Case 1

ERP implementation is an expensive exercise. Apart from the cost of the application and the hardware and software platforms, a considerable amount of expensive input will be required from the suppliers and consultants in design, build, data-loading, implementation and training activities. Despite the expected benefits, the cost of installing such a system may lead to a temptation to trim costs by omitting expenditure required to address the business continuity issues.

Hershey Foods Corporation, the leading chocolate manufacturer in the United States, experienced difficulties with the $115 million ERP it was implementing. Among other things, its ability to ship goods during the peak Halloween season in 1999 was hampered.

The ERP project was a major one, designed to replace scores of legacy systems that had been running everything from inventory and order processing to human resource information systems. It was expected to impact on virtually every facet of the companys operations.

Hershey had spent up to three years implementing the system, well supported by a number of teams of consultants. There were problems as they went along.

During the busiest season of the year, customers such as Wal-Mart and Kmart had no option but to start topping up their orders with product from Hersheys competitors.

Meanwhile, Hersheys warehouses were piling up with stock.

It is reported that third-quarter sales in 1999 dropped by 12.4 per cent compared with the previous year, and that earnings were down 18.6 per cent.

During the period of difficulties with the system:

• typical delivery times went from five to twelve days;
• there was a 29 per cent increase in year-to-year inventory costs;
• relationships with customers became strained;
• customers replaced usual supplies with other brands;
• rivals boosted their sales considerably.

Question 1: Where did Hershey Food Corporation went wrong.

Question 2. what measures should Hersheys management taken to overcome the disaster situation and to continue with their functioning and operations.

PLEASE SEND ASAP. NO COPY PASTE