It appears that the company is sincere about living up to its mission statement – “Bringing sweet moments of Hershey happiness to the world every day”.1
Hershey made a decision to up date their hardware and software with a four-year plan. The company set goals which included standardizing the hardware and changing from mainframe to TCP/IP network. The company-reviewed information from Grocery Manufactures’ of America and this showed they were well behind on system updates, and expenditure on systems compared with similar companies in the industry.
The upgrading proved to be a bittersweet lesson2 for the company and cost them considerably in sales and credibility over nearly a 12-month period. The food and beverage industry in the country works on low profit margins and high volumes due to extensive competition. As a whole, investment in modernization of IT systems is low. But the Y2K threat required them to make major changes in their systems, and hence the Hershey management decided to go in for a major overhaul instead of tuning and adjusting the current system consisting of mainframes to client server environment. Many distributors and retailers felt that the delivery system of the company could be better tuned in order to reduce inventory costs. At that time, orders for peak time demand (Halloween) needed to be placed several months in advance for timely delivery. Unless Hershey complied, there was a chance that retailers and distributors may switch over to other manufacturers. Moreover, rising competition and low margins required higher turnover and a better equipped IT infrastructure was the only solution open. Customer loyalty is not high in the industry and they will switch over to other brands if Hershey’s products became unavailable. It will also enable Hershey to tackle high seasonal demand.