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hershey chocolate problems and their solution
- 1. Hershey Chocolate Factory Final Production and Operations Management Project Seong-Hun AHN, Yoon Ju HWANG, Byung-Im KIM, So Jeo
- 2. • Pennsylvania Plant built in 1992 • Makes milk chocolate in the traditional fashion of Hershey • Old video old strategies • Limited amount of information Outline of Hershey Chocolate Factory
- 3. Index 1. Problems from Video 2. Additional research: ERP 3. Solutions 4. Additional suggestion
- 4. 1. Problems from Video 2. Additional research: ERP 3. Solutions 4. Additional suggestion
- 5. • Milk: one of the most fundamental supply chain • Sugar: essential for sweetening the main product, chocolate Supply chain of Milk and Sugar
- 6. • Milk is carried through pipes that are located outside of the milk receiving building • Milk leaves the receiving building flows through the pipes to chocolate processing are Inefficiency Layout (1)
- 7. • Too much unnecessary movements of products within the lab • Machines located inefficiently – loss in time and costs Inefficiency Layout (2)
- 8. • Repetitive stages of alignment and misalignment • Useless transfers of final product around the plant Inefficiency Layout (3)
- 9. Unnecessary labor input • People measuring the temperature of the milk
- 10. Unnecessary labor input Is the temperature information reliable?
- 11. Unnecessary labor input Is the product clean and safe?
- 12. 1. Problems from Video 2. Additional research: ERP 3. Solutions 4. Additional suggestion
- 13. • Invested 10million on SAP R/3 program • Error in ordering and shipping process before the 1999 Halloween • Inventories 20% increased, 19% decrease in profit as a result of sales reduction Hershey’s failure
- 14. • Scheduling function • Forecasting sales/ demand function • Accounting function • Build Database • Unify the boundaries among functions, business units, regions, process lines • Information distribution among processes So what is ERP?
- 15. So what is ERP? Accounting & Financial Information Human Resource Manageme nt Supply Chain Consumer Informatio n
- 16. • Increase in average profit rates by 29% • Improve the launching of products on time by 95%, inventory reduction by 10~40% • Cost Reduction by 5~10% • Reduce unnecessary labors in assemble line by 25~40% • Reduce overtime work by 50% Benefits of Usage
- 17. • Adopted hasty methodology • Confusion of managers • Reduction in process time and costs • Decrease in defects by improving working environment Hershey’s Lesson
- 18. 1. Problems from Video 2. Additional research: ERP 3. Solutions 4. Additional suggestion
- 19. Solution What is primary directing point for Hershey’s?
- 20. Details in process 1. Layout : Rearrange equipments effectively 2. Additional automation
- 21. Layout : More effective arrangement Example 1) : Milk truck and pipeline Example 2) : Milk balancing tank and dryer Example 3) : Process before packaging
- 22. Additional automation Automated process to reduce errors or cost from human Safer
- 23. Solution for ERP Elite human resource : Get more reliable workers who can treat equipments and process
- 24. Elite human resource How to get more trained worker who can control the process and automated equipments? 1. Training 2. Outsourcing
- 25. 1. Problems from Video 2. Additional research: ERP 3. Solutions 4. Additional suggestion
- 26. Suggestion - Forecasting demand Product trait : Milk Chocolate 1) Short retention period 2) the demand boom in specific periods Exact demand forecasting is most important to Hershey’s!
- 27. Suggestion - Forecasting demand To get cost reduction, making exact forecasting demand model must be preceded. Collecting historical data is essential.
- 28. Suggestion - Forecasting demand Demand is very fluctuating and seasonal
- 29. Forecasting demand : additional operation Sharing demand / producing information From supplier to sale department
- 30. Cost balance Cost up VS Cost down Cost UP Cost DOWN Information sharing cost for managing quality of material Cost cutting from Inventory managing Cost from additional automated process Benefit from additional automated process Training / outsourcing cost for advanced worker Benefit from achieving lean system Benefit from effective layout
- 31. Expectations Managing quality Managing inventory : lean system
- 32. Any Q & A?? Thanks for watching!!
Editor's Notes
- Hi everyone We will now begin our final marketing presentation on Shinee I am hwang yoon ju, your first speaker for the first part of the presentation.
