Retooling for E-Business - Page 2

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Executing Plan A

In 1992, owens cornings top executives, including CEO Hiner, thought they knew the secret to driving out costs and making the business more efficient: Re-engineer internal business processes and deploy integrated ERP software from a single vendor—SAP—throughout the enterprise. The ERP deployment, one of the most comprehensive at the time, included most modules of R/3 and was part of a broad re-engineering initiative dubbed Advantage 2000. Pushed by Hiner, the initiative had ambitious goals, including increasing revenue from $3 billion to $5 billion and growing earnings twice as fast as revenue growth.

In 1994, Owens Corning started its 100-week global redesign and legacy systems replacement project centered around R/3. The goal: to build an information system based on access to real-time information across multiple business units in multiple countries. Owens Corning wanted to build a single system that could support a global sales and services organization. The new system was to replace 200 disparate legacy systems. Although companywide rollout was completed in mid-1999, Owens Corning has continued to upgrade and extend R/3, for example, deploying Release 4 of the software last year and the data warehouse components from SAP in 1999.

The good news for Owens Corning is that Advantage 2000 delivered on most of its key goals. The company boosted sales to the $5 billion level while streamlining key processes such as customer invoicing and inventory management.

The most significant efficiencies resulted from taking the company paperless. Owens Corning automated human resource functions and purchase orders and eliminated paper-based requisitions in favor of automated receipt generation. Even though there are still customers who insist on doing business via fax, the company has been able to reduce the amount of paper it uses by one-third and has cut the number of printers it has in its world headquarters by half.

"Weve been successful in getting rid of as many nonvalue paper transactions as possible in some areas like procurement but not so successful in other areas," Johns said. "We are not quite the 800-pound gorilla like Home Depot where we can absolutely dictate what people who do business with us will do. Its a long road to haul, to be honest."

Owens Corning was also able to streamline internal processes by obtaining better and more up-to-date data. Using SAPs Business Information Warehouse data warehouse and reporting software, Owens Corning can get and analyze targeted sales data from across the company to improve quality control, pricing and product development. This has helped it to rapidly discern which goods or packing will be in high demand by customers, Johns said.