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In the mid-1990s, the company deployed SAP s enterprise resource planning (ERP) product across its global enterprise. At the time, OC believed that a common global technology platform would resolve many of the business issues relating to its product-driven, make-to-stock manufacturing environment. This was important because these process issues affected OC s forecasts, materials management, production scheduling, ability to meet deadlines, and cost containment. According to Hatfield, Our forecast accuracy was not good, we didn t have the right linkage to production schedules, and we weren t doing the right level of demand-supply balancing. Our planning problems were having downstream effects on our customers, impacting on-time delivery and order fill-rate performance. The SAP system eliminated 500 legacy A new SAP system systems, achieving one of the company s eliminated 500 legacy prevailing goals to keep it simple, common, and global. OC then implemented systems and SAP s advanced planning and logistics softachieved one of OC s ware. However, the information technology applications only brought so much benefit. prevailing goals: to As David Johns, senior vice president and keep it simple, chief supply chain and information officer, common, and global. notes: The progress made was in the areas of back-office operations, logistics, and
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OWENS CORNING PROFILE: Reorganizing for a Bright Future
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materials management. But where we still lacked real integration was with our manu- OC wanted to see a facturing and our sales and operations plan- $250 million ning processes. It became apparent that a more cus- improvement in tomer-centric, enterprise-level approach income from using best practices and standards adopted by top-performing companies was needed to operations (IFO) over meet strategic goals. The biggest goal was three years. to operate as one company. This would prove to be no small order. A supply chain transformation initiative would become one of five top strategy principles championed by OC s new chief executive officer, Dave Brown. OC wanted to make significant gains in customer service levels and a $250 million improvement in income from operations (IFO) and working capital over a three-year period. It wanted to create a brighter future for its employees and stockholders. Lifting supply chain transformation to the strategic level was just the beginning of the three-year plan. As Hatfield explains, What we needed to do was to get better in each supply chain process (plan, source, make, deliver), change our mind-set from manu- We needed to facturing efficiency to supply chain flexi- change our mind-set bility, and integrate our customers and suppliers into our supply chain. We also from manufacturing had to expand our thinking beyond the efficiency to supply functional level to the enterprise, integrated chain flexibility, supply chain level.
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says Sue Hatfield.
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ORGANIZATIONAL CHANGES
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A first step was to integrate the functions having an impact on the customer experience materials management, logistics and warehousing, customer service/call centers, receivables management, customer and product master data integrity within a single group. Today, 350 employees report to this department, headed by Vice President of Customer Supply Chain Operations Meg Ressner. We intentionally put customer in front of our organization s name to make sure that we were really driving the culture of the supply chain to be end-to-end and externally focused, she says. The other thing we re
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Strategic Supply Chain Management
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trying to do is distinguish the process of supply chain from the organization that operates many of the processes. Ressner s group sits inside a broader organization called Supply Chain and Technology Solutions (SCTS), headed by David Johns. The reason for the differentiation We ve been trying to help our company see that the supply chain is a business process that touches everybody in the company. SCTS focuses on the processes, by operating them, deploying technology that supports them, or encouraging process innovation and enhancements. OC has recognized the value in combining the technology and supply chain process function in one organization. Johns OC has recognized explains the rationale: We wanted to leverthe value in age the resources we have across the enterprise, do things faster, and improve the combining the service we can provide. The company also technology and wanted to be more flexible in its response to supply chain process customers. Because OC had had a do everything for everybody mentality a functions in one decade ago, company costs were too high, and, as Johns says, We weren t really able organization. to grow, because we didn t have a consistent, coherent strategy. In those earlier days, we did understand that simple, common, and global were key operating principles and they remain so today but now we understand that flexibility is the key competitive advantage, Johns says. He contrasts this customer-facing perspective with OC s historical focus on manufacturing efficiencies: Our philosophy as a 60-yearold manufacturer was long product run times. And that strategy had all sorts of implications. But today, with a focus on flexibility, we re looking at market-driven lead times for product delivery and our ability to quickly respond to big changes in demand.
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