EXECUTIVE SUMMARY

Dead Sea Works is an international multi-firm producer of Potash and other chemicals whose sales for 1998 were about $500 million. In 1996, the Information Systems group convinced top management to pursue a big-bang ERP implementation of SAP R/3. To reduce project risk, risk management was practiced. First, only modules that matched the functionality of the then-existing systems were targeted, avoiding as much as possible software modifications and process reengineering. Second, a steering committee was set up to handle conflict resolution and set priorities throughout the project and top users were given responsibility with implementing modules within their respective functions. R/3 went into production on July 1, 1998, six months ahead of schedule and without exceeding the $4.95 million budget.

BACKGROUND

Dead Sea Works Ltd., one of 15 member companies of Israel Chemicals LTD, is a producer of Potash and other chemical products from the mineral-rich Dead Sea, Israel's greatest natural resource. Situated at the lowest place on earth, it lies in a valley whose southern part is suitable for evaporation pans and enjoys ample sunlight for most of the year. This combination of chemical riches and topography that is amenable to practical use fired the imagination of Theodore Herzl, the father of modern Zionism. After hearing of a plan to extract minerals from the Dead Sea, during his 1896 visit to Palestine, Herzl described in his book, Alt Neuland, a Jewish State whose economic strength would be derived from the treasures of the Dead Sea.

Moshe Novomeisky, chemical engineer, came from Siberia to Palestine at the beginning of the century inspired by Alt Neuland to turn this vision into a reality. In 1930, he obtained from the British Mandatory authorities a concession to extract minerals from the Dead Sea, established the Palestine Potash Company LTD, and constructed a plant in the northern part of the Dead Sea. In 1934 evaporation pans and a chemical plant were constructed in Sodom as well. This became the foundation for today's Dead Sea Works (DSW) which, since it was reestablished in the 1950s, has increased production steadily to its current level of close to three million tons of Potash per year. In addition to Potash, DSW produces Magnesium Chloride Flakes and Pellets, Salt, Bath Salts, Magnesium Metal, Chlorine and Bromine.

Instead of mining, as do most of its competitors, DSW extracts Potash from the Dead Sea. The production process begins with the pumping of Dead Sea water to 105 square-kilometer salt pans, where the solution is concentrated. An additional forty square-kilometer pans are then used to crystallize materials, which after settling on the pan floor, are pumped by harvesters directly into refineries. In this process, DSW takes advantage of the energy of the sun, another important natural resource in the region. Artificially, these drying processes would require 10 million tons of oil per year.

Wherever Potash is produced, transportation is a major expense, as was the case for DSW because of the 900-meter altitude difference between the factory at Sodom, the...