Foodstuffs South Island owner operators keen for SAP

Store owners eager to reap the benefits as co-operative rolls out SAP ERP

AUCKLANDAs Foodstuffs South Island Limited rolls out SAP ERP, Merchandising and Supply Chain to its 49 owner-operated stores, members of the co-operative who have seen benefits gained by those already on the system are lobbying to be pushed up the rollout schedule.

The programme encompasses finance, merchandising, procurement and promotions across Foodstuffs’ supply chain and now retail stores which will provide an integrated solution across the co-operative, increasing the visibility of data across the entire supply chain. Foodstuffs anticipates that the increased efficiency will reduce the cost of doing business and these savings can be passed on to customers of Pak’n’Save, New World, Four Square, Henry’s and On the Spot retail stores and Trent’s wholesalers.

Phil Wright, Foodstuffs South Island general manager IT, says following the implementation into Foodstuffs nearly three years ago, the phased rollout into retail began two years ago with the pilot stores. The main rollout consists of – store infrastructure deployment ahead of module 1 (scanning and promotions), module 2 (SAP for some departments within a store) and finally, module 3 (full SAP for the entire store).

“Currently eleven stores have switched fully to SAP, another five are running some departments (module 2) 24 are on module 1 and the remainder are putting the infrastructure in place in their stores. We anticipate all stores will be live on the new system in 18-24 months,” says Phil.

Foodstuffs is a co-operative which poses its own unique challenges and meant some customisations were required.

“We don’t dictate from head office how our owner-operators should run their businesses. There are differences between the stores in terms of business processes, product lines and store owners are responsible for buying products,” adds Phil.

“The key drivers for the project were to provide the business integrated data across wholesale and retail, and also providing tools to enable owner-operators to better manage their respective businesses. SAP provided the best all-round solution for our organisation in the long term,” says Phil.

Visibility of data drives margin improvements

SAP ERP and Merchandising will give Foodstuffs timely financial reporting that is more tightly integrated with the operation of the business. Previously the co-operative had disparate systems for its retail and wholesale divisions. It will also enable e-commerce in retail including electronic invoicing and purchasing.

The solution has also increased the accuracy of data within Foodstuffs, which leads to increased visibility and better decision-making.

“We thought our data was pretty accurate before but SAP is fairly unforgiving with even small data errors, this forced us to address the root cause and in turn improve the data quality. We’re now getting improvements in margin management because of the improvement in data quality,” explains Phil. “Our pricing can be very complex, particularly with promotions. The better visibility we’re getting means we can make more informed decisions around pricing. We’re also seeing more efficiency in inventory which is traditionally complex in a co-operative such as ours.”

Customer benefits

Due to the superior analytics in SAP ERP and Merchandising the stock carried in stores can optimised for local tastes and preferences, and inventory can be managed more closely. This means stores are less likely to run out of a product leaving customers disappointed. And the efficiencies gained can be passed on to customers in savings and service.

Change management

There have been some challenges in the project including change management.

“Changing from our historic systems has meant that our staff have faced new ways of working and different divisions have had to work closely together. Staff have been very supportive though, despite the magnitude of the changes,” says Phil. “Now that everyone is seeing that we’re achieving the goals we set out at the beginning it makes the hard work worthwhile – although this has taken longer than we had envisaged at the outset, but it was important to provide the functionality the business needed”

Graeme Riley, SAP New Zealand managing director, says that the local SAP team has learnt a great deal about the specific demands of a co-operative business during the project.

“We’ve been able to tailor SAP ERP to the specific needs of Foodstuffs to support the essential functions of the business processes and operations efficiently. There has been excellent governance on the project and Foodstuffs is already realising the benefits of SAP brought about by greater visibility across the whole organisation.”

About Foodstuffs South Island Ltd

Foodstuffs South Island is one of three co-operative companies in the 100 percent New Zealand-owned and operated by the Foodstuffs organisation.
Each co-operative operates independently and autonomously with its own Board of Directors, Chief Executive Officer and management structure and each individual store is owner-operated by a co-operative member.

  • Full service supermarkets trade as New World
  • Foodbarns/retail food warehouses trade as PAK’nSAVE
  • Convenience order grocery stores trade as Four Square/Four Square Discount
  • Small convenience stores trade under the name On the Spot
  • Henry’s retails beer, wine & spirits

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For more information, press only:
Peter Sertori, SAP Australia and New Zealand, +61 2 9935 4845, peter.sertori@sap.com
Rachael Joel, Botica Butler Raudon Partners, 09 303 3862 or 021 403 504, rachaelj@botica.co.nz