Spar Group loses $43m due to software glitches
International wholesaler and distributor of goods, Spar Group lost $43 million in the current reporting period due to software glitches.
In October 2022, the group commenced the launch of a new SAP software system in South Africa, and it says the transition resulted in various go-live and integration issues, negatively impacting distribution operations.
“The estimated impact of SAP go-live issues at KwaZulu-Natal (KZN) amounts to $43 million (R786 million) of lost wholesale turnover during the period,” Spar told shareholders at its interim results for the six months ended March.
Spar is an international group of independently owned and operated retailers and wholesalers who work together in partnership under the Spar brand. The business comprises more than 13,600 stores in over 48 countries on four continents.
Detailing the challenges it faced with SAP software implementation, Spar said the group commenced the launch of its new SAP software system at the South African central office.
‘’The distribution centre in KZN was the first regional distribution centre to launch SAP, thereby limiting any risk to the rest of the regions in doing so.
“The go-live at KZN commenced during February 2023. The transition to SAP has resulted in various go-live and integration issues, negatively impacting distribution operations in KZN.
“This has caused interruptions in stock deliveries to our retailers’ stores, resulting in reduced service levels and has had a significant impact on retailer loyalty in this region.
“Actions have been taken to improve supply to our retailers’ stores, including servicing these stores from our Eastern Cape, South Rand and North Rand distribution centres, direct to store deliveries, as well as the increased use of supplier drop shipment channels.”
Spar said it is resolving these issues with the assistance of SAP specialists and operational performance is improving.
It said: “The various go-live issues are being resolved and the priority remains to improve order fulfilment to ensure more predictable and consistent supply to our retailers in this region.
“Once service levels have improved to a satisfactory level on the reduced retailer base, KZN will take back the servicing of the rest of its stores from the neighbouring distribution centres.
“The rollout of SAP has been delayed in other regions until all issues at the KZN centre have been completely and satisfactorily resolved.”