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e-Business in the chemical, rubber and plastics industry5.9 Zachem S.A. (Poland)AbstractZachem S.A. is a large company supplying organic and inorganic chemical products tothe chemical and power industry. The case study illustrates how a large state-ownedcompany was confronted with changing market conditions. The main challenge in thenew environment was to abandon a complex and inflexible organisational structure andcreate an efficient information management system. The effort made to adapt to thisnew reality was the creation of a telecommunication infrastructure connecting allbusiness units and an implementation of a business management system. Thesecreated a new information culture and led to the digitalisation of all businessdocuments.Case study fact sheetFull name of the company:Location (HQ / main branches):Main business activity:Year of foundation: 1948Zachem SABydgoszcz, PolandNumber of employees: about 1,400Turnover in last financial year:Primary customers:Manufacturing organic and inorganic chemicalproducts and intermediate productsabout €25 millionCompanies in the chemical and power industriesMost significant geographic market: Poland (65%), worldwide exports (35%)Main e-business applications studied:Case contact person(s):Enterprise Resource Planning (ERP)Mr Robert Kalinowski, Director of the ITDepartment at Zachem5.9.1 Background and objectivesEstablished more than 50 years ago, Zachem S.A. is one of the most important chemicalenterprises in Poland and one of the biggest companies of the north-western part of thecountry. The company specialises in manufacturing organic and inorganic chemicalproducts and intermediate products for the chemical, cable and power industries. Its mainproducts include flexible polyurethane foams and toluene diisocyanate (TDI),polyurethane epichlorohydrin (EPI) and allyl chloride (AC). Furthermore, it is also anestablished producer of a wide range of PVC-compounds and a number of inorganicproducts, such as hydrochloric acid, sodium hydroxide, and sodium hypochlorite.Founded as a state company, the firm was of strategic importance for chemicalsproduction in the complex state-controlled industry system. As a result, it evolved into alarge centrally-managed conglomerate producing various types of products in largebatches. However, due to the political and economic transformation starting in 1989Zachem S.A. was confronted with new challenges and had to adapt to new marketconditions. It became clear that the firm was not able to maintain its large size andextensive scope of operations. The company needed to become more efficient andflexible in order to survive in the new competitive environment.181
e-Business in the chemical, rubber and plastics industryAnother legacy of past times the firm had to deal with was the lack of accurateinformation for taking management decisions, which would enable it to react faster tochanging conditions. According to Robert Kalinowski, Director of IT Department atZachem, “an information infrastructure hardly existed in the company back then, and thedevelopment or implementation of a management system that could support such a largeorganisation was out of reach as well.” Consequently, one of the main points of therestructuring programme was a structural transformation. In 1992, Zachem S.A sold itsexplosives manufacturing unit and adopted a holding structure, i.e. the firm was split intofive units with separate sales, marketing and accounting divisions. According to thecompany speaker, this change of structure enabled the firm to significantly reduce thereaction times and enabled it to survive the turbulent times.Although the new organisational structure worked well, new problems emerged. In 1998,the company realised that information from the various units was not collected centrallyand did not give a holistic picture of the company’s operations and condition. Thus, themanagement board decided to build an information infrastructure and implement anenterprise resource planning (ERP) system. The case study describes this process.5.9.2 e-Business activitiesTelecommunication infrastructureIncluding 60 buildings, Zachem’s industrial complex was the second largest in Poland.Thus, considering that it had to start from scratch in order to create an informationinfrastructure and implement a business management system, the computerisationproject involved considerable costs. In order to build such an infrastructure the firmneeded to lay down 34 km of fibreglass and connect all buildings within the company’snew telecommunication network. This network was, however, a precondition for furtherdevelopment of the ICT infrastructure.ERP system selectionThe firm began working on specifying its requirements for a business managementsystem in 1998. According to Mr Kalinowski, the system was to support production, sales,distribution and accounting operations of all five conglomerate units. Zachem S.A.considered three main offers made by IFS, BAN and SAP.Zachem gives several reasons for finally selecting the offer from SAP. The main reasonwas the positive feedback the company got from two business partners: PetrochemiaPłock S.A. and Zakłady Azotowe Kędzierzyn S.A. The first one is one of the largestrefineries in Poland and, according to Mr Kalinowski, has a structure similar to the one ofZachem S.A. “Having seen positive outcomes of the system implementation atPetrochemia Płock S.A., we believed that we could replicate their success in ourcompany. Furthermore, their employees gave us positive feedback after the systemlaunch, which additionally encouraged us to go ahead with the plan.”The second company, Zakłady Azotowe Kędzierzyn S.A., is one of the leading Polishproducers of polyamides, acetal copolymers and fluorine plastics. It implemented anidentical ERP system as the one planned by Zachem S.A. in 1997/98. “Due to the factthat Zachem S.A. maintained very close links with this company, we could benefit from itsexperience. One of the directors of Zakłady Azotowe Kędzierzyn S.A. served us as a182
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