Hershey Foods Corporation

Hershey Foods Corporation was founded by Milton Hershey in 1894 with the help of Joy Royer, a candy maker at Pennsylvania. In early 1990s the Hershey’s sales increased to about $4.4 billion, as a result of the rapid growth of the chocolate Industry. By 1906 Hershey Foods Corp became a multibillion dollar company, as a result of its large scale operations (Carr, 2002). Availability of funds strengthened its position and it became the chief supplier of candy products in the U.S., which also enabled it to fund orphanages. For efficient production and sale of its products, Hershey must embrace the use of technology in its logistics systems to survive competition in the modern business world.

 Hershey’s 21 project’s goals, as stipulated by Rick Bentz, include upgrading and standardizing of its hardware and replacement of mainframe based legacy systems with the client-server network (Carr, 2002). For a company to perform well, it must manage customer relations and effectively track its marketing activities. The goals would help the company reduce its inventory costs and improve mass business operation strategies to curb competitions.

The company planned to integrate Manugistics Group Inc. software with EPR system acquired from SAP AG of Germany to aid in the transport management, production forecasting and scheduling, and installation of bar-coding systems (Koch, 2002). New SAP system was put in place for faster completion of the project. However, the cutover strategy led to high costs. Problems emerged when customers could not get the candy products due to the failure of the cutover strategy. The company suffered loss of sales, especially during peak seasons, and their profits greatly declined with the freight charges and warehousing costs escalating (Songini, 2000).

 The problems were caused by instant conversion processes and lack of qualified personnel. To prevent the losses, Hershey could have taken time to test and analyze the systems instead of the cutover strategy as well as train and educate its staff on the new systems. Hershey should rely on extensive marketing and advertising expenditures to gain market share opportunities and reach the level of Leapfrog Company.