UFA, an Alberta-based cooperative with agricultural retail stores and a petroleum distribution network in Alberta, B.C. and Saskatchewan, is optimizing its business processes with mySAP ERP. It will tap into SAP’s industry-specific retail and oil and gas distribution modules to help streamline operations and create supply chain efficiencies.
United Farmers of Alberta had J.D. Edwards as its core ERP system for about a decade. Being a cooperative, it has some unique requirements, such as tracking member sales and calculating member commissions. It also has two relatively different business processes for its retail store business and petroleum distribution business, which required a lot of customization.
“All the customization caused us to have some unique processes and almost a proprietary system, which we’ve had a really hard time upgrading and maintaining with the new versions and patches that came along,” said Rahul Kohli, vice-president of information technology with UFA. So it started the process of looking for a much simpler ERP system. After a four-month selection process between some 20 vendors, it chose SAP as its supplier, which provided much of what it required out of the box. The phased rollout began in September with SAP partner Bearingpoint, which is doing the implementation and training; the entire project is expected to go live by the end of this year.
“One of the key drivers this time around is to have very minimal customization, if any at all,” said Kohli. “One of our objectives is to use as much of the best-in-class processes that come out of base SAP, versus customizing them to the processes we already have, which we know are not optimized and streamlined.”
The cooperative is more than 100 years old, but wants to be more aggressive in how it grows by increasing efficiencies in its supply chain, said Dean Melnyk, vice-president of SAP Canada Inc.’s Western Region.
“They used a lot of spreadsheets,” he said. “While spreadsheets give you a good view after the fact, the management team didn’t have a holistic view of their business that was relatively real time and they couldn’t look at the business as a whole.” They wanted to better manage their inventory, he added, and be able to provide different products and services to farmers, ranchers and large commercial farming enterprises.
The ERP backbone helps them with business applications, including human resources, finance, purchasing and procurement, he said. UFA is going live in the second quarter with its human resources application. “Like many Alberta companies, UFA is in a very competitive marketplace when it comes to retaining their employee base and attracting new employees, so they decided to implement human resources first,” he said, adding this includes an employee information portal. The procurement piece will go live in the third and fourth quarters.
UFA is still using its existing front-end retail point-of-sale system, Competitive Edge from Responsive Data Systems, which it isn’t planning to replace right now. Though there is some concern around that system, Kohli believes by replacing the back-end system, it will resolve a lot of those front-end issues.
“There were a lot of weaknesses in our controls and we’re looking to resolve that,” said Kohli. “As that happens, it will also allow us to rely more on the integrity of our data, which we’re hoping will then help us to understand and provide better service to our customers.”
The biggest challenge is around managing change. “SAP, like any other ERP, brings about such a major change in the company, whether it’s process-related or work-related,” he said. And being a cooperative, that’s heightened. “At least in our cooperative, many people have only worked at UFA, so they haven’t necessarily seen this magnitude of change take place, which brings about all sorts of uncertainty.”
Members and non-members may not see any direct changes when they go into a retail store, since the same POS system exists, but there will be improvements in customer statements and computations around commissions, he added.
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