While enjoying a smooth Hershey's chocolate bar, few consumers realize the massive $250 million supply chain transformation happening behind the scenes. The iconic candy maker is implementing its "Advancing Agility and Automation Initiative" (AAA) to overhaul operations and stay competitive in an evolving market.
Digital Transformation: Hershey's Strategic Priority
Hershey Company announced it will invest $250 million through 2026 in its AAA program, which CEO Michele Buck described as building "greater agility and efficiency in how we operate." The initiative focuses on digitization and automation to optimize procurement, manufacturing, and planning processes.
"What was once conceptual is now becoming reality," said CFO Steve Voskuil, highlighting the company's progress in achieving end-to-end visibility from suppliers to retailers. Morningstar's Erin Lash noted this represents "the next step in Hershey's evolution" by integrating more technological capabilities.
Laying the Foundation: Previous $1 Billion Investment
Prior to AAA, Hershey spent $1 billion building its supply chain network, including new chocolate factories, expanded production lines, and facility upgrades. The company also acquired several salty snack brands like Dot's Pretzels and Pirate Brands, though these operated largely independently until recently.
SAP S/4 HANA: Breaking Down Information Silos
The key to unification came through implementing SAP's S/4 HANA enterprise platform. "S/4 is a critical foundation that enables end-to-end connectivity," Buck explained. Voskuil revealed 95% of global transactions now run through this single system, providing unprecedented inventory visibility and supply chain coordination.
Technology Leadership: Hiring First Chief Technology Officer
In 2023, Hershey appointed Deepak Bhatia as its inaugural Chief Technology Officer. The former Amazon executive brings both technical expertise and supply chain operational knowledge. "He understands how to run a business like ours," Buck said of Bhatia's qualifications.
Tangible Benefits: Procurement and Manufacturing Efficiency
The improved visibility has yielded measurable improvements. Analyst Jim Salera cited Reese's products as an example: better demand planning prevents both over-ordering ingredients (reducing waste) and under-ordering (preventing stockouts). Real-time data also enables predictive equipment maintenance and more flexible manufacturing.
"Whether you're making chocolate bars or potato chips, efficiency comes from limiting downtime," Salera noted. The system allows smaller test batches for new products, accelerating innovation cycles while minimizing risk.
Future Outlook: $300 Million in Annual Savings Expected
When completed in 2026, AAA is projected to save $300 million yearly, with 30% coming from supply chain productivity. This year alone anticipates $100 million in savings. However, as Salera cautioned, "To maintain advantage, you must continually invest in the latest innovations."
Hershey's transformation demonstrates how legacy brands are reinventing operations through technology. The AAA initiative positions the 130-year-old company to meet future challenges while continuing to deliver the chocolate products consumers love.