Botched Spar SAP project cost retailer R1.4-billion in 11 months

Spar Group’s botched implementation of SAP has cost the Durban-headquartered retailer more than R1.4-billion in lost turnover in the past 11 months.

The company disclosed the figure in a trading update on Thursday for the 47 weeks to 25 August, in which it said the project, at its KwaZulu-Natal distribution centre, continues to be a major focus.

“The impact of the SAP implementation at KZN amounted to an estimated loss of turnover to the group of R1.4 billion for the period, being approximately R786-million for the six months ended 31 March 2023, as previously reported, and an additional R638-million for the five months to August 2023.”

Spar said SAP – the German-headquartered enterprise software giant – has “remained a supportive partner throughout the project”.

“After months of collaboration to resolve the issues and drive success, management is satisfied to report that the KZN distribution centre is once again servicing all stores in the region. The SAP solution is stable and performing consistently,” it said.

“Overall service levels are approaching the levels at which they were prior to the SAP implementation,” Spar added.

“The learnings during this transition phase have been immense and there is a sense of positivity about the system as the KZN region continues to adapt to it. A recalibrated roll-out plan is underway, and management remains confident that modernising the business through this solution will deliver significant benefits to Spar and its independent retailers.”

Spar SAP project

The latest disclosure from Spar comes two weeks after news emerged that the company’s CIO, Mark Huxtable, had resigned.

Spar CIO resigns amid botched SAP project

The move to the SAP software resulted in various integration and distribution issued that caused interruptions in stock deliveries to stores and lost sales, Bloomberg previously reported. Huxtable left Spar for personal reasons., Bloomberg said.  – © 2023 NewsCentral Media

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