Easter bunnies and candy make me remember Hershey’s Halloween Hell. Apparently, I’m not alone, since the ERP channel recently wrote about the same topic.
With Easter egg hunts, chocolate rabbits, and spring in the air, there couldn’t there be a more perfect time to remember our friends at The Hershey Company (NYSE: HSY). Except, of course, if it were Halloween.
Hershey sure remembers the bad Halloween of 1999, when the company couldn’t ship candy, all because their ERP implementation didn’t work. Here’s what CFO magazine had to say about that fateful time:
Last July was a hot month in Pennsylvania, but the IT managers at Hershey Foods Corp. headquarters, in Hershey, Pennsylvania, were feeling a different kind of heat. For the past three years, they and four different teams of consultants had been working on a massive enterprise resource planning (ERP) software system from SAP AG and two other software vendors that would put the company’s operations on one integrated computing platform. The $115 million system would replace scores of legacy systems that were currently running everything from inventory to order processing to human resources. They were three months behind schedule, and itching to flip the switch on the project. It would all go live simultaneously across the enterprise with one big bang.
Big bang? Big flop. By mid-September, the company was still trying to fix glitches in its order-processing and shipping functions. During the busiest season of the year, big customers like WalMart and Kmart were loading up on extra Halloween candy from competitors like Mars and Nestlé, while Hershey warehouses piled up with undelivered Kisses, Twizzlers, and peanut-butter cups. The upshot: third-quarter sales dropped by a staggering 12.4 percent compared with last year, and earnings were off 18.6 percent.
According to ComputerWorld, the problems were only related to order entry and fulfillment, and did not involve manufacturing. So, the company actually produced lots of chocolates, but it piled up in the warehouse. Oops. Bummer, dude. In addition to their SAP system, Hershey was also implementing Siebel and Manugistics at the same time. To SAP’s credit, they did step in to help solve the problems. For the record, IBM was the lead consultant on the project. In ComputerWorld, IBM said that the implementation involved lots of change. Yeah, I suppose that would be right.
So, today we learned an important lesson: never take your bunnies for granted. Did we learn anything else? I think we learned that the truth is sometimes stranger than fiction.