In-Depth

Owens Corning turns data into actionable information

Category: Data Warehousing
Winner: Owens Corning

Given that data warehousing and business intelligence have been around for a decade or longer, it seems unusual that Owens Corning waited until 2004 to build a data warehouse and business intelligence capabilities to support pricing and gross margin decisions. But when it did, it quickly built the system and experienced an astonishing payback.

The data warehousing and BI project, dubbed the Information Access Project (IAP), arose from the difficulties company managers had analyzing and optimizing pricing and gross margin across all of the company’s products, customers and markets worldwide. Managers could see gross margins shrinking but lacked the data to do much about it.

“We have a good ERP system and we can use it to know exactly how profitable we are. However, the number is an aggregate. It doesn’t give us anything actionable. We could see gross margins decline but not how to fix [the cause of the decline],” says