Hershey’s ERP Implementation Essay: Solution Application Of Hershey’s ERP Implementation.

Discuss about the Solution Application of Hershey’s ERP Implementation.

The present business scenario is characterized by high competitiveness and efficiency in operations. The companies are implementing different kind of software and technological solutions to automate the process to increase efficiency and productivity. ERP (Enterprise resource planning) is kind software that assists a business organization to streamline different applications and back office functions related to software, technology, human resources or business operations. It is integrated application software that worked on real time and supports all the major functions of an organization. As a result, several business organizations implement this software to enhance the organization’s performance. Although ERP software requires considerable efforts and time period for successful implementation, most of the organizations have implemented it to increase to increase their operational performance (Bradford, 2015).

The implementation of the ERP system is desirable as it streamlines all the business operations and provides solutions to the resource planning. It results in fewer requirements of the resources and high profit margin due to the increased efficiency. Using ERP system assists a business organization to achieve its targets which results in happy customers and repeated business. However, the implementation of ERP encompasses various requirements such as budget, communication with all the employees regarding the change, training and development of the employees and modification in the existing processes of the company to support the introduction of the new software. Therefore, several times, the implementation of the software becomes unsuccessful and failure (Shacklett, 2016). In the resent report, the failure of the implementation of ERP system in Hershey has been explored, the root causes for the problem are defined, solutions to the problem are explored and an implementation or action plan is formed to combat the situation.

In 1996, Hershey, a leading confectionary manufacturer company took strategic decision to implement ERP software to integrate the business operations in the different departments of the company. The scheduled time for the software implementation was four years; however, the company wanted to implement the software before the year 2000. It resulted in the implementation of the software in the organization in December of 1999. Due to several testing and scheduling issues, the implementation of the ERP software failed.  The failure of the software was at the prime time of the company’s business, as during Christmas and the New Year, company receives several orders.  Hershey was unable to fulfill these orders due to technical glitches which resulted in huge financial loss to the company (Pemeco Consulting, 2013).

Problem Definition

The major issues in the implementation of the ERP software were testing and scheduling of the software. In software systems as large and as complicated as ERP system, testing of the software is important to find anomalies and technical issues in the software. If the ERP software is not tested before implementation, it can halt the whole system. However, several times, due to the lack of time, software testing is neglected. The result is complexities in the software which are very difficult to eradicate and disruption in the whole system. Several times, the companies conduct testing without employing the best testing practices which also creates several technical issues at a later stage (Wallace and Kremzar, 2002).

Defining the problem is considered as the most crucial step in the problem solving. There are several methods available to assist a person in defining the problem and understand it. It is important to realize the underlying causes of the problem to generate its solutions. If the problem is not defined clearly; the generated solutions will not be able to address the situation and the problem persists. In this regard, the problem is defined using 5Ws tool. In this tool, 5Ws (What, Where, When, Who and Why) clarifies and sheds light on the nature of the problem and its major components.

Porter’s Value chain Analysis: Porter’s Value chain analysis is the most appropriate tool for examination of the internal activities of the organization. A company can examine the most valuable internal sources and the sources which can be improve to enhance the competitive advantage of the firm (Ijioui, Emmerich and Ceyp, 2007).

(Figure: Jurevicius, 2013)

(Source: https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html)

Primary Activities

Inbound Logistics: The Company has long relationships with most of the suppliers. It has a developed strong supply chain and has transportation and storage warehouses for storing the raw material.

Operations: It operates in a large number of countries and exports confectionaries all across the world. However, till 1996, there was no automation of services which resulted in low efficiency. 

Outbound Logistics: It has a strong supply chain that supports the outbound logistics of the company.

Marketing and Sales: The Company invests in intensive marketing and has acquired a substantial consumer section with it.

Services: It provides high quality products to the customers.

Support Activities

Firm Infrastructure: It has well-designed infrastructure. The company lags behind in technology.

Human Resource Management: It has a committed workforce; however, technical workforce is limited which can be examined by the lack of

Solution Generation

Procurement: The Company maintains high standards in its procurement.

Technology: Hershey lags behind in technology.

From the analysis, it can be defined that the major issue for the company is that it is lagging behind in technology. Another major reason for ERP system failure is lack of management knowledge, implementation strategy, scheduling and testing methods.

In any strategy that is focused on the finding solution to a problem, solution generation is the next step. At this stage of problem solving, all the possible approaches to solve the problem are explored. The most common methods of solution generation are fishbone diagram and brainstorming. 

Fishbone Diagram:

The fishbone diagram, also known as Ishikawa diagram or cause effect diagram is a very common problem solving tool. The main purpose of this diagram to get to the root or the underlying cause of some situation. It could be used for both good or bad situations.  The fishbone diagram examines a process with all the factors working on it separately. It is used to examine cause-effect relationship between different variables.

Figure:  Fishbone Diagram for Hershey

Brainstorming for Solutions

Brainstorming was developed in the 1930s by Alex Osborne to encourage people to find solutions in a creative manner.  It is the process of encouraging a group of people to generate maximum ideas in a minimum span of time. It is an invaluable method in problem solving as the several times brainstorming results in brilliant ideas. It is also an enjoyable and fun activity; however, the downside of brainstorming is that several of the solutions generated by brainstorming are impractical (Robson, 2002).

