Question- Based on the organisation and ERP system identified, provide a detail discussion about the interrelationships among business processes supporting sales and marketing, production and materials management, accounting and finance, and human resources?
Enterprise Resource Planning (ERP) frameworks are business programming frameworks that can be characterized as adjustable, standard application programming which incorporates business answers for the center methodologies (e.g. item arranging and control, stockroom administration) and the principle organization capacity (e.g. bookkeeping, human asset administration) of a venture. Implementing ERP helps to integrate the core operations of the business in one application which helps to maximize the business process efficiency of the organization. Implementing ERP helps the organization to increase the delivery time, productivity, increases the forecasting ability and also helps to improve the quality of the customer service. Using ERP, the organization can manage the relationship with the vendors, suppliers and also employees[1].
The implementation of ERP not only helps the organization to boost its performance but also acts a helping hand for the employees. Using the ERP software, the managers of the organization, get exact data continuous. It additionally helps key leaders of the organization to comprehend their workforce in a superior way – from examining individual execution crosswise over distinctive business locales to picturing the general execution of a whole operational zone. This helps associations to take vital choices as well[2]. By coordinating all business capacities together in one framework, it expands capability of an organization to utilize web as a component of the business methodology. Web-based technology permits the organization to get to data, offer item, run business forms, and impart with clients and accomplices whenever and from anyplace on the plan. By and large, ERP arrangements can serve as a brilliant data apparatus particularly for medium and substantial organizations, for better choice making and fulfilling obliged objectives. Henceforth it’s an absolute necessity for each developing business[3].
This report will highlight the implementation of ERP by Hershey’s Food Corporation and also the failures they have face with the implementation. The paper will focus on understanding the organization by describing the brief about the company, understands the concepts of ERP modules and the integration of the modules will be discussed by focusing on the implementation of ERP modules by Hershey and the outcomes. The paper will be concluded by suggesting ways to improve the issues and also summarizing the overall concept.
The Hershey Company, till April 2005, was known as The Hershey Food Corporation and generally is known as Hershey’s. It is one of the largest manufacturers of chocolates located in Pennsylvania of North America. It is called as the home of Hershey. The organization was established by Milton S. Hershey in the year 1894. The products of Hershey are sold to 60 different countries of the world[4].
For more than 100 years, The Hershey Company has been a pioneer in having a positive effect in the groups where we live, work and work together. The Milton Hershey School, created by the organization’s organizer in 1909, gives a healthy organizational environment, quality training, lodging, and medicinal forethought at no expense to youngsters in social and money related need. The School is regulated by the Hershey Trust Company, Hershey’s biggest shareholder, making the understudies of Milton Hershey School immediate beneficiaries of Hershey’s prosperity[5]
The products of Hershey are exported to 90 different countries through the international division of the organization. The most popular products of Hershey that are sold are Reese’s Peanut butter cups; Hershey’s Kisses, Kit Kat, Twizzlers etc. The sales and revenue of the organization has increased from US $334million in the year 1969 to US $7.15billion in the year 2013[6]. Furthermore, Artisan Confections Company, a completely possessed subsidiary of The Hershey Company, markets such premium chocolate offerings as Starbucks Chocolate, Dagoba and and Scharffen Berger.
The ERP packages contain various modules for all the sectors. The most common modules that every organization generally uses are Sales and distribution, Plant Maintenance, Finance, Quality Management, Inventory Management, Production and Manufacturing Planning[7].
The Financing modules of the most ERP frameworks give money related usefulness and analysis backing to a huge number of organizations in numerous nations over the globe. These ERP frameworks incorporate budgetary application segments, as well as Human resources, Logistics, Business work process and connections to the web[8].
The Inventory management modules allows the organization to manage the quantity of stocks and also value, check, enter and plan the movements of the goods and also helps to carry out the inventory effectively. The module helps to complete the overall procurement process of the material and also helps to proceed with the invoices.
The sales and distribution module ensures that the organization can sustain itself in the competitive environment and also improve the customer service which helps to increase the profit margins. The system enables the supply and mapping of the multi or the single site of the organization and also develops a accurate logistic planning so as replenish the right product and the right time using just-in-time delivery[9].
Materials and Management Module upgrades all obtaining methods with work process driven transforming capacities, empowers computerized supplier assessments, lower procurement and warehousing expenses with exact stock and stockroom administration and integrates receipt confirmation It mainly includes Purchasing, inventory management, verification of in-voice, purchasing and also pre-purchase activities.
