Sample Aviation Business Plan Paper on Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP)

Organization and business operation

There are several organizations that have experienced bad reputation because of ERP. Several global leaders in business have experienced the ERP challenge. It might be a result of the complex social contexts that influences heavily the ways in which ERP is being used and implemented. One organization that has experienced various ERP scandals is Hershey Foods Corporation which spent about $112 million on enterprise resource planning. However, the project ended up blowing up. During the Halloween season and back-to-school period, the company began to experience severe problems with order fulfillment. The result was orders not being properly processed and deliveries being delayed while others were incomplete. This led to the drop in the profit margin by 19%. It was because the company could not deliver close to $100 million Halloween Kisses which caused their stock to drop by 8 percent (Wailgum, 2009). The problem was as a result of poor information flow between various applicants.

The software

 The main softwares comprised of SAP’s R/3 ERP, Customer relation management of Seibel software and Manugistic supply chain management (SCM). The main aim of the company was to roll the systems before the Y2K in a period of 48months for implementation (Gross, 2011). It therefore decided to do it by 30months which was a huge risk. It began by going live with its SAP software to process orders and make bills and later used Manugistics for scheduling and planning. On the other hand, Siebel’s software use was to promote the prices on the packages (Gross, 2011). However, the ordering process failed to work during Halloween season making it hard to make any fulfillments. It shows that the software was off-the-shelf and could not operate as expected. The applications of the customers were not properly integrated because of the poor communication of the softwares leading to friction and errors. It was therefore not easy to access information for the company to remain efficient as expected during Halloween period. There were no hardware problems with the system meaning that only the software caused the problem.

The root of the problem (what went wrong?)

Critical data, system integration and processing problems were not detected by Hershey and by the time they realized, it was late to make proper adjustments. Another mistake that the company made was project timing. It decided to squeeze a project such as ERP which is complex in a short timeline. This was unreasonable and uncalled for leading to all the problems experienced. The timing was also not good based on the schedule. The company decided to time to cut the operations during a period the peak season when it was going to be busy. It was therefore impossible to meet the demands of the peak (Gross, 2011). The employees could not handle the pressure while at the same time they were not trained to use the new system. This led to decline in performance.

The expected cost

The expected cost was $100 million which Hershey was to process for Kiss and Jolly orders during the Halloween period (Wailgum, 2009). In the end, the revenues dropped by 12% because of the increased damages which were too great.

Getting up and running

After a rocky situation and failure of ERP implementation, currently, Hershey’s sales are on a rise. However, the company is still experiencing rocky economy because of the stigma that is associated with the ERP implementation failure. In this regard, their sales are still lower compared to their competitors such as Nestle (Manes, 2003).  Hershey is working towards improving production strategies.

Scheduled delay

The scheduled delay for the project was 18months but it purposed to do it in 30months instead of 48months.

What could have been done?

Hershey could have not reduced the time for implementing ERP because the process was complex. On the other hand, it could have trained its employees first before coming up with a new system. It could have also improved flow of information requesting the clients to bear with them and explaining the reasons for the delays (Manes, 2003).

References

Gross, J. (2011, March 9th). A case study on Hershey’s ERP implementation failure: The importance of testing and scheduling. Pemeco Consulting.

Manes, TA. (2003). Web services: A manager’s guide. London: Addison-Wesley Professional.

Wailgum, T. (2009, March 24). 10 famous ERP disasters, dustups and disappointments. CIO