Business Operations Management Case Study: The Hershey Company

This case study provides a comprehensive analysis of the Hershey Company's operations management. It begins with an overview of the company's products, including its iconic chocolates and baked goods, and discusses its historical performance and market position. The study then examines the company's product uniqueness, highlighting its diverse product range and innovative branding strategies. A significant portion focuses on Hershey's supply chain strategy, emphasizing its focus on efficiency, cost reduction, and the use of technology to streamline operations. The case study also explores various ways Hershey maintains a competitive edge, such as mergers and acquisitions, human resource management, packaging innovation, and a focus on healthy products and snacks. The analysis draws on various sources, including market reports and academic research, to provide a detailed understanding of Hershey's business strategies and operational practices.

Operations management in business

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Contents
Type of products being produced by the company................................................................................2
Company’s performance in the past few years......................................................................................2
Product uniqueness................................................................................................................................3
Focus on Supply Chain Strategy............................................................................................................3
Ways to maintain a competitive edge....................................................................................................4
References.............................................................................................................................................6

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Type of products being produced by the company
Hershey was established in 1894. Hershey is an American multinational company
producing chocolates. Other than the chocolates, Hershey also produces baked products like
cakes, cookies, drinks, milkshakes and more. Hershey chocolates are available in more than
sixty nations. The company has attained success based on the’ help-the-other-fellow’
principle. Hershey has been producing some products over a hundred years ago like Hershey
Bar and Hershey Kiss. 85% of the products sold by the company are produced in the US. The
product category of Hershey involves baking, bars and minis, syrups and toppings, kisses,
Hershey’s and bites. Since chocolate is the main product of the company. The chocolate
range comprises milk chocolate bar, special dark mildly sweet chocolate bar, air delight
chocolate bar, milk chocolate with almond bar, cookies and cream bar, miniatures, extra dark
chocolates, candy bar and more. The company believes in offering goodness in every bite.
Hershey uses simple ingredients to produce its products. Hershey is even approved to
manufacture products of Cadbury products along with the Kit Kat bar and Rolo candies. Kit
Kat bar and Rolo candies are possessed by Nestle.
Company’s performance in the past few years
Hershey is a foremost player in the confectionery industry. The company is getting
superior with every passing year. The company grew a CAGR (Compound Annual Growth
Rate) of 4.9% in 2009-2014 and reached to $198.4 billion. Further, the market grew at a
CAGR of 2.7% between 2015-2019. Moreover, Hershey is a top player in the US
confectionery market and ranks second in Canada. In the last twenty years, Hershey has
accomplished twelve acquisitions. The company is attaining success regularly by trading
innovative products and strong association with the retailers which drive success and profit
growth (Loss, Zellner & Migoya, 2017). The capability of the company to synthesize various
data sources offer the company a complete picture of significant trends, category, and
complete retail environment. Effective floor sets and product mix has assisted Hershey to
increase sales in the past few years. The seasonal items have been a unique growth driver for
Hershey. Such products are on the front counters in the stores and become an addition to the
deliberate purchases. The company is striving to offer exclusive and distinctive products with
ties to the seasons.
Hershey has made various acquisitions and the most significant takeover made is
‘Modelez International’ in 2016. Hershey generates an annual revenue of $7.515 B in 2017

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which was 1.01% increase from the previous year. 2018 resulted in attaining an annual
revenue of $7.791 B which was a 3.67% increase from 2017. A 2.51% increase was realized
in the annual revenue of 2019 which led to $7.986B Macrotrends, 2019). At the end of 2019,
Hershey’s revenue was $2.068B, a 4.04% increase year over year. The sales of the company
are growing progressively. Along with this Hershey is putting in perspective, constantly
changing, continually evolving and looking at change as an opportunity, not as a challenge.
Product uniqueness
Hershey is one of the oldest and largest American chocolate manufacturers. The
company is having differentiated products and a great number of variations in the gum and
candy business. Hershey is having exclusive products, supply chain, and technology. The
innovative products and strong associations with the retailers are driving the sales and profit
growth of Hershey (Du & Wang, 2018). Hershey is an innovative and creative chocolate
brand. Hershey has branded itself in various ways and has initiated various new things
comprising Hershey’s chocolate world, different packaging types used and various types of
chocolates. Hershey is having more than fifty product variants which are deliberated a huge
collection for a chocolate manufacturer. Hershey is having automation of activities bringing
consistency of quality to the products. It has enabled Hershey to scale up and scale down
reliant on the demand existing in the market (Davis, et al. 2019).
To maintain product quality, Hershey has maintained standards that ensure the quality
of the products. The suppliers are required to complete preventive actions in the appropriate
period and document CAPA plans with the verification.
Focus on Supply Chain Strategy
Hershey is focused on the supply chain which assists the company in attaining
competitive advantage. The supply chain is all about making the appropriate product at the
appropriate quality at the precise cost and deliver it to the accurate place at the right time.
Hershey is having reliable suppliers offering raw materials, it enables the company to
overcome supply chain bottlenecks. The company aims to streamline supply chain operations
and form a modest cost structure. The company has even changed its supply chain design and
analytics. Therefore, the company has even selected a seller of supply chain design software,
LLamasoft. It has rationalized the supply chain of Hershey and geared toward the internal
competence with the great level view of the operations. It has enabled the company to detect
a flaw in the internal disciplines. The company has been also able to assess the influence of

