Hershey's ERP: Goals, Customization, and Change Management Analysis

This report provides a detailed analysis of Hershey's ERP implementation, examining the company's key goals, the advantages and disadvantages of system customization, and the critical importance of effective change management. Hershey aimed to increase efficiency, reduce costs, improve collaboration, and gain a competitive advantage through its ERP system. The report explores the pros and cons of customizing the ERP system, emphasizing that while customization can address unique business processes, it also introduces complexities and challenges during upgrades. The analysis highlights the crucial role of change management in ERP implementation, emphasizing the need for a dedicated team, stakeholder involvement, effective communication, and employee training to mitigate resistance and ensure successful adoption of the new system. The report uses specific examples from Hershey's experience with SAP ERP, Seibel CRM, and Manugistic SCM to illustrate these points and to provide insights into how the company could have improved its implementation process.

ERP Assignment
Name of the Course
Student Name

1. What are the key goals Hershey wanted to achieve using an ERP system?
The key goals that any company want to achieve through ERP systems is increased efficiency
of the business processes, cost reduction, improved collaboration among the departments,
competitive advantage and key functionalities. There is no dearth of companies like IBM,
General Motors, Emerson Electric, Cummins that have achieved many benefits by
implementing ERP in a successful manner but at the same time there are numerous examples
of ERP failures also. Hershey was using a traditional legacy systems that do not provide
much collaboration among the business processes. For example, each department was
purchasing their own software based on their requirement that result in huge communication
gap between the departments as well as result in the redundant data entry in multiple systems.
On the other hand, ERP systems consists of different modules like Purchasing and sourcing,
Order and quote management, Customer relationship management, Accounts Payables,
General ledger, Human resource, Supply Chain planning and these systems are based on the
flow of the data from 1 system to another which encourages collaboration as well as provide
the visibility of upstream and downstream processes (Ranjan, Jha, & Pal, 2017). In ERP
systems, as soon as the order management tem ships the customer orders, account receivables
will become active and accounts were informed to invoice the customer. This will
automatically create the process flow and thus streamline the entire business process. Apart
from it, ERP systems were also consisting of workflows to effectively manage the business
approvals. Hershey was also looking to improve its inventory turnover rations, better supply
and demand planning, accurate forecasts, and better accuracy in customer fill rate and
accurately promising dates to the customer so as to increase the customer satisfaction (Aloini,
et al., 2016). Apart from this, the business climate has become very competitive and cost
reduction is one of the areas to improve margins. ERPs often streamline the business
processes, reduce manual efforts of entering data again and again in different systems and

also speeds up the order processing cycles, purchasing cycles, automate the various activities
and thus reduce the costs (Conteh, & Akhtar, 2015). Apart from it, ERP systems captures the
huge data and can also provide the key performance indicators by taking data from various
modules. This will help in decision making as well as identifying the areas of improvement.
Further, ERP systems automatically creates the income statement and many other reports by
directly taking data from the system.
2. Discuss the pros and cons to customising the system. Use examples relevant to
Hershey.
Customization means changing the standard ERP package to suit to your needs. Generally,
ERP packages consists of industry best practices ingrained in standard business processes and
thus it is not recommended to change the standard way of doing things however there are
some cases when customizations are absolutely necessary. For example, if any organization is
having very unique business process or the business process is a source of competitive
advantage for the organizations and it is not supported by the ERP packages, it makes sense
to customize the ERP systems however for every single case, it is not advisable to customize
the ERP but instead change the business process and align it to the standard ERP way
(Narayanamurthy, & Gurumurthy, 2017).
The pros of customizations is that organizations can continue to use their existing business
processes if they are not supported by the ERP systems and sometimes it is possible that
custom process is even better than the standard process flow configured in ERP system.
Apart from it, customization of the process will lead to easy acceptance among the people
because they are comfortable in that manner and not much training is needed.
However, there are also large number of issues associated with the ERP systems. For
instance, customization means changing the package and thus require technical expertise and

are expensive to build and maintain. Apart from it, ERP systems releases their upgraded
versions time to time and customizations are not supported during the upgrades. They need to
be redesigned every time during upgrade (Fryling, 2015). Apart from it, custom process also
impacts the performance and processing speed of the ERP systems. Thus, it is recommended
that organizations should go for customizations only in extreme cases where there is no other
alternative. The better approach is to change the business process and align it to ERP way. In
case of Hershey, it decided to implement SAP ERP systems, Seibel Customer relationship
system and Manugistic’ supply chain management systems. Though each of the software is
best in class but integrating them requires customization that have led to many problems
because different software have different formats and also needs changes in all the software
to accommodate input and output from each other. This has increased the complexity and any
upgrade in any of the software may require rebuilding the integration. Thus, maintenance of
such systems is quite a difficult task even after a Go live. Also, in case of any issues, different
vendors will blame each other’s products and will not accept the bug in their systems.
3. How should Hershey have handled change management during ERP
implementation?
Hershey should have defined the entire change management team headed by the project
champion like in six sigma projects. It is because ERP projects are also very complex projects
that requires huge changes. ERP implementation project require huge changes in the way user
works and users often resists the new systems because it is the human tendency to resist
change that challenge their existing way of doing things. Thus, Hershey should first of all
have identified that the change management is one of the critical success factors of ERP
implementation project.
Change management team should have identified the key stakeholders of the project and
must have involved them in the decision making. For instance, Hershey management was so

much in a hurry that although consultants emphasis that it will be a 4 year project, it still
decide to complete the project much before that. Also, In order to do so, testing and training
needs of the employee is neglected.
Change management team should have include all the stakeholders like employees,
consultants and management and tries to bridge the gap among all of them. Employees are
the end users of the ERP systems and unless they accept the new product, it is going to be a
disastrous. Change Management team should have also bring the top management on the
board to explain to the employees about the benefits of the ERP systems and why they are
needed and also ensure the employees that their job is not threatened by ERP in any way
(Chaushi, & Dika, 2016). Change management team should also have published the training
and testing calendar so that the employees should be ensured of the organization’s support in
learning the new technology. Communication is one of the most important pillar of the
successful organization and thus it should been handled in an effective way with the full
support from the top management. Employees have to be ensured that they are the ultimate
drivers of the project and this project will only go live once they will be satisfied and familiar
with the new software. They should also be given ample time to test the new systems before
it will go live (Malinowska, & Rzeczycki, 2017). Apart from it, instead of taxing existing
employees with extra work load, new team should be identified consisting of experienced
people that will work on the ERP project along with the consultants in a full time basis. If
that would not have been possible, incentive should be given to the people for undertaking
extra work to keep them motivated.

References
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Conteh, N. Y., & Akhtar, M. J. (2015). Implementation challenges of an enterprise system
and its advantages over legacy systems. International Journal on Computer Science and
Engineering, 7(11), 120.
Fryling, M. (2015). Investigating the effect of customization on rework in a higher education
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Malinowska, M., & Rzeczycki, A. (2017). IMPLEMENTATION OF THE ENTERPRISE
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