FRAMINGHAM (04/25/2000) - Problems with a new Internet-based order management system continue to haunt Thomas & Betts Corp., which incurred more than $6 million in additional freight, distribution and customer service costs because of the system issues during this year's first quarter.
The $2.5 billion electrical parts manufacturer in Memphis today announced first-quarter sales of $660 million and income of $35.9 million, up 7.8% and 4%, respectively, compared with the same period in 1999.
The first-quarter results also include a $6.4 million pretax gain from the subleasing of the company's former headquarters. But Thomas & Betts said $5 million of that gain was eaten up by the cost of keeping extra inventory on hand as a way to resolve problems caused by the new order processing system.
"In light of the difficulties we faced in managing the transition of our new systems, I am pleased that we met our earnings target for the quarter," said Clyde R. Moore, president and CEO of Thomas & Betts, in a prepared statement.
On the down side, Moore said, he was disappointed by a first-quarter increase in accounts receivable, which he attributed to billing issues associated with the systems conversion.
Thomas & Betts' systems-related financial problems first surfaced in February, when the company blamed its new Internet-based order management system for a 50% nosedive in profits for the fourth quarter of 1999 plus another $42 million in lost business caused by ordering and shipping disruptions.
The system, known as TOPS, for Thomas & Betts Order Processing System, comprises software applications for processing and fulfilling orders. The ordering and fulfillment systems run on IBM mainframes and the Adabas database, using the Natural interface language. On the front end are dynamic HTML-, Java- and XML-based processes. IBM's MQSeries middleware connects the order processing system to financial applications from Oracle Corp. and to manufacturing systems that run on IBM's AS/400 servers.
TOPS also includes a worldwide online ordering system and gives Thomas & Betts' customers the ability to get pricing and product availability information and to track their orders via the Internet.