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Pandemic causes Hershey's to pause ERP project

Major parts of The Hershey Co.'s ERP project, notably its supply chain, is being put on hold for a year as the firm adjusts to pandemic-related business needs.

The fallout from the pandemic is changing how people buy The Hershey Co.'s confectionary products, and meeting pandemic-related shifts is now the firm's management focus. The adjustment has resulted in a decision to pause parts of a massive ERP deployment. 

The Hershey's ERP project is intended to streamline its manufacturing and supply chain, among other processes. In 2018, it hired Accenture to implement an SAP S/4HANA platform. And then the pandemic arrived. 

"We are highly focused on managing the pandemic," said Michele Buck, chairwoman, president and CEO at Hershey's, on a recent call with financial analysts. Doing so has led to a reprioritization of resources and what its managers are spending time on, resulting in a one-year delay on some aspects of Hershey's ERP deployment, she said.

The pandemic is delivering an array of business changes, according to Jeff Beckman, a spokesman for Hershey's. It is causing "everyone to work differently, refocus, adjust plans and activities, and think and operate differently," he said. 

Hershey's is delaying its ERP supply chain work and order-to-cash effort but is continuing work on the finance and data aspects of the project. With respect to the latter, a goal of the Hershey's ERP project is to gain real-time customer insights from its data.

The situation at hand

Buck said the company is taking this approach so its "teams can adequately focus on the situation at hand," she said. The selective pause on Hershey's ERP project is prompted in part by the need to have "all our functional experts" focus on critical design phases, she said. 

Michele Buck, chairwoman, president and CEO, The Hershey Co. Michele Buck

Beckman illustrated some of the changes the pandemic has delivered, including that selling to retailers has shifted to online sales and away from "instant consumables" or items bought in grocery stores and at gas stations. "Our manufacturing focus and shipping needs to adjust to these new realities," he said. 

"There is an impact across all aspects of our business," Beckman said. This includes changes for the staff, who are "balancing work with home responsibilities such as childcare and home schooling," he said.

[The pandemic is causing] everyone to work differently, refocus, adjust plans and activities, and think and operate differently.
Jeff BeckmanDirector of corporate communications, The Hershey Co.

What Jonathan Gross, managing director of Pemeco Consulting in Toronto, sees in Hershey's ERP announcement is that key people involved in its reengineering and design phase "are being pulled into the business to help manage a major on-demand shift." 

Hershey's made history in 1999 when an ERP project that involved SAP R/3 and other platforms, ran into problems at its rollout, resulting in a 19% drop in quarterly profits and an 8% decline in stock price, Pemeco said in its case study. Order processing delays hurt the firm's Halloween candy shipments and ultimately its share price. This Hershey's ERP project typically ends up on lists that round up notable ERP implementation failures

That history may make the firm cautious, Gross said. "The board of directors is probably going to be a little bit more sensitive to the fact that they can't have another debacle," he said. But that should be true of all firms, he said. 

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