Tick-Tock...Tick-Tock...Hershey's having distribution problem?????

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Things that make you go Hmmmmmm????

Happy Halloween

-- CP (Spoonman@prodigy.net), October 29, 1999


I heard on the radio this morning that Hershey blamed the lack of chocolate candy on "a new computer system that they had installed to improve service for customers." No mention of Y2K, but nobody is installing new systems for the hell of it in late 1999.

-- Dog Gone (layinglow@rollover.now), October 29, 1999.

This is due to an SAP installation gone bad. Not unusual, I might add.

-- Hawthorne (99@00.com), October 29, 1999.

Doesn't look like there's a shortage of Hershey's choclate at WalMart, they bins and bins of the stuff. Maybe our store got it all.

-- bardou (bardou@baloney.com), October 29, 1999.

http://library.northernlight.com/EB19991029700000078.html?cb=0&dx=1006 &sc=0#doc

Computer Woes Hurt Hershey Delivery

Story Filed: Friday, October 29, 1999 11:31 AM EDT

HERSHEY, Pa. (AP) -- Problems involving a new computer system have disrupted distribution of Hershey's chocolates, so some little ghosts and goblins will be disappointed -- or snacking on rival Mars bars -- come Halloween.

And Santa might be next in line to be affected.

Hershey Foods Corp., the nation's largest candymaker, announced a 16 percent drop in third-quarter earnings per share earlier this week. Hershey Chairman and Chief Executive Officer Kenneth L. Wolfe acknowledged that the company's distribution woes have led to lost sales and increased costs.

He said the company had hoped to get customer service back to normal by the end of the month but that the goal would not be met. He said the company still expects to improve through the end of the year.

He gave few details, but The Wall Street Journal reported today that spot shortages of Hershey's products have prompted many stores to replace their usual supplies of the company's candies with other brands.

Sales have increased for rivals like Mars Inc. and Nestle USA without any special promotions to boost sales, the newspaper said. And some customers and industry analysts said they believe the problems could persist at least through Christmas.

Callers to a Hershey's consumer phone line today were told the company is ``doing everything possible to correct these temporary difficulties. We apologize for the inconvenience and appreciate your patience. You should be able to locate your favorite products in your stores soon.''

Hershey said it lost about one-tenth of a percentage point of its still-dominant market share in the four weeks ended Sept. 12, and retailers forecast a sharper drop for October, the Journal reported.

Hershey spokesman John Long had no comment on the article, other than to refer to the earnings announcement, issued Monday.

The company planned to bring its new, $112 million computer system online during a slow period in April but was forced to delay until July when development and testing were not completed, the newspaper reported. That's the month that retailers begin ordering for Halloween.

In discussing the problem last month, the company said earnings for the entire fiscal year could be 8 percent to 10 percent below previous projections.

``For a candy company to miss part of Halloween is not as bad as a toy company missing part of Christmas, but it's close,'' John M. McMillin, who follows the food industry for Prudential Securities, said at the time.

-- Homer Beanfang (Bats@inbellfry.com), October 29, 1999.

The new system was installed due to Hershey's earlier system being not compliant for Y2k. The problems are far from over and there is no end in sight for the fix. Retailers are very pissed as you can well imagine. Trucks showing up at distribution warehouses empty, wrong orders, etc.

Time will bear out the truth on this story and it is the TRUTH. Hershey will be having distribution problems for a long, long time. Well into the new year. You'll see. I can't tell you who I am. Suffice it to say I would lose my job faster than a KISS melts. (attempt at humor)

-- Hershey Spy (Iknow@thetruth.com), October 29, 1999.

[ Fair Use: For Educational/Research Purposes Only ]


Hershey Kisses Off Sales

Hershey Kisses Off Sales

Hershey kisses off sales

Computer horror story haunts deliveries of Halloween candy

October 29, 1999: 3:45 p.m. ET

PHILADELPHIA (Reuters) - Halloween could turn out to be a real horror story for Hershey Foods Corp., the leading U.S. candy maker, whose distribution channels continue to be haunted by problems with a new computer system, analysts say.

The maker of Hershey's chocolate bars and Kisses, Reese's Peanut Butter Cups, Kit Kats and Twizzlers hasn't been able to get all of its Halloween inventory on to store shelves soon enough to fill the plastic orange jack-o'-lanterns of trick-or-treaters, who are expected to stalk American neighborhoods Sunday evening.

Analysts on Wall Street had expected difficulties with the $112 million order-and-distribution system to be exorcised by mid-October. But now they fear the stubborn ghost in Hershey's machine could jinx candy sales through Christmas and maybe even into next Easter.

"This is serious stuff. The fourth quarter represents about 40 percent of profits, and Hershey (HSY) could lose $100 million in sales between back to school, Halloween, Thanksgiving and Easter," said Merrill Lynch analyst Leonard Teitelbaum.

The Hershey, Pa.-based company had $4.44 billion in revenue last year.

Most serious is the potential for a 0.5 percent loss in U.S. market share to privately held Mars Inc. and Nestle SA , as consumers who find store shelves bare of Hershey products switch to rival brands.

Hershey, which has had no production problems, also must face the potential costs posed by pallets of undelivered "Cat 'O' Lantern" milk chocolate snacks, Reese's Peanut Butter "Pumpkins" and other seasonal goods marketed in highly decorated holiday wrappers only at this time of year.

The company's computer system, which uses software from SAP AG and Siebel Systems Inc., began operating in July. But it quickly presented the 1,200-strong sales force with a steep learning curve.

Managers now are expected to have the upper hand by the first quarter of 2000.

Industry executives believe Hershey still hasn't yet been able to fill orders at 100 percent and has resorted to flying some shipments out to keep relations sweet with key customers such as Kmart Corp. (KM) and Wal-Mart Stores Inc. (WMT).

But some analysts contend that the difficulties posed by the Hershey computer are temporary and say supposed dangers to the underlying business are no more real than the bogey man.

"It's too alarmist," said Goldman Sachs analyst Nomi Ghez. "They clearly have a problem. I think it is a fixable problem. It is a short-term problem. Yes, they're probably going to lose some market share. But their brands are very strong and consumers are not going to forget them.

"I think they'll recoup lost market share, but probably at some cost to them," she added.

Company officials admit that relations with some business customers have been strained but say there is sure to be enough sweet stuff to go around this weekend.

"Consumers should have little problem finding Hershey's candy on the shelves," said spokesman Mike Kinney. "While we have not filled all orders to 100 percent, we have generally solid distribution."

Meanwhile, doubts about Hershey shipments could linger until the company begins operating a new distribution center in the third quarter of 2000, analysts said.

"If they run into problems with the new distribution system, it'll mean a second year of difficulties and that would be more severe," said Ghez. "They know that, so I'm sure they'll be careful."

Friday, Hershey stock was down 3/16 at 50-1/16 in New York Stock Exchange trading.

-- Ashton & Leska in Cascadia (allaha@earthlink.net), October 29, 1999.

"The company's computer system, which uses software from SAP AG and Seibel Systems Inc., began operating in July. But it quickly presented the 1,200-strong sales force with a steep learning curve. . . ."

I don't want to bring The Wrath of Hoffmeister [tm] down on me, but why, when I read of companies having troubles with new software, SAP (and/or PeopleSoft) are often mentioned? (I know nothing of either package, I'm just curious.)

-- I'm Here, I'm There (I'm Everywhere@so.beware), October 29, 1999.

You did remember to stock up on chocolate?

-- Mad Monk (madmonk@hawaiian.net), October 29, 1999.

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