Spar confident worst of ERP disaster now behind it

Spar Group has blamed the disastrous ERP implementation in its key KwaZulu-Natal region for R1.6-billion in lost turnover in the past year and for directly costing it R720-million in profit.

The SAP implementation began in October 2022 at Spar’s KwaZulu-Natal distribution centre but the transition resulted in “various go-live and integration issues” that impacted distribution operations in the region.

“Actions were taken to improve supply to our retailers’ stores, including servicing these stores from the Eastern Cape, South Rand and North Rand distribution centres, direct-to-store deliveries, as well as the increased use of supplier drop-shipment channels. The KZN distribution centre resumed servicing all stores in the region as of August 2023,” Spar said in notes alongside its results for the year ended 30 September 2023, which were published on Thursday.

The group said the SAP solution is now “stable and performing consistently” at the KZN distribution centre, but the roll-out of the software to other Southern African regions has been delayed “until management is satisfied with the optimisation of the system at the KZN DC”.

“The learnings during this transition phase have been immense,” it said.

As a result of the change in approach towards the SAP implementation roll-out for the foreign regions, it said a write-off of R94.1-million in respect of the SAP “asset under construction” has been recognised in its books.

Read: Spar CIO resigns amid botched SAP project

“Management believe that they have identified the key issues that resulted in the shortcomings of the KZN DC SAP roll-out and that they now have the right team and resources in place to appropriately plan for future implementations in Southern African regions,” Spar said.  – © 2023 NewsCentral Media

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