Essay about IME6140 2013 Hershey Final

Submitted By soulmechanic
Words: 1106
Pages: 5

The Milk Chocolate
“Uh Oh”
Hershey Foods Corporation
ERP Implementation Failure
Bobby Robinette | Carlos Herrera| Hector Tapia | Steve Zeigler

Enterprise

21

The Team…

Bobby
“Jolly Rancher”
Robinette

Carlos
“Cookies ‘n’ Cream”
Herrera

The Team… continued

Hector
“Ice Breaker”
Tapia

Steve
“White Chocolate”
Zeigler

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Hershey Food Corporation

Hershey Food Corporation

Hershey Food Corporation

Hershey Food Corporation

Sales of $334M USD

Y2K

2012

Sales of $6.6B USD

ERP Implementation …

Hershey Food Corporation

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Enterprise Resource Planning (ERP)
• Suite of integrated applications
• Information readily available and easily visible
• Can help a business with:
– Material shortages, productivity enhancements, customer service, cash management, inventory problems, quality problems, prompt delivery, etc

ERP Visualized
Financial
Management

Customer
Relationship
Management

Human
Resource
Management

ERP
System

Supply Chain
Management

Manufacturing
Resource
Planning

Why ERP for Hershey?





Legacy System
Shared data to customers
Need for improved supply chain system
Y2K Concerns

Hershey ERP Selection
• SAP AG’s R/3 Enterprise Resource Planning suite
– Finance, purchasing, materials management, warehousing order processing, and billing

• Manulogistics
• Software for transport management, production, forecasting and scheduling.

• Siebel
– Manage customer relations, track effectiveness of marketing. Hershey ERP Selection
• IBM Global Services
– Integration company

• $110M USD Estimate
• April 9th 1999 – Original project plan completion date • Project Name:

Enterprise

21

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

ERP Risk Management
• ERP projects affect the whole organization
– Large scale, complexity, impact, and cost

• Typically associated with changing business practices “We redesigned the whole business process with the customer in mind. We’re implementing this No. 1 to enhance our competitiveness, and No. 2 to enhance our customer service.”
– Kevin Costello , Enterprise 21
Project Team Member (Hershey)

Enterprise

21

Risk Management – Known Risks
• Information Systems Known failures

Key Risks in ERP Implementation, Eugene A. Khvalev (2011)

Probability and Impact
• Risk = P + (2 * I)
• Risk and Probability are a number 1-5

Risk Management
“Project cost and time overruns can occur because of lack of a measurement system for assessing and controlling project risk” (Ewusi-Mensah, 1997).

• Risk Management can help prevent a big mess
• Hershey did not do a good job of Risk management Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Agenda








Hershey Food Corporation
What the “ERP”?
Risk
Schedule
Cost
Integration
Conclusion

Schedule Plan

Jan. 1996:
Roll out of the plan
-

Modernize hardware and software Replace legacy system with SAP R3

Jan. 1997
Implementation start
-

Replace 5000 desktop computers New TCP/IP network
Switch to Client/Server applications April 1999
Enterprise 21 live
-

Enhance Competitiveness
Enhance customer service Network Planning Model (CPM)

Network Planning Model (CPM)

Network Planning Model (CPM)
25
2
5
Total time:
48 Month

3
3

What went wrong

1. Squeezed Deadline
• Project originally schedule to last 48 month
• Company management forced the implementation to
30 month.
• Project become three…