Owens-Corning's Enterprise System Struggle

CASE STUDY Owens-Corning's Enterprise System Struggle

In the early 1990s Owens-Corning was a U.S. leader in the pro- Owens-Corning's project began with its insulation group,

duction and sale of such building materials as insulation, siding, and those on the project team understood this. They undertook

and roofing, but management wanted the company to grow. a redesign process before implementing SAP's R/3. They set up

The company had only two possible paths to growth: offering a cross-functional teams to identify the handoffs and touch points

fuller range of building materials, or becoming a global force. To between the various functions. For example, the process that

increase its range of products Owens-Corning decided to runs from the time the firm needs to buy something through the

acquire other companies. To become a global force, manage- payment issuance to the supplier touches logistics and accountment

realized the company would need to become a global ing. The teams also kept in close contact with suppliers who

enterprise that could coordinate the activities of all of its units in needed to know what Owens-Corning would require of them.

many different countries. As a result of the redesign, purchasing decisions were moved

Headquartered in Toledo, Ohio, Owens-Corning had been from the plants up to a regional level, enabling commodity spedivided

along product lines, such as fiberglass insulation, exterior cialists to use their expertise and the leverage of buying for a

siding, and roofing materials. Each unit operated as a distinct entity larger base to improve Owens-Corning's purchasing position.

with its own set of information systems. (The company had more How did the first ERP project go? During a weekend in

than 200 archaic, inflexible, and isolated systems.) Each plant had March 1997 a team of about 60 people transferred legacy data

its own product lines, pricing schedules, and trucking carriers. into the SAP system, and on Monday morning the company

Owens-Corning customers had to place separate telephone calls for went live. When Owens-Corning first went live with SAP, overeach

product ordered–one each for siding, roofing, and insulation. all productivity and customer service dropped sharply during

The company operated like a collection of autonomous fiefdoms. the first six months. "When you put in something like SAP, it's

Owens-Corning management believed that these problems not a mere systems change," said David Johns, Owens-Corning's

could be solved by implementing an enterprise system. The director of global development. "You're changing the way people

company selected enterprise software from SAP AG to serve as have done their jobs for the past 20 years."

the foundation for a broad company overhaul. "The primary The first problems that surfaced were technical. According to

intent with SAP was to totally integrate our business systems on Johns, application response time had increased from seconds

a global basis so everyone was operating on the same platform before ERP to minutes under the new system. Other technical

with the same information," said Dennis Sheets, sourcing man- problems also emerged. For example, Johns said the system wasager

for the insulation and roofing business. Sheets wanted to n't working the way it was supposed to. Johns believes the source

centralize purchasing. "Prior to SAP," he said, "we were buying of these problems was inadequate testing. The team further

widgets all over the world without any consolidated knowledge tuned the software, and during the next weeks response time

of how much we were buying and from whom. Now [using reduced to an acceptable level. Slowly the software began operat-

SAP's R/3 software] we can