hershey chocolate factory
DESCRIPTION
Hershey Chocolate Factory . Final Production and Operations Management Project. Seong -Hun AHN, Yoon Ju HWANG, Byung -Im KIM, So Jeong Yoo . Outline of Hershey Chocolate Factory. Pennsylvania Plant built in 1992 Makes milk chocolate in the traditional fashion of Hershey - PowerPoint PPT PresentationTRANSCRIPT
Hershey Chocolate Factory Final Production and Operations Management
Project
Seong-Hun AHN, Yoon Ju HWANG, Byung-Im KIM, So Jeong Yoo
• Pennsylvania Plant built in 1992• Makes milk chocolate in the tradi-
tional fashion of Hershey• Old video old strategies• Limited amount of information
Outline of Hershey Chocolate Factory
Index
1. Problems from Video2. Additional research: ERP 3. Solutions 4. Additional suggestion
1.Problems from Video2. Additional research: ERP 3. Solutions 4. Additional suggestion
• Milk: one of the most fundamental supply chain
• Sugar: essential for sweetening the main product, chocolate
Supply chain of Milk and Sugar
• Milk is carried through pipes that are located outside of the milk receiving building
• Milk leaves the receiving building flows through the pipes to choco-
late processing are
Inefficiency Layout (1)
• Too much unnecessary movements of products within the lab
• Machines located inefficiently – loss in time and costs
Inefficiency Layout (2)
• Repetitive stages of alignment and misalignment
• Useless transfers of final product around the plant
Inefficiency Layout (3)
Unnecessary labor input• People measuring the temperature of the milk
Unnecessary labor input
Is the temperature informa-tion reliable?
Unnecessary labor input
Is the product clean and safe?
1. Problems from Video2.Additional research:
ERP 3. Solutions 4. Additional suggestion
• Invested 10million on SAP R/3 program• Error in ordering and shipping process be-fore the 1999 Halloween• Inventories 20% increased, 19% decrease in profit as a result of sales reduction
Hershey’s failure
ERP
Back
Of -fice
Shop
Front
Of -fice
Manufacture
• Scheduling function• Forecasting sales/ demand function• Accounting function
• Build Database • Unify the boundaries among functions, busi-ness units, regions, process lines • Information distribu-tion among processes
So what is ERP?
So what is ERP? Account-ing &
Financial Informa-
tion
Human ResourceManage-
ment
Supply Chain
Con-sumer
Informa-tion
• 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
• Adopted hasty method-ology
• Confusion of managers
• Reduction in process time and costs
• Decrease in defects by improving working environment
Up-grade
Hershey’s Lesson
1. Problems from Video2. Additional research: ERP 3.Solutions 4. Additional suggestion
SolutionWhat is primary directing point for Hershey’s?
Details in process
1. Layout : Rearrange equipments effec-tively
2. Additional automation
Layout : More effective arrange-mentExample 1) : Milk truck and pipe-
lineExample 2) : Milk balancing tank
and dryerExample 3) : Process before
packaging
Additional automationAutomated process to reduce errors
or cost from human
Safer
Solution for ERP
Elite human resource : Get more reliable workers who
can treat equipments and process
Elite human resourceHow to get more trained worker
who can control the process and automated equipments?
1. Training
2. Outsourcing
1. Problems from Video2. Additional research: ERP 3. Solutions 4.Additional suggestion
Suggestion - Forecasting de-mand
Product trait : Milk Chocolate 1) Short retention period 2) the demand boom in specific pe-
riods
Exact demand forecasting is most important to Hershey’s!
Suggestion - Forecasting de-mand
To get cost reduction, making ex-act forecasting demand model must be preceded.
Collecting historical data is es-sential.
Suggestion - Forecasting de-mandDemand is very fluctuating and
seasonal
Forecasting demand : additional operationSharing demand / producing in-
formation From supplier to sale department
Cost balance Cost up VS Cost down Cost UP Cost DOWN
Information sharing cost for managing quality of material
Cost cutting from Inventory man-aging
Cost from additional auto-mated process
Benefit from additional automated process
Training / outsourcing cost for advanced worker
Benefit from achieving lean sys-tem
Benefit from effective layout
Expectations Managing quality
Managing inventory : lean sys-tem
Any Q & A??
Thanks for watch-ing!!