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strategic verdicts that are under deliberation. The North America segment of Hershey even
stated a 2.9% upsurge in the net income motivated by the higher sales volume and
enhancements in the supply chain processes (Zhu, et al. 2016).
The supply chain transformation made by Hershey resulted in a boost in the
manufacturing capability with the lessening in the number of manufacturing lines. Add on,
Hershey outsourced the making of some lower value items and construct a new production
amenity in Mexico. Hershey has also formed some progressive sourcing policies for checking
and controlling sources of the ingredients and supplies. The company has even devoted to a
transparent supply chain with high-quality products.
Hershey has overhauled its global operations required a supply chain redesign. The
company is looking at different initiatives within the organization and its supply chains stood
up to the specific strategic decisions made. Hershey looks to scale up its existing efforts as it
wrestles with different cost variables and varying demand projections. It is a quick transition
to get up, thus requires better technology. Other than this, Hershey is having complex
requirements in its supply chain operations. The company has decided to play a more active
role in guiding the application and execution of the initial project. The vendors with the
company are engaged in more hand-holding. It is assisting customers to comprehend their
capabilities (Thorlakson, Hainmueller & Lambin, 2018).
Hershey is requiring accompanying the process change with the major software
execution. The company has to make efforts to comprehend the complete impact of major
strategic decisions in the form of innovative product launch, entrance into the new market,
acquisition or phasing out of a key project. Hershey is doing prognostic and in some other
cases narrow, analytics by using supply chain design technology.
Ways to maintain a competitive edge
Hershey can maintain its competitive advantage through the initiatives mentioned below:
 The large market share has a great role in maintaining the competitive advantage of
Hershey. Therefore, Hershey can go for dedicated mergers and acquisitions. The
acquisitions in the coming period can enlarge its market share along with efficient
market operations.

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 Hershey can add value to the organization by hiring a team of talented people. Such
people can enable a strategic business model to take important business decisions on
behalf of the company (Rosales, Suwonsichon & Klinkesorn, 2018).
 Hershey can attain a competitive advantage by managing the best person at the right
job. The human resource in the company can take the best-qualified applicants to
match the job which best suits them. It can help Hershey in attaining the utmost
results along with enhancing productivity.
 The packaging is generally viewed as an innovation. It focuses on the unique brand
characteristics along with enhancing product experience (Rosales, Suwonsichon &
Klinkesorn, 2018).
 Hershey can even attain a competitive advantage by focusing more on healthy
products. Such products will contain fewer fats, low sugar or no sugar, dark
chocolates, 100% cocoa. These products can attain the attention of health-conscious
people. Hershey can even attain a competitive advantage by offering a wide variety of
diet food. It can even increase sales of the company as health-conscious people will
also start to have chocolates who were early avoiding to have chocolates (De Sousa
Jabbour, et al. 2019).
 Hershey can focus on the snacks segment other than the chocolates. It will create
more diversification in the company. The company is already popular for the
chocolates, this way snacks can also become one of the specifications of Hershey.
 Hershey can organize a great number of human capitals to execute an integration plan
on the acquisition strategy because the acquisitions made by the company not surely
brings 100% profits for the company.

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References
Davis, S. W., Horváth, C., Gretry, A., & Belei, N. (2019). Say what? How the interplay of
tweet readability and brand hedonism affects consumer engagement. Journal of
Business Research, 100, 150-164.
De Sousa Jabbour, A. B. L., Luiz, J. V. R., Luiz, O. R., Jabbour, C. J. C., Ndubisi, N. O., de
Oliveira, J. H. C., & Junior, F. H. (2019). Circular economy business models and
operations management. Journal of Cleaner Production, 235, 1525-1539.
Du, J., & Wang, Y. (2018, July). The Relationship Between Brand Positioning and Packaging
Color of Chocolate. In 4th International Conference on Arts, Design and
Contemporary Education (ICADCE 2018). Atlantis Press.
Loss, C. R., Zellner, D., & Migoya, F. (2017). Innovation influences liking for chocolates
among neophilic consumers. International journal of gastronomy and food
science, 10, 7-10.
Macrotrends (2019). Hershey Revenue 2006-2019. Retrieved March 23, 2020 from
https://www.macrotrends.net/stocks/charts/HSY/hershey/revenue
Rosales, C. K., Suwonsichon, S., & Klinkesorn, U. (2018). Influence of crystal promoters on
sensory characteristics of heat‐resistant compound chocolate. International Journal of
Food Science & Technology, 53(6), 1459-1467.
Rosales, C. K., Suwonsichon, S., & Klinkesorn, U. (2018). Influence of crystal promoters on
sensory characteristics of heat‐resistant compound chocolate. International Journal of
Food Science & Technology, 53(6), 1459-1467.
Thorlakson, T., Hainmueller, J., & Lambin, E. F. (2018). Improving environmental practices
in agricultural supply chains: The role of company-led standards. Global
environmental change, 48, 32-42.
Zhu, X., Song, B., Ni, Y., Ren, Y., & Li, R. (2016). Prosumer Economy—From Supply
Chain to Prosumer Economy. In Business Trends in the Digital Era (pp. 123-141).
Springer, Singapore.

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