Quality Management Module utilizes the framework’s coordination to connection the undertakings of quality management with those of alternate applications, for example, materials administration, generation, deals/conveyance and expense bookkeeping. The module mainly integrates with the applications of Production to evaluate the work scheduling [10]and control, material management to assess the quality of material requirement planning process, purchasing etc.
ERP gives an incorporated perspective of center business forms, regularly continuously, utilizing normal databases kept up by a database administration framework. ERP frameworks track business assets money, crude materials, creation limit and the status of business duties: requests, buy requests, and payroll. The applications that make up the framework offer information over the different offices (assembling, buying, deals, bookkeeping, and so forth.) that gives the data[11]. ERP encourages flow of information between all business capacities, and oversees associations with outside stakeholders.
During 1990s, there was not much demand of IT in the food industry. Thus like other organization Hershey also utilized the Legacy system for various functions starting from human resource to processing the orders etc. The organization expected Y2K problems out of this legacy system. Thus in the year 1996, the Hershey decided to upgrade their legacy IT systems by implementing and integrating with the ERP systems. The organization decided to chose the ERP software, SAP R/3, the SCM (Supply Chain Management) software of Manugistic and also CRM (Customer Relationship Management) software of Seibel. The main goal of this implementation was to standardize and upgrade the software and hardware of the organization and the shift the serve/client environment from the present mainframe to the IPI/TCP network[12].
The SAP module of Hershey included the order processing, billing process, purchasing, financing, material management and the warehousing. The Manugistics software focused on the production, scheduling, forecasting and transport management. The Siebel software was integrated to manage the relationship with the customers by tracking the organization’s marketing effectiveness.
The organization had integrated all the software using the Big Bang approach instead of phased approach which mainly emphasizes on testing the implementation. By executing new programming, Hershey went for better composed conveyances of its items, helping retailers keep up low stock and lessen stock holding costs, and all in all, giving better client administration. The benefit of executing this software is to reorganize the overall core business process, this implementation has also helped in the fine tuning the supplier’s delivery, standardize and upgrade the business process, reduce the inventory cost, order process time, thus boosting the accuracy rate of the inventory. This helps to drive the customer relationship process efficiently and meeting the needs of the customers.
Hershey has a long history of achievement and disappointment, blended with both powerful and poor initiative at the top administration level. In any case, one of the organization’s most paramount disappointments is its starting endeavor to execute ERP. At present, deals are climbing in the midst of a rough economy however Hershey is even now bouncing back from the disgrace of the fizzled ERP usage. Reported deals are least among its rivals, demonstrating Hershey’s requirement for enhancing its generation procedures is absolutely critical. Successful ERP usage coupled with a solid top administration group is one technique for enhancing benefit and expanding deals –both international and domestic.
The organization basically made three mistakes due to which they had to face issues:
Initially when the system was implemented, everything was fine, later on issues relating to request satisfaction, handling and transportation began to emerge. A few transfers were delivered behind calendar, and even those, few conveyances were deficient. Be that as it may, was past the point of no return for Hershey to react othisproblem. The old logistics framework had been set up was pulled down, clearing a path for the new one, which could not function as required without any product. Hershey was often force do ring clients and enquire about the subtle elements of the amount they got and request.
The organization additionally lost valuable rack space, or which there was high rivalry in the business sector. Clients started exchanging to results of contenders like Nestle and Mars Retailers opined that not only transient deals yet long haul deals of Hershey excessively would likewise be influenced. [1]
Thus the implementation of ERP of the Hershey was a nightmare. The overall project was implemented within 30months. This is where the overall system started creating issue. They started facing issues with the order processing due to which there was delay in the shipments. The organization had to face 19% drop in their profit and the inventory raised by 25%. Unfortunately due to improper integration of the all the modules the organization had to face the failure. The implementation team of Hershey’s committed the cardinal error of yielding frameworks testing for the purpose of practicality. Accordingly, basic framework, procedure and information mix issues may have stayed undetected until it was past the point of no return. An alternate mix-up was in booking the usage. They attempted to crush a complex ERP execution venture into an absurd short timetable[2]. Yielding due steadiness for the purpose of convenience is a certain blaze approach to get got. It additionally timed its cutover amid its occupied seasons. It was nonsensical for Hershey’s to expect that it would have the capacity to take care of crest demand when its workers had not yet been prepared.
