Mega supermarket spots stock discrepancy of tens of millions amid ERP system migration

British retailer Asda admits tech divorce from former owner Walmart has been delayed again

Exclusive Asda, the UK's third largest retailer, discovered a multi-million pound discrepancy between its distribution system and SAP ERP tech installed earlier this year, according to an internal Major Incident report seen by The Register.

Asda migrated from the legacy SAP system run by former owner Walmart to a new instance of S/4HANA, hosted in the Microsoft Azure cloud, following a deal announced in December 2021. The same month, Manhattan Associates announced that the supermarket had chosen its Manhattan Active Warehouse Management software to help "evolve" its logistics network in the UK.

The Major Incident report distributed at the start of this week states a mismatch of approximately £21 million ($28 million) had occurred "between Manhattan SCI and SAP closing stock reports across two months affecting quarterly reporting." The retailer's annual revenue is around £24 billion ($32 billion).

It said there had been a 10 million item mismatch for June that had been fixed in the Manhattan system, while efforts to fix an 11 million item mismatch in July were ongoing. "The plan is currently to post manual corrections to stores once the finance team has gone through the Manhattan data," it adds.

The report warns the issue could "potentially lead to the delay of the publication of validated financial information and increase the risk of dysfunctional commercial decision-making alongside a delay [to] Asda's consolidation of group-wide financial results."

A spokesperson for the retailer told us: "Like other large businesses, we run regular data checks to ensure the stock received and invoices raised are aligned. A recent check identified a minor discrepancy in how the data appeared in a report and was quickly rectified. This had no financial or operational impact whatsoever."

It is understood that Asda runs a reconciliation task between its stock holding in depots and its invoicing records in finance as a "business-as-usual process."

Asda's move to SAP's latest in-memory ERP system, S/4HANA, is part of "Project Future," the name given to its technology separation from Walmart, the US retail giant that sold the UK supermarket to the Issa brothers and TDR Capital in February 2021.

In January, The Register reported on delays to the project – which also includes front-end POS systems – after Asda was forced to extend its arrangement with Walmart to continue supporting back-end systems until February 2024.

Asda had intended to finish the project by the end of 2024, but in a blog post published late last month, the company said it would prioritize the conversion of around 850 sites including smaller supermarkets, and Asda Express convenience stores during the remainder of 2024. It said the bulk of customers shop in larger stores, which it would convert to the new system from early January 2025 onward following the peak Christmas trading period.

"This is a sensible and pragmatic approach for the business during the 'Golden Quarter' period. It is also the right thing to do for customers, as it will help to give them the best possible Christmas – with Asda's commitment to uncompromising value and an enhanced product offering," the blog post said. ®