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4. Process Line Transition StrategySimilar product lines are transferred from inheritance system to the new ERP system oneotherThis step-by-step success helps to build industrial faith in the new ERP system thereby inits overall prospect of being successful

5. Hybrid Transition StrategyCombination of any of the implementation strategy like process line, parallel and phasinimplementation strategyFlexible in adapting to the specific needs of the situationIndustries can exclusively adjust implementations for their needs


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Finish date of implementation was kept at April 1999 (offseason for confectionary market)Hershey installed bar coding system across its products and plants to reduce production cost and traflowJanuary 1999 financials, material management, purchasing and warehousing have been implemOther SAP modules and Manugistics modules were behind schedulePost April orders started filling in Hersheys transferred from a phased approach to Big Bang appromeet Halloween ordersBy July orders were twelve days late and by August orders were 15 days lateThere were problems in order entry , processing, fulfilment and inventory. In spite of having high iwarehouse the company was facing issues.What Hersheys did was since it was not able to meet deadlines it shifted to Big BangapproachIt could not meet orders and the market share and the goods availability was being affecte


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1. Idealistic AnticipationsHershey Foods Corporation assumed the new system to perform excellent and made idealistic

expectations.The company must have miscalculated the time, resources and other key factors to impsystem.The management of Hersheys should have realized that the new system is complicated and tr

2. Poor ManagementIn order to implement ERP system in a perfect approach, the management team should be propefamiliar with scope and dimension of an ERP implementation .Hersheys did not have a CIO position and nobody to overlook the implementationIndustry analysts of Hershey Foods Corporation concurred that problems in project managemenblame for the debacle ( Gupta and Perepu 2008 ).

3. Wrong TimingHershey Foods Corporation implemented the ERP system at the time of peak season . Sodid not have enough time to resolve the errors that were produced during the implementation prIf the company planned to implement the ERP system during normal season and before Hallowthey would have been able to manage time to solve the problems concerned with the new system


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4. Big Bang ApproachUnlike phased approach, the big bang approach merges all the system together for quick procwithout any testing.Whereas, phased approach helps in identifying exact mistakes by performing every task thorough

5. Compatibility IssuesThe employees were unable to enter data in the new system and the company was facingwith the flow of data from the old system to the new one.This clarifies that the mismatch of some technical components were causing significant blunders business processes of Hershey Foods Corporation.

6. Insufficient Training and KnowledgeIn the case of Hershey Foods Corporation, the personnel performing the implementation task mighave been trained properly.Since the proper training and knowledge were inadequate, the company failed to recognize errors appeared during the implementation process.Also, the employees were working under a lot of pressure since it occurred during the peak seasonHalloween.


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7. Lack of Implementation and Integration StrategyThree parallel project implementation instead of single focused implementation.This approach lead to confusion and failed implementationAlso, top management failed to correctly gauge the scope of the project


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L. Mohan

Case Study - Big Bang Strategy Failure

Nike Says Profit Woes Due To IT Philip Knight, Nikes Chairman and CEO, blamed the complications arising froof implementing our new demand-and- supply planning systems and processeshortages of some products and excess amounts of others as well as late deliveri

Result: Profits Fell Short of Estimate by 33%I guess my immediate reaction is: This is what we get for $400 million?

Source: Computerworld, March 5, 2001


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L. Mohan

Some Causes for the Nike Problem

BIG Global Supply-Chain Project

Suppliers in Indonesia, Malaysia, China. A Real Challenge

High degree of Customization

i2s Supply Chain application had to be linked with SAPs ERP and Siebels CR

Wide range of footwear products in a multitude of styles and sizes

Complexity in mapping the supplychain software to the companys internal bprocesses


A S S A i P i


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L. Mohan

A Success Story: Asian PaintsIT Funded Global Acquisitions

$20M investment in ITBenefit:

$80M operating cash flow generated over 3 years

Implemented SCM from i2 before ERP from SAP

Inventory Turns: 11.6 in 2002 vs. 6.5 in 1998



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----------SUCCESS

--------- FAILURE

@ ASIAN PAINTS FACTOR @ NIKE

Restricted to India Number of locations Suppliers across the globe

Decided to install SCMsoftware before ERPsoftware

Top management insight Did not recognize thecomplexity of a global SupplyChain Project

Phased First SCM, thenERP, last CRM

Implementation strategy Three packagessimultaneously Nike IT staffspread thin

Restructured in 1998,

before SCM Project onlymodest customizationneeded in the software

Organization issues Heavy customization of i2

software to fit Nikes businessprocesses no pilot test dueto aggressive time-table

i2 played a proactive role -suggested implementingsmaller modules one at atime.

i2s role i2 did not adhere to what itdid usually it adopted a big-bang rollout approach


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MIS Hersheys