Spar’s SAP warehousing system is still sending retailers in KwaZulu-Natal stock-out notices, suggesting products are not available for order, forcing them to buy elsewhere.
But the system has improved from the height of its implementation failure in 2023.
Difficulties in rolling out new SAP software in the KwaZulu-Natal distribution centre from February cost Spar R1.6bn in revenue in the most recent financial year.
But retailers in KwaZulu-Natal who spoke on condition of anonymity suggested that while things have improved the frequent problems place an additional administrative burden on them to ensure they get orders placed and delivered.
Spar, a wholesaler that sells food and liquor to independent stores, has been transparent in saying the system rollout was “disastrous”. However, it said in its financial statements in November it was stable and performing consistently.
One retailer said it would take two years before the system is working properly “unless miracles happen”.
This means Spar sales may again take a hit as its franchisees are forced to buy some goods elsewhere, and it already has low profit margins.
Ideally, privately owned stores would buy about 90% of their goods from Spar, but many can only get about 75% of their stock from the distribution centre.
Retailers expressed confidence in Spar CEO Angelo Swartz, who was appointed in 2023, as the right person to lead the firm. “We have got a lot of faith in him. We are sure he will turn things around,” said one retailer.
Spar said it is selling almost the same quantity of goods to KwaZulu-Natal retailers as it did before the SAP implementation, with a drop of just 3%-5% experienced.
But this does not line up with what retailers, also facing huge load-shedding bills and cash-strapped customers, at many stores are saying.
Big nightmare
One store owner said the SAP failure “allowed them to go and buy elsewhere because if they didn’t have stock they would have had no business”.
“They’ve tasted [buying] from outside and seen what the [alternate wholesalers] are offering, which is a problem. So SAP has caused this big nightmare.”
In a letter sent to KwaZulu-Natal retailers in December, Spar said SAP “altered our landscape somewhat”, euphemistically referring to continuing issues.
It told retailers that if they hadn’t received an email after placing orders with SAP they needed to follow up with the distribution centre.
“If the order confirmation emails are not received by 1pm on the day of ordering, then the order did not reach SAP and therefore may not be released for picking yet by the distribution centre. Or, there may have been an issue with the email not being sent.”
Spar said “asking retailers to check their orders predates the implementation of SAP and is merely a guardrail against the connectivity issues that we are all currently facing from load-shedding, theft and network outages”.
A different notice sent to retailers last week suggested the in-store Sigma software used by retailers and the SAP software at the distribution centre don’t communicate well.
Spar said it is fixing things. “Sigma communicates directly with SAP but in October 2023 a necessary change to Sigma was identified, which is affecting some functionality. Development of this Sigma change is almost complete but [will probably] only be deployed with other updates in April. We are communicating with stores every step of the way.”
Spar faces many issues that its new leadership team under chair Mike Bosman has done its best to address.
Lost jobs
It has been transparent about needing to exit its business in Poland where it has always made a loss and probably will exit Switzerland where it barely makes any money. It has R10bn in debt and faces great competition from Checkers that is opening more stores and offers speedy delivery.
Spar decided against implementing SAP in other provinces and a few people connected with the project lost their jobs including former IT head Mark Huxtable. It has since hired a board member with extensive IT expertise.
It is common for implementation of new software to cause problems. Massmart’s Game was a victim of a move to SAP a few years ago.
“I can’t understand how these people [SAP] get away selling a product and it is not working from day one,” said one retailer.
Tjaart Malan at SAP Africa, said: “A team of SAP experts and support staff have worked hand-in-hand with Spar’s team and resolved the adoption challenges, ensuring that the Spar Group can benefit in full, from both their investment and the efficiency gains of its new SAP solution. The system will continue to be optimised to improve business performance.
“An implementation of this magnitude has many facets, and the issues experienced were not related to the SAP software itself.”
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