Nova Scotia Liquor Corp takes a shot of ERP

When the Nova Scotia Liquor Corp. (NSLC) decided to spike its product and service delivery model, it turned to an enterprise resource planning (ERP) software vendor that provided a flexible system to meet its customization needs.

The NSLC wanted to make some changes to its business and operational process to improve efficiency and customer service, but the corporation felt its current ERP system was not up to the task.

“We were in the process of modifying our processes and we needed an ERP system that could keep up with the changes,” said Mark Brown, vice-president of information technology for NSLC.

After conducting a tendering process, NSLC selected IBM in partnership with enterprise software maker, SAP Canada Inc. to implement its ERP project.

Work on the project began in April, 2006 and the system went live just two months ago.

NSLC is the largest single banner liquor retailer in Nova Scotia and ranks number four is the country’s beverage alcohol retail market.

The corporation sells around 3,000 products from around the world through 108 retail stores, 2,100 licensees and 45 agency stores.

NSLC employs 1,300 people and generates about half a billion dollars in revenue a year from which the province of Nova Scotia retains an estimated $180 million in annual profits.

Brown said the new IBM-SAP system was superior to NSLC’s previous ERP system because of its “inherent flexibility.”

He declined to name NSLC’s previous ERP system but said one critical failing was its inability to facilitate “quick changes” to meet the organization’s changing demands. “Very often, when we needed to customize our old ERP system, the process took a month. This tied-up our IT personnel.”

Brown said the SAP ERP system comes with a set of tools that have “built-in features ideal for out business.”

The implementation included the following:

• Deployment of SAP ERP, which provides control and financial insights across the enterprise

• Installation of forecasting and replenishment applications developed for NSLC to help reduce inventory

• Deployment of SAP Store Management application to provide staff with up-to-date product and inventory information

• Set up of transportation and logistics software tools streamline supply chains

Reducing inventory and obtaining accurate reports are vital for retail businesses, according to Bob Courteau, president and managing director, SAP Canada.

“Retailers are very cost-conscious. They are always looking for ways make their delivery more efficient, and get the correct facts to make the right decisions.”

The new system, Brown said, has helped NSLC eliminate key deficiencies such as inaccurate and duplicate data storage.

Because the previous ERP system had “inadequate reporting capabilities”, IT personnel had to develop use another application to provide the corporation with inventory reports, Brown said.

This method, however, resulted in information being stored in separate data storage systems.

“Our sales numbers, in particular, often didn’t match. It sometimes took the staff up to six weeks just to trace where the problem occurred and reconcile the numbers.”

He said the business intelligence component of SAP’s ERP system provided “an all-in-one solution” that consolidated data from across the operation.

ERP software products have become very vital to both small and large scale retail operations in recent years, according to one Canadian IT industry analyst.

“Not only have these software tools automated processes that were traditionally done manually, ERP application provide improved insight into resource management and business forecasting,” says George Goodall, senior research analyst for Info-Tech Research Group Inc., in London, Ont.

He said ERP applications have proven very effective in improving several key business operation areas such as:

• Supply chain management – ensuring that the right quantity of products is available at the right time;

• Merchandize optimization – helping companies secure and deliver the appropriate product for different markets;

• Markdown optimization – assisting managers and planners in determining the correct moment to markdown product prices in order to maximize profit and;

• Workforce management – making it easier for managers to develop personnel deployment strategies

Currently, SAP appears to be head-to-head with rival Oracle Corp. in the battle to win over retail businesses, according to a retail industry analyst.

“Around two years ago, both Oracle and SAP realized that retail represents the last remaining sector that has not fully adopted ERP,” according to Scott Langdoc, vice-president of research for retail industries at analyst firm IDC Inc.

He said both companies poured considerable resources into strengthening their ERP offerings through software development and acquisitions.

“The main thrust of their efforts is to provide retailers with a single system solution for the ERP needs.”

Traditionally, Langdoc said, retailers employed separate systems to handle storage, merchandize and supply chain control. Some companies have been wary about an “all-in-one” ERP product for fear that it will not have the flexibility to deal with their particular needs, he said.

Goodall said “it very hard to find differentiating features in ERP products in the market today” but SAP may have some advantage in the Canadian market.

Its 2005 purchase of Toronto-based point-of-sale software maker Triversity, however, provides a strategic advantage in the Canadian market, according to Goodall. “Ontario’s Beer Store is an excellent anchor client for SAP because it uses an ERP application developed by Triversity,” he said.

The Corporate Information Systems division in the Nova Scotia Department of Finance has also been relying on SAP ERP software products for several years.

The division uses the products for financial, material and human resources management.

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