UNIVERSITY INSTITUTE OF INFORMATION
TECHNOLOGY,HIMACHAL PRADESH
UNIVERSITY SHIMLA(H.P)
CASE STUDY REPORT
ON
ERP IMPLEMENTATION
IN
COMPANY(SUCCESS &FAILURES)
SUBMITTED BY:
MONIKA SHARMA
(INFORMATION TECHNOLOGY)
BTECH 7TH SEM.
ROLL NO. 65501(3767)
ERP IMPLEMENTATION IN COMPANY(SUCC-
ESS AND FAILURE)
INTRODUCTION
Enterprise resource planning (ERP) is business management
software—usually a
suite of integrated applications—that a
company can use to store and manage data
from every stage of business, including:
•Product planning, cost and development
•Manufacturing
•Marketing and sales
•Inventory management
•Shipping and payment
ERP FUNCTIONS
ERP provides an integrated real-time view of core business processes,
using common databases maintained by a DBMS. ERP systems track
business resourcescash , raw materials, production capacity—and the
status ofbusiness commitments: orders, purchase orders, and payroll.
The applications that make up the system share data across
thevarious departments (manufacturing, purchasing, sales,accounting
etc.) that entered the data.
ERP facilitates information flow between all business functions ,and
manages connections to outside stakeholders.
ERP IMPLEMENTATION SUCCESS
COMPANY BACKGROUND
Cadbury is a British multinational confectionery company owned by
Mondelēz International.
It is the second largest confectionery brand in the world after
Wrigley's.
Founder: John Cadbury
Founded in: 1824, Birmingham, United KingdomCurrently, Cadbury
India operates in four categories viz. Chocolate Confectionery, Milk
Food Drinks, Candy and Gum category. In the Chocolate Confect
-ionery business, Cadbury has maintained its undisputed leadership
over the years.
KEY BRANDS OF CADBURY IN INDIA:
Dairymilk
5 Star
Oreo
Bourn Vita
Bournville etc.
ERP IMPLEMENTATION
•Cadbury turns out, in recent years, Kraft implemented SAP ERP 6.0
(System Analysis and Program Development) in what SAPcalled one of
its largest global ERP implementations
•Kraft credited ERP with reducing operational costs.
•11,000 employees were sending data to thecompany's SAP solution
and it was linked to1,750 applications by 2008.
•That same year, Kraft aslo added SAP's masterdata management
solution, NetWeaver, withan eye toward integrating legacy systems.
•Cadbury was left with a glut of chocolate products at the start of the
year, after the installation of a new SAP-based enterprise resource
planning (ERP) system led to an excess of chocolate bars building up at
the end of 2005.
•The new U.K. computer system is part of a five-year IT transformation
project, called "Probe", aimed at integrating the Cadbury Schweppes'
supply chain, purchasing, manufacturing,distribution, sales and
marketing systems on a global, SAP-basedERP platform.
•Cadbury Schweppes is aiming for an ultimate savings from the Probe
project, but its implementation has been far from smooth.The project
was beset by problems and delays when it was first introduced in
Australia in 2002.
BENIFITS OF ERP
• Cadbury was on a fast paced growth and could not continue with the
existing systems and the pace was too slow due to added inefficiencies.
ERP added efficiency and guided the led all the issuesfast paced
growth.
• The implementation of ERP brought in a new way of warehouse
management system and brought in structure to branch offices and the
depots.
• While implementing the ERP systems, the company has built it upon
the past strengths of the company thereby not losing out on its
competitive.
• The initial implementation took time and then the successive imp
-lementations took lesser time and cost and there is a huge advantage in
saving cost while in the implementation phase itself.
• The reaction from competition does not matter in this because this
isnot a change that was advertised to the market. This is an
internalprocess restructuring and was a welcome change within the
company which badly needed the change.
• The company also has built in a robust regular feedback system to
monitor the changes and check if they go according to the initial
plan.The entire implementation is cross functional and hence it is
important that there is a high increase in the efficiency
• It was considered at low cost and high result implementation which by
itself highlights the success and the benefits.
ERP IMPLEMENTATION FAILURES
COMPANY BACKGROUND
• Hershey's is the largest chocolate manufacturer in North America.
• Its headquarters are in Hershey,Pennsylvania, which is also hometo
Hershey's Chocolate World.
• Chocolate Business was started by Mr.Milton S. Hershey in 1876
• The Hershey Company was establishedin 1894
• Hershey's products are sold in about sixty countries worldwide.
Hershey’s cocoa add from 1918
• Hershey's sales are roughly 80% chocolate and 20% non-chocolate.
• Hershey’s Competitors include Mars, Nestle, Russell Stover,
Palmerand Nabisco
ERP IMPLEMENTATION
To enhance company’s competitiveness and Customer Service
• During late1996, the management of Hershey gave itsapproval to a
project named Enterprise21
• For this Hershey selected SAP's R/3 ERP software,Manugistics SCM
software and Seibel's CRM softwareand IBM Global Service so as to
manage integrationamong these three systems
.• Overall Project Cost was US $10 Million
• The recommended implementation time for theproject was 4 yrs. and
Hershey demanded for 2.5 yrs.
• Hershey decided to go with Big Bang Approachinstead of phased
approach
IMPACT OF ERP FAILURE
• Problems pertaining to order fulfillment, processingand shipping
started to arise; Hershey would not beable to meet its committed date of
delivery
• Several of Hershey's distributors who had ordered theproducts could
not supply them to the retailers intime, and hence lost their credibility in
the market
• Product inventory started to pile up and by the end ofSeptember 2000;
the inventories were 25% more thanthe inventories during the previous
year
• After Hershey’s announcement in the market aboutproblems due to
malfunctioning of the newlyinstalled computer systems, Hershey's stock
price plunged by 8% on a single day.
• Hershey's failure to implement the ERP software ontime cost the
company US $150 million in sales. Profitsfor the third quarter 1999
dropped by19% and salesdeclined by l2%, in its 1999 annual report
REASONS OF FAILURE
• Over-squeezing implementation schedules
•Big Bang Approach instead of Phased Approach
• Mistake of sacrificing systems testing for the sake ofexpediency
• Cutover Activities and Go-Live was scheduled in Hershey’s busiest
business periods
LEARNING FROM FAILURE
The first lesson
An ERP implementation project should not be forced into an
unreasonable timeline. Over-squeezing implementation schedules is a
sure-fire way to overlook critical issues.Testing phases are safety nets
that should never becompromised
The second lesson
Never schedule cutover during busy seasons. Even in a best-case
implementation scenario, companies should still expect steep learning
curves and operational performance dips. By timing cutover during slow
business periods, the company gives itself more slack time to iron out
systems kinks. It also gives employees more time to learn the new
business processes and systems. In many cases, it is even advisable to
reduce orders in and around the cutover period. This tactic is aimed at
minimizing exposure to damages caused by potentially undetected
errors and less-than-perfectlytrained users
REFERENCES:
•http://www.scribd.com/doc/39650132/ERPIMPLEMENTATION-AT-
CADBURY%E2%80%99S
• http://en.wikipedia.org/wiki/Enterprise_resource_planning
• http://www.webopedia.com/TERM/E/ERP.html
•http://www.itbusinessedge.com/cm/blogs/lawson/kraftcadbury-deal-me
ans-major-erp-integration-work/?cs=38891
•http://www.ft.com/cms/s/0/1cb06d30-332f-11e1-a51e-00144feabdc0.ht
ml#axzz2vdMyHJ14
