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Avnet Still Navigating Expensive ERP Project

Kevin Moriarty

Kevin Moriarty

William Amelio

William Amelio

Avnet (NYSE: AVT) is making progress working on a complex ERP deployment, but the project continues to impact portions of the distributor’s business, company officials said today.

Avnet’s ERP problems surfaced around April and was responsible for some — though not all — of the company’s recent revenue challenges.

“As you know, we have deployed multiple ERP systems in the past without this level of disruption,” said CFO Kevin M. Moriarty during an earnings call with Wall Street financial analysts today. “The deployment in the Americas region was certainly one of the more challenging in that it addressed our distribution business, our embedded business and the complex supply chain services we provide to both customers and suppliers.”

After the ERP Setback

While there was significant issues in April, the company’s pick, pack and ship business is operating at normal levels, and Avnet’s supply chain business has a few remaining issues that will be resolved shortly, Moriarty said.  “Most of our time and energy is focused on our embedded business, where we are working to resolve the remaining technical and operational issues,” he added.

The ERP project is no longer undermining revenues, but it has triggered higher IT expenses that will stretch through the September quarter and perhaps even stretch a bit into the December quarter, Moriarty conceded.

During a brief moment on the earnings call, Avnet appeared to mention SAP by name — though ChannelE2E has not confirmed that the ERP deployment challenges have involved the German software company.

Avnet’s Executive, Business Transitions

Overall, it sounds like Avnet has largely worked through the ERP challenges. But the company remains in transition mode. Rick Hamada stepped down in July amid an unexpected earnings shortfall. William Amelio was named interim CEO, and the company’s board began an internal and external search for a permanent replacement.

During today’s earnings call, Amelio said he considers himself the frontrunner for the post. But Avnet’s board, he added, has a fiduciary responsibility to “make sure that we do a credible search and to make sure that we leave no stone unturned.” He expects the search to be done “relatively rapidly.”

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