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AOSI 2008
Caso E: Hershey
57400 – Paul Maia
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AOSI-2008-CASOE-57400.doc
Suppliers’ Distributors
Suppliers Hershey Retailers Customers
Suppliers
Upstream Downstream
Figure 1 – Hershey’s Supply Chain
(Laudon, page 360)
As illustrated the upstream portion of Hershey’s supply chain (Laudon, page 361)
involves:
Suppliers’ Suppliers:
o Output:
o Inputs:
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Raw materials.
Hershey:
Outputs:
Inputs:
Finally, Hershey’s supply chain’s downstream portion (Laudon, page 361) involves:
Distributors:
o Outputs:
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o Inputs:
Retailers:
o Outputs:
Products to customers.
o Processing:
Sells products.
o Inputs:
Customers:
o Outputs:
Information to Hershey.
Orders to retailers.
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Substitute products –
strong:
Enormous variety of candy.
Customers – strong:
Competitors – strong:
If one brand doesn’t fill
Suppliers – average: Shelf space is intensely
the retailer’s shelves,
Hershey is extremely selective fought for. If a customer
another one will.
with suppliers, because the wants to buy chocolate
Switching cost is low.
options are vast [2]. he’ll buy what’s available.
Customer’s buy
A delay in supplier’s Hershey has a strong
reputation and brand whatever is available.
distribution may render
name, but so do other Their rush for candies in
Hershey incapable of
the Halloween and
producing its products. competitors (e.g. Mars).
Christmas generates
most of Hershey’s
logistics problems –
because of the push-
New Market Entrants – based model (Laudon,
weak: page 366).
Many strong companies
already established,
making entry difficult.
Customers tend to prefer
known brands and will
only opt for new brands,
if the usual ones aren’t
available.
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To better understand the situation its best to complement this with a value chain model
[3] (Laudon, page 105):
Administration and Management: inexistent centralized information application (e.g. ERP), makes it
difficult to obtain accurate information about the whole firm.
Human Resources: inexistent ERP and ERM (Laudon, page 371), makes it difficult to obtain accurate
information about employees.
Procurement: difficult due to inexistent B2B e-Commerce (Laudon, page 410), which increases
information asymmetry, reducing price and cost transparency and increasing search costs (Laudon, page
395) towards suppliers.
Inbound Operations: Sales and Marketing: Service: no Outbound Logistics:
Logistics: production is lack of information information logistics problems,
logistics based on due to inexistent CRM due to lack of data
problems, due to inaccurate system. sharing with
lack of data demand customers.
sharing with forecasts,
suppliers (because due to
of inexistent inexistent
SCM. SCM.
The need to fill retailers’ shelves to keep up with competitors (or customers
will switch). This is currently done with a push-based model (Laudon, page
366), resulting in extreme logistics costs. Optimizing logistics is crucial to
achieve Operational Excellence (Laudon, page 8).
Candy industry was a Low IT industry starting to increase its investment in IT.
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Firms within this industry will have to keep up their IT investments for survival
(Laudon, page 13), because IT accelerates competition [4].
The demand is irregular throughout the year reaching its peek on Halloween
and Christmas. Therefore it is critical to succeed in this time of the year.
If customers wish to buy candy and can’t find a Hershey’s product, they will
opt for a competing brand.
o Centralizes the firm’s data allowing the Hershey to analyze it, take
conclusions (e.g. forecasting demand – crucial to satisfying clients), and
make better decisions.
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Increasing sales.
Optimizing logistics.
Siebel’s CRM would allow for greater marketing and customer knowledge
(Laudon, page 375):
o Increasing sales.
It would solve the Y2K problems because it was a new software product.
Notice, not all problems are solved. Procurement related problems (supplier selection)
won’t be solved with Manugistics’ SCM system. To solve these problems B2B e-
Commerce would be a possible solution (see figure 4). This would make suppliers a
weak force, because, in case of a delay, Hershey could easily switch from one supplier
to another giving Hershey greater bargaining power.
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Referências
[1] Suppliers – What we buy, by Hershey,
http://www.thehersheycompany.com/business/suppliers_what.asp, consulted in: 18th
October 2008.
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October 2008.
[4] Investing in the IT That Makes a Competitive Difference, by Andrew McAfee and
Erik Brynjolfsson, HBR, July-August 2008.
[6] In Search of Business Value & ROI: Achieving IT Benefits Realization, by Eric
Kimberling, http://it.toolbox.com/blogs/erp-roi/erps-big-bang-theory-11954, consulted
in: 19th October 2008.
[7] Choosing Strategies for Change, by John P. Kotter and Leonard A. Schlesinger,
HBR, July-August 2008.
[8] Employee Motivation A Powerful New Model, by Nitin Nohria, Boris Groysberg,
and Linda-Eling Lee, HBR, July-August 2008.
Palavras: 1450
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