Hershey Chocolate Company Yurah Jo Heeyeon Kim Inge Slijpen

TABLE OF CONTENT About Hershey Production process Operational Issues  Hershey’s Supply Cain  Inventory Management and Logistics  Hershey’s Kisses Packaging Process Technological Failure Q&A

About Hershey 1894: start up to produce sweet chocolate as a coating for his caramels 1907: Starts to produce the famous HERSHEY’S KISSES 1939: Hershey’s goes to war!! Present:  Leading North American Chocolate manufacturer, non-chocolate confectionery and grocery products  Exports to over 90 countries  Approximately 13,700 employees  Net sales in excess of $4 billiom

Production Process Born in the jungle Liquid Chocolate Mixing it up Perfecting the product HERSHEY’S KISSES

Operational Issues

Cocoa Production and Harvesting Labor intensive process  Working policies are met, especially because cocoa grows large in undeveloped countries with harsh circumstances  Related to Hershey’s Corporate Social Responsibility

Supply Chain Hershey’s Supplier code of conduct  Legal Compliance and Business integrity  Social and Working conditions  Environment and Sustainability  Verification and Compliance  Supplier’s Certification of Compliance

Supply Chain Corporate Social Responsibility Framework

Cocoa Production and Harvesting Cocoa harvesting industry is famous about its child labor Hershey has been accused for exploiting its migrant workers in domestic plants  Hershey must take actions!

Dairy industry Importance showed by the fact that Hershey first had its own Dairy farm Most Dairy farms produce the cattle’s food themselves and grow their own cows Milking is done by machines

Dairy industry Concerns Animal waste Use of hormones Animal welfare  Hershey has to be very cautious and has to make sure that every supplier is using a rightful regulation and supplier code of conduct in a proper way

Inventory Management and Logistics, problems 1996: After acquiring Leaf Candy co. Hershey’s got distribution problems. Inefficient distribution process due to small truckload lots  increasing inventory  inflexible distribution  could not support customers needs

Inventory Management and Logistics, solutions They decided to open EDCIII Taking care of “co-packing” Advantages  Closing of warehouses  save money  Invested this money in funds to raise flexibility and establish a better distribution network  By opening new EDC efficiency increased

Hershey’s Kisses Packaging Process

Problems  No mechanisms to align the Kisses  The knocking of could create damages  increase in number of defects  increase costs  A lot of iteration  ineffective

Hershey’s Kisses Packaging Process Solutions  Line chocolates beforehand in the process  Rebuilding the plant

Technological Failure ERP System

Technological Failure Problems Failed to implement its costly ERP system 19% drop in profits and 8% decline in stock price Overlap with Halloween and Christmas Solutions Thorough testing Pre-implementation Create a learning environment to become familiar with the system

Technological failure New ERP system SAP was implemented. Integration happened following steps  Though EDI receiving information about customers  Delivery data is sent to the TM. It provides also the needed transportation means for the product ordered  When transportation is settled data is processed to the SAP system Increases efficiency and leads to higher customer satisfaction

Any Questions Left?? Thanks for listening and good luck with your exams