1. Employee Training for operating ERP software
2. Consulting with management regarding the problems that may arise after quickening the pace.
3. Making a proper implementation plan for the software.
4. Employees should be communicated regarding the benefits of software to reduce employee resistance
5. Hiring technical experts from outside for steady implementation of the software

It could be analyzed from the situation that there are several solutions that can be used to solve the problem. However, in the present report the best fit solution will be selected for the implementation.

The next step in the problem solving process is to identify the appropriate solution. It is important that all the major stakeholders of the decision making process participate in it so that the best solution for all the stakeholders  is extracted. There are a number of tools used for finding the appropriate solution. Some of them are  Affinity diagram, decision matrix and Pareto analysis. In the present situation, the decision matrix is used for the decision making process  A Decision matrix assists business owners, leaders and managers to take the correct decision. It represents the benefits and shortcomings of each decision in a matrix form. It is a quantititave method that examines the relation between strategies and their imact (Zarate, Kersten and Hermandez, 2014).

It could be analyzed from the situation that development of an implementation plan will be the best fit solution to this situation. The implementation plan of the ERP software will have a detailed discussion  regarding the implementation schedule, resource requirements and testing methods. It will also include methods of employee training and alignment of the new software with the systems of the organization.

As per the above discussion, the best method to approach the problem of the failure of the ERP system is to develop an implementation plan before introducing the sytem in the cmany. Previously, the ERP system failed in Hershey due lack of testing and schedule planning. As result, during the busiest time of the year, the company lost its substantial business as the employees do not have knowledge how to operate the system (Vidgen, 2002). In this regard, an implementation plan will be developed for smooth integration of the system in the organization’s operations:

• Firstly, in the implementation plan, all the stakeholders will be invited to input their viewpoint. The major stakeholders include the management, employees, supliers and technical team. In addition to it, the technical experts should be hired externally so that no technical issue emerge at a later stage. The vendor of the ERP software and the software developers should also be included so that all the essentialities are covered in the implementation plan.
• Secondly, the implemetation plan should also include other details such as scheduling plan and testing of the software. It should cover in detail the testing schedules, testing tools and verification and validation of the software. The plan should also include the details regarding the importance of every step so that the management can easily be conviced and the budget allocated.
• Thirdly, the implementation plan should also include employee training and employee communication. Several times, it is seen that the employees resist the implementation of new software and technologies; however, acknowledging them the benrfits of the tehnollogy will make them more acceptable towards it. In addition to it, the employee training regarding the new software will assist them to learn how to operate them easily. The  company can provide on-the-job training or employee mentoring for teaching the employees regarding the operations of the new software (Werner and DeSimone, 2011).

Conclusion

In the present organizational context, ERP system is essential to enhance the productivity and efficacy of the organization. As a result, the organizations are adoptin this system. However,  a proper implementation plan is necessary for implementation of any new system. In the case of Hershey, the quick implementation of the ERP system led to its failure and cost the company a huhge amount of business. In this report, the failure of the ERP system in the compny is explored by 5Ws and th Porter’s value chain to identify the root cause of the system failure. It was analyzed that lack of testing and the scheduling plans lead to the failure of theERP implementation. Subsequently, a number of solutions were explored through brainstorming and  fishbone diagram. The best solution was identified by the decision matrix as development of implementation plan. Then after an action plan  to develop implementation plan document s suggested.

References

Bradford, M. (2015). Modern ERP: Select, Implement, and Use Today's Advanced Business Systems. Lulu.com.

Ijioui, R., Emmerich, H. and Ceyp, M. (2007). Strategies and Tactics in Supply Chain Event Management. Springer Science & Business Media.

Jurevicius, O. (2013). Value chain analysis. Strategic Management Insight. Retrieved 15 December 2016 https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html

Pemeco Consulting. (2013). A case Study on Hershey’s ERP Implementation Failure: The importance of Testing and Scheduling. Retrieved 15 December 2016 https://www.pemeco.com/wp-content/uploads/2013/09/Hershey_ERP_Case_Study.pdf

Robson, M. (2002). Problem-solving in Groups. Gower Publishing, Ltd.

Shacklett, M.E. (2016). Before implementing ERP, understand its many components. Search Manufacturing ERP. Retrieved 15 December 2016 https://searchmanufacturingerp.techtarget.com/feature/Before-implementing-ERP-understand-its-many-components

Vidgen, R. (2002). Developing Web Information Systems: From Strategy to Implementation. Butterworth-Heinemann.

Wallace, T.F. and Kremzar, M.H. (2002). ERP: Making It Happen: The Implementers' Guide to Success with Enterprise Resource Planning. London: John Wiley & Sons.

Wealleans, D. (2001). The Organizational Measurement Manual. Gower Publishing, Ltd.

Werner, J.M. and DeSimone, R.L. (2011). Human Resource Development. Cengage Learning.

Zarate, P., Kersten, G. and Hermandez, J.E. (2014). Group Decision and Negotiation. A Process-Oriented View: Springer.