- Our video was on the hershey chocolate factory plant in Pennsylvania, that was built in 1992.
- First, we have closely analyzed the characteristics of the industry of K-pop. We found out that from the product characteristics analysis, K-pop idols has a short expiration date. What we mean by this is that they are physically limited by their appearances and fitness to continue their profession as an idol. Korean idols especially carry the ‘fresh, youth’ image, thus, as the singers age, they cannot be helped but be disregarded by the public. Also, we found out that k-pop has a huge ripple effect, especially to the teenagers as even smallest things like what the idols wear can lead to greater boom in the fashion industry. Also it could be possible to argue that these k-pop idols were the starters of Hallyu boom globally. When we analyzed the purchase characteristics, we found out that mostly the unconditional, lowly-involved fans were the k-pop consumers. The common K-pop music lovers with no specific taste tended to purchase k-pop music, too. The key marketing issues of this industry were analyzed to be first, having sustainability, second, each idol groups have a definite identity and finally, attempting to keep up with the fast-paced demand state.
- From closely viewing the video, we noticed that the milk
- Investsed 10 million on sat r/3 – one of erp
- ERP(기업 자원 계획, Enterprise Resource Planning) is a compatible 있는 소프트웨어 모듈의 집합체, 포괄적인 통합 정보 시스템 조정 bewteen the processes을 통해 적절한 의사결정이 이뤄질 수 있도록 돕는 것을 목적으로 함. ERP시스템은 기업의 주요 프로세스에 대해 명확하게 적용되어야 함. Must follow the flow of the corporate
- ERP(기업 자원 계획, Enterprise Resource Planning) is a compatible 있는 소프트웨어 모듈의 집합체, 포괄적인 통합 정보 시스템 조정 bewteen the processes을 통해 적절한 의사결정이 이뤄질 수 있도록 돕는 것을 목적으로 함. ERP시스템은 기업의 주요 프로세스에 대해 명확하게 적용되어야 함. Must follow the flow of the corporate
- 모든 제품, 모든 공간, 모든 시간 시점에 대한 기업 전체의 정보 자료를 볼 수 있게 한다. 자료를 지속적으로 갱신 경영진의 정보 접근성을 제고해 즉각적인 대응이 가능하게 함 기존에 문제시된 기능 간 조정 불화를 제거함
- – 4년 소요되는 프로젝트를 30개월 만에 적용시킴 Pennyslcania 공장에서 다른 공급업체 시스템과 중복 사용 But, 2001.07. ~ 2002. 05. 업그레이드 통해 문제 해결되며, 도리어 20% 경비 절감 효과도 얻었다고 홍보함 -> 문제 해결 Not used to the system - 신기술에 대한 합리적인 접근이 요구됨 조직 차원의 충분한 적응 시간이 요구됨 기술 이해도를 높여 보다 적극적으로 기술을 활용할 수 있는 방향으로 전개되어야함.
- “김병임 solution 참조” 를 읽어주세요 데헷
- 사진 : 허쉬 초콜릿 공장의 작업 모습
- 사진 : 수동으로 우유의 온도를 재는 모습. **** 자동으로 재는 모습이 더 어울릴 것 같아서 새로운 사진을 넣어봤어요!
- Not just training the existing employees, outsourcing and hiring the experts on this program can be the solution.
- Why forecasting demand is important for hershey? 1) The characteristic of milk product 2) ex) Halloween Exact forecasting is also important for ultimate goal which is more profits.
- It is important to find out exact forecasting demand model.
- This graph shows that the demand is very fluctuating and seasonal so it is easy to analyze historical data for developing exact forecasting demand model.
- And this whole forecasting demand information must be shared with other related suppliers.
- By putting additional automated machines and system, additional cost can be made. 하지만 그에 따른 이득도 있어서 비용이 상쇄(offset? Counterbalance) 될 것이기 때문에 이는 크게 문제되는 부분이 아니다.
- To sum up; with all these solutions mentioned before(비디오 해결책부터 forecasting demand suggestion까지), it would be easier to manage quality and inventory more effectively.
- 사진 : 허쉬 키세스