The failure of a new supply chain management system has been blamed
in part for a 38% fall in profits at the Quest food business at
chemicals giant ICI.
ICI chairman Lord Trotman said Quest had a disappointing second
quarter for 2002 as a result of production problems after systems
were changed.
While production volumes have now been restored, he said there
would be a trading profit impact in the second half, which is
estimated at around £10m. The failure has, so far, cost the
business £4m.
ICI chief executive officer Brandan O'Neill said the problems
involved a company-wide project known as Q-star, based on SAP. The
project's aim was to optimise Quest's supply chain, in order to
achieve savings of £20m a year by 2004.
However, at the end of May, when the system went live across four
locations in the Netherlands, Quest experienced problems with
Q-star, that led to "an inability to locate raw materials
accurately", O'Neill explained. The result was a massive backlog in
the company's order book.
O'Neill said Quest has spent the past eight weeks rectifying the
glitch, which involved a combination of seven-day working in at the
plant in Naarden, and relocation of manufacturing to other Quest
sites to reduce the production backlog.
O'Neill insisted he was undeterred by the failure at Naarden and
planned to continue rolling out the Q-star project and SAP.
"We have implemented SAP successfully across ICI and within the
Q-star programme," O'Neill said. "The problems we experienced were
unique to this location."