Hershey Foods Inc
By David F. Carr | Posted 2002-12-16
Was it a fluke? In September, Hershey Foods said it had completed an upgrade to mySAP.com—on schedule and below budget.
It was a significant turnaround for a company that had become an example of how not to do a major software project. In 1999, Hershey stumbled while rushing to
complete an enterprise systems overhaul, with a new SAP implementation at its core.
Basic order management and fulfillment processes broke down, causing the company to fail to meet many retailers' orders. The immediate impact was
about $150 million in lost sales for the year. The damage to sales and retailer confidence lingered into early 2000.
Hershey is still reluctant to discuss what happened and what caused it; the company declined repeated requests for interviews from Baseline over the
past year, and asked SAP and Accenture (which helped with the mySAP implementation) not to talk, either.
But we gathered insight from insiders and former employees, and from some public statements Hershey has made about its supply-chain
improvements. Here's a look at three things that went wrong at Hershey—and the subsequent lessons learned.
#1: The Big Bang">
What Went Wrong #1: The Big Bang
The overriding problem appears clear: Hershey was simply trying to do too much at once. In cosmology, the Big Bang theory tells us the universe sprang into
being in an instant, wiping out everything that went before. In Hershey's case, it was the old logistics systems that had allowed it to do business for years that were
wiped out in a flash.
In late 1996, Hershey's management approved what came to be known as the Enterprise 21 project, which would largely replace legacy mainframe systems with
new enterprise client/server software. Enterprise 21 was partly a Year 2000 project, allowing Hershey to scrap rather than repair legacy software that might not
process date-related procedures correctly after the turn of the century. But the new...