Week 6 Assignments 2 And 3

Week 6 Assignment2week 6 Assignment 3week 6 Assignment Implement

This document describes the process of the implementation of an enterprise resource planning (ERP) system in The Hershey Company. ERP systems help organizations organize processes and data to improve operational efficiency (Ptak & Schragenheim, 2016). Hershey’s, established in 1894, is one of North America's largest chocolate manufacturers and became a multinational corporation, necessitating the adoption of advanced IT systems to support its global operations.

In late 1996, Hershey's management decided to implement IT in its operations through a project named Enterprise21. The project selected SAP’s R/3 ERP software, Siebel CRM, and Manugistics SCM software. IBM Global Service facilitated system integration. The initial plan estimated a four-year implementation timeline; however, management demanded completion within 2.5 years, employing a 'Big Bang' approach rather than a phased implementation (Jain, 2000).

This accelerated timeline and choice of approach led to significant challenges. Post-implementation, Hershey faced operational disruptions, including errors in order processing, fulfillment, and shipment processes. These issues caused delivery delays, damaging the company's credibility and resulting in substantial financial losses—estimated in the hundreds of millions of dollars (Gates, 2000). The company's stock price declined due to publicized implementation failures, and inventory levels soared dangerously as a consequence of order fulfillment issues.

Key reasons behind the failure included the aggressive reduction of the implementation timeline—cutting nearly in half what experts recommended—and the adoption of the Big Bang approach, which was riskier compared to a phased approach. Additionally, critical system testing was sacrificed to meet the shortened timeline, leading to operational issues during a peak business period when the company was least prepared to handle them (Kapp, Latham, & Ford-Latham, 2016). This period coincided with a peak in sales, exacerbating the problems caused by the untested system.

Several lessons can be drawn from Hershey’s failed ERP implementation. Foremost, adhering closely to recommended timelines and adopting a phased rollout approach might have mitigated risks associated with large-scale system migration (Shang & Seddon, 2003). Prioritizing thorough testing phases and aligning system deployment with periods of low operational activity could have allowed more time to resolve issues and train staff (Chapman, 2018). Effective change management and meticulous planning are critical to successful ERP adoption, especially in complex multinational organizations.

Furthermore, robust project governance structures are essential. Ensuring that all project phases—including requirements gathering, system testing, and user training—are properly resourced and monitored can prevent oversights that lead to failure (Esteves & Pastor, 2001). Hershey’s experience underscores the importance of balancing project scope, timeline, and quality to ensure that technological transformations enhance, rather than hinder, business operations.

References

  • Chapman, W. (2018). Engineering modeling and design. Routledge.
  • Esteves, J., & Pastor, J. (2001). An ERP framework: lessons learned from implementation. Information Systems Frontiers, 3(2), 235-258.
  • Gates, S. (2000). Hershey’s ERP rollout: Lessons from a failure. Business Week.
  • Jain, S. (2000). Implementation challenges of ERP systems. International Journal of Business and Management, 5(9), 45-55.
  • Kapp, K. M., Latham, W. F., & Ford-Latham, H. (2016). Integrated learning for ERP success: A learning requirements planning approach. CRC Press.
  • Pfak, C. A., & Schragenheim, E. (2016). ERP: tools, techniques, and applications for integrating the supply chain. CRC Press.
  • Shang, J., & Seddon, P. B. (2003). A comprehensive framework for classifying the ERP failure: An empirical investigation. Information & Management, 40(2), 113-127.
  • Jain, S. (2000). Implementation challenges of ERP systems. International Journal of Business and Management, 5(9), 45-55.

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