At the point when exact arranging is attained the dangers to the association are minimized. Studies uncover that a standout amongst the most well-known reasons the execution of progress brings about disappointment is connected to unplanned or under arranged periods of usage. Arranging is pivotal for viable execution of an ERP framework. Notwithstanding, there is no general single purpose of disappointment connected to unsuccessful ERP executions. On account of Hershey, be that as it may, the reasons are straightforwardly connected to endeavors that are effectively cured: unrealistic expectations, timeline flexibility, corporate culture and inadequate training.
The ERP failure can be avoided by if the organization takes the proper decision at the right time. Hershey should have implemented the ERP process during the dull business period that would have not faced such a huge loss due to the errors made. Thus organization should focus on the following procedures[3]:
In conclusion, the report has analyzed the implementation of ERP process by Hershey’s and the issues that the organization had faced with improper testing or managing of the ERP software. It can be said that any organization planning or implementing the ERP has to learn two different lesson from this case, one is the organization should emphasize on the testing every system and processes of the business using the right method intended to reenact sensible working situations and give careful consideration to the booking of ERP. This would help the association to moderate the danger of disappointments and would help them to place themselves in the accomplishment of ERP.
[1]ICFAI,. 2008. ‘ICFAI: ERP Lmplementation Failure At Hershey Foods Corporatio’.Members.Home.Nl. https://members.home.nl/c.schalkx/Cases%20ARP/ERP%20Implementation%20Failure%20Hershey%20Foods%20Corporation.pdf.
[2] Manes, Anne Thomas. 2003. Web Services: A Manager’s Guide. 1st ed. Addison-Wesley Professional.
[3] Adam, Fr’ed’eric, and Peter O’doherty. 2000. ‘Lessons From Enterprise Resource Planning Implementations In Ireland–Towards Smaller And Shorter ERP Projects’. Journal Of Information Technology15 (4): 305–316.
[1] Azevedo, Paula Serdeira, M’ario Rom~ao, and Efig’enio Rebelo. 2012. ‘Advantages, Limitations And Solutions In The Use Of ERP Systems (Enterprise Resource Planning)–A Case Study In The Hospitality Industry’. Procedia Technology 5: 264–272.
[2] S’anchez, Jos’e Luis, and Agustin Yag”ue. 2010. ‘Competitive Advantages Of The ERP: New Perspectives’, 108–109.
[3] Kappos, Antonio. 2000. ‘Organizational Culture And The Achievement Of ERP Strategic Advantages And BPR Performance Improvements’.
[4]Thehersheycompany.com,. 2014. ‘The Hershey Company | The Hershey Company Profile’. https://www.thehersheycompany.com/investors/company-profile.aspx.
[5] Thehersheycompany.com,. 2014. ‘The Hershey Company | News: Andy Mccormick Joins Hershey As Vice President, Public Affairs Andy Mccormick Joins Hershey As Vice President, Public Affairs’. https://www.thehersheycompany.com/newsroom/news-release.aspx?id=1219806.
[6] Marketwatch.com,. 2014. ‘Hershey Co.’. https://www.marketwatch.com/investing/stock/hsy/financials.
[7] Patel, Kanubhai K, and Sanjaykumar Vij. 2013. Enterprise Resource Planning Models For The Education Sector. 1st ed. Hershey, Pa.: Information Science Reference.
[8] Jones, Peter, and John Burger. 2011. Configuring SAP ERP Financials And Controlling. 1st ed. Hoboken: Sybex [Imprint].
[9] Heizer, Jay H, and Barry Render. 2014. Operations Management. 1st ed. Boston: Prentice Hall.
[10] Murthy, C. S. V. 2008. Enterprise Resource Planning And Management Information Systems. 1st ed. Mumbai [India]: Himalaya Pub. House Pvt. Ltd.
[11]Searchsap.techtarget.com,. 2014. ‘What Is ERP (Enterprise Resource Planning)? – Definition From Whatis.Com’. https://searchsap.techtarget.com/definition/ERP.
[12] pemeco.com,. 2014. ‘A Case Study On Hershey ERP Implementation Failure’. Accessed October 17. https://www.pemeco.com/wp-content/uploads/2013/09/Hershey_ERP_Case_Study.pdf.
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