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Owens-Corning Case Study
Table of contents
1. Case Study Questions........................................................................................................... 1
2. Owens-Corning's Enterprise System Struggle......................................................................1
1. Case Study Questions
Read the Owens-Corning Case Study and then consider the following questions:
1. Describe the problems Owens-Corning had with its information systems prior to
installing its enterprise system. What management, organization, and technology factors
were responsible for those problems?
2. What management, organization, and technology problems did Owens-Corning face in
putting their enterprise system into effect?
3. How did implementing an enterprise system change the way Owens-Corning ran its
4. Was installing an enterprise system the right solution for Owens-Corning? Explain.
2. Owens-Corning's Enterprise System Struggle
In the early 1990s Owens-Corning was a United States leader in the production and sale of
such building materials as insulation, siding and roofing, but management wanted the
company to grow. The company had only two possible paths to growth: offering a fuller
range of building materials, and/or becoming a global force. To increase its range of products
Owens-Corning decided to acquire other companies. To become a global force, management
realized the company would need to become a global enterprise that could coordinate the
activities of all of its units in many different countries.
Headquartered in Toledo, Ohio, Owens-Corning had been divided along product lines, such
as fiberglass insulation, exterior siding, roofing materials. Each unit operated as a distinct
entity with its own set of information systems. (The company had more than 200 archaic,
inflexible and isolated systems.) Each plant had its own product lines, pricing schedules, and
trucking carriers. Owens-Corning customers had to place separate telephone calls for each
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product ordered- one each for siding, roofing and insulation. The company operated like a
collection of autonomous fiefdoms.
Owens-Corning management believed that these problems could be solved by implementing
an enterprise system. The company selected enterprise software from SAP AG to serve as the
foundation for a broad company overhall. "The primary intent with SAP was to totally
integrate our business systems on a global basis so everyone was operating on the same
platform with the same information," answered Dennis Sheets, sourcing manager for the
insulation and roofing business. Sheets wanted to centralize purchasing. "Prior to SAP," he
said, "we were buying widgets all over the world without any consolidated knowledge of
how much we were buying and from whom. Now [using SAP's R/3 software] we can find out
how many widgets we're using, where they're being purchased, and how much we paid for
them, [allowing] us to consolidate the overall acquisition process." Now, he added, "we can. .
. make better business decisions and better buys." Sheets expected the company's material
and supply inventories to drop by 25 percent as a result.
However, the project to install SAP's enterprise system would ultimately cost
Owens-Corning about $100 million and take several years, too expensive and time
consuming to be justified only by the reasons given by Sheets. The company hoped that the
new system would also enable it to digest acquisitions more easily. Owens-Corning wanted
to acquire other companies to expand its product line so it could increase sales from $2.9
billion in 1992 to $5 billion within a few years. That meant that Owens-Corning would have
to digest it's the archaic, inflexible systems from the companies it purchased. If
Owens-Corning were to become a global enterprise, it would need a flexible system that
would enable the company to access all of its data in an open and consolidated way.
ERP experts point out that simply converting to ERP systems does not solve companies'
problems. "Unless a company does a lot of thinking about what its supply chain strategy is
and articulating what its business processes are, these tools are going to be of little use,"
explained Mark Orton, of the New England Supplier Institute in Boston.
Owens-Corning's project began with its insulation group, and those on the project team
understood this. They undertook a redesign process before implementing SAP's R/3. They set
up cross-functional teams because "We had to identify the handoffs and touch points between
the various functions," said Moke Morey, the division's ERP implementation