Halloween Less Haunting For Hershey This Year

Candy company overcomes ERP woes

Thanks to improvements in what was initially a balky order processing and enterprise resource planning (ERP) system, Halloween doesn't appear to have been as nightmarish for Hershey Foods Corp. as it was last year.

During last year's Halloween season, the peak sales period for Hershey's candy products, the Hershey, Pa.-based firm was waylaid by major order fulfillment problems. The cause: start-up difficulties with a $112 million set of ERP and supply-chain applications that had been installed earlier in the year.

The problems in getting candy out the doors of its warehouses resulted in a 19% drop in Hershey's profits for last year's third quarter and saddled the company with sharply increased product inventories. But after a series of fixes to the system, the story was different this time around, according to Hershey officials.

Hershey recently reported that third-quarter profits rose 23% to $107.4 million, an increase from $87.6 million in the same period last year. Revenue increased 12% to $1.197 billion, up from $1.097 billion last year.

"Admittedly, we were in the depths of our shipping difficulties during last year's third quarter," said Kenneth Wolfe, Hershey's chairman and CEO. But, he added, the ERP system, as well as a revamped distribution facility in the Eastern U.S., were both "much improved during this period of high demand for our domestic confectionery business." Last spring, Wolfe had said getting through this year's Halloween season would be "the final determinate of our success."

Hershey officials last week declined to elaborate on the steps the firm took to straighten out the system, which is built on SAP AG's R/3 application suite and includes products made by Siebel Systems Inc. in San Mateo, Calif., and Manugistics Group Inc. in Rockville, Md.

Included are SAP's finance, purchasing, materials management, warehousing, order processing and billing modules, plus promotions management software from Siebel and a production forecasting and scheduling application from Manugistics.

A year ago, SAP said the problems that Hershey experienced weren't due to any problems with R/3 itself. An SAP source last week said Hershey is now a "happy customer."

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