ERP Problems Put Brakes On Volkswagen Parts Shipments

Another painful ERP installation has surfaced, this time in Germany. Volkswagen AG is having trouble delivering spare parts to some car dealers there after turning on SAP AG's R/3 software in its central parts warehouse.
An SAP spokesman in Germany confirmed that the enterprise resource planning (ERP) vendor has assigned 13 employees to help Volkswagen fix the problems, which are forcing some owners of VW and Audi cars to wait up to several weeks for needed repairs.
But the spokesman added that the R/3 applications being used at the parts warehouse in Kassel, Germany, were heavily customized without SAP's involvement before Volkswagen turned on the system in September.
Officials at Volkswagen corporate headquarters in Wolfsburg, Germany, weren't available to comment on the problems at press time.
Dave Caruso, an analyst at AMR Research Inc. in Boston, said many users end up customizing ERP software to fit their business needs.
But often, that's "asking for trouble," he said. "These systems are so complex that what seems like a benign change has a good possibility of upsetting things downstream."
Delayed Shipments
System problems can have an especially big impact on warehouses by delaying shipments to customers and causing product inventories to build up, Caruso added.
For example, order processing problems in Hershey Foods Corp.'s warehouses after an installation of R/3 and other applications hampered the Hershey, Pa., company's ability to ship candy and other products to retailers during the lucrative Halloween season. Hershey executives blamed a 19% drop in third-quarter profits on the problems with the new system (News, Nov. 1).
German newspaper reports said Volkswagen -- which typically delivers spare parts to dealers in one or two days -- hopes to get back to its usual level of performance early this year.
The problems primarily affect deliveries to dealers in eastern Germany, many of which are providing rental cars to customers while waiting for parts to arrive.