Pick n Pay implements world competitive solution

* Area of operation:
* Grocery, clothing, general merchandise retailing through company-owned and franchised stores

* Size of company:
* 400+ stores

* Location:
* South Africa

2. Pick n Pay's business challenge

Pick n Pay needed to replace its legacy in-house system with a fully integrated world-class packaged solution to enable a wide range of strategic business initiatives and increase competitiveness.

3. Pick n Pay's strategic goals

To rapidly implement a world-class, integrated systems platform to underpin strategic business improvement and competitiveness initiatives, including:

Improved inventory management through:

* Real-time visibility of inventory across the whole supply chain.
* Automated and optimised replenishment decisions - vital in relation to the introduction of convenience food lines.
* Improved integration with suppliers.
* Ability to support centralised distribution - the Longmeadow Distribution Centre was opened in September 2007 on a state-of-the-art SAP WM system - supports all stores in the inland regions of Pick n Pay - up to 120 000 cases per day.

Improved operational efficiencies:

* Increased automation of clerical functions in the finance department.
* Paperless operation within warehouses.

4. The solution

* What was chosen:
* SAP for Retail solution (including SAP Forecasting and Replenishment and SAP POS Data Management), SAP ERP, SAP NetWeaver Business Warehouse Component, SAP Business One.

* Why it was chosen:
* Most integrated solution with widest range of functionality including retail, finance, warehouse management, HR/payroll, BI. SAP had best support structures in South Africa and internationally. SAP is the largest application software provider worldwide and has the largest R&D budget, which means functionality and technology platform will continue to grow and change.

* Deployment time:
* One year for Group Finance and HR. Running concurrently for 18 months for full retail, operational finance and warehouse management.

5. The business benefits

* A number of business processes that were not fully effective were identified by the improved SAP reporting.
* Accurate information and management reporting systems enable the ability to make the “right” decisions.
* Customer service, efficiency, productivity and cost savings are always the primary goals, but none of these can be properly achieved without the right information. The overall integration of SAP modules and the ease of reporting make this a very powerful ERP solution for Pick n Pay.

“With 400 outlets and millions of customers across South Africa and its neighbouring states, Pick n Pay focused on implementing a new retail software solution without disruption of its many stores,” said Tony Nugent, senior executive for strategic projects at UCS.

UCS Solutions, as an accredited and expert provider of SAP solutions, was the first choice as a partner for this major project that would see the deployment of the latest SAP technology.

“Many of SAP's components were included in the scope,” says Nugent. “These included retail, warehouse management, finance, HR and payroll. Additionally, we also deployed systems for business intelligence and customer relations management.

“We also used the SAP NetWeaver Process Integrator (PI) and POS Data Manager (POS DM) components to build a seamless integration platform between SAP and other systems, such as the point of sale and store back office systems.”

Pick n Pay has extensive IT staff resources and expertise of its own. For most of the company's 40-plus years of operation and growth, it ran a mainly custom-built, in-house solution for its central merchandising and administrative systems.

Eventually, expansion and the need to operate cost-effectively in an always connected trading environment drove the need for a comprehensive retail and business process solution, SAP being the vendor of choice.

“While the primary goals are always factors like customer service, efficiency, productivity and cost savings, none of these can be properly achieved without the right information,” Ursula Warner, business applications director at Pick n Pay.

Warner notes: “Our in-house solution had been developed over a 20-year period. We were not getting the desired outcomes from a recent project to replace that with a new system of our own. The decision was made to investigate what was available as a complete solution from software vendors.

“This had such positive results that we quickly decided to deploy the SAP solution - not just for retail, but for nearly all our business processes - and UCS was selected as the implementation partner, thanks to their experience and abilities in that area.

“A major factor was that the SAP solution has built-in integration. Often, a system this large and complex means months of integration tweaking before it works reliably and we really needed to avoid that possibility.”

Considering the size of the project, it was decided to roll out the new system in the Western Cape area first and then follow that with other regions. There was also the opportunity to include Pick n Pay's state-of-the-art distribution centre at Longmeadow, in Gauteng, in the solution framework.

“This project is practically a showcase of what a major grocery retailer can achieve by implementing a wall-to-wall SAP solution,” says Nugent. “UCS has a wealth of expertise in the retail vertical and the success of this solution supports our belief that packaged ERP solutions have matured to the point where businesses can derive exceptional value by deploying them.”

“One of the biggest challenges in an implementation of this nature is change management,” says Warner. “There were a number of systems and procedures that had been established within our organisation over many years that had to be revised, especially with the inclusion of our centralised distribution strategy and bringing the new Gauteng warehouse into the system.

“UCS provided great support throughout the entire process.”

Another aspect to deploying a completely new system is that it often highlights problems, which were not previously obvious.

“A number of business processes that were not fully effective were identified by the improved SAP reporting,” says Warner. “When you have accurate information and reporting to management, the right decisions can be made. This is just one of the improvements that are achieved when you have a better system in place.

“The overall integration of SAP modules and the ease of reporting make this a very powerful ERP solution for our whole company,” says Warner.

The full range of SAP functionality is now fully operational across the corporate head office and half of the operating regions. The roll-out to the remaining operational regions will be completed in the next 18 months.

In Pick n Pay's recent financial results announcement, Nick Badminton, CEO of Pick n Pay, confirmed that the company is seeing significant benefits from the implementation of SAP.

“Those regions that have now run with the system for a full financial year are seeing considerable benefits from the discipline that SAP brings to our business,” Badminton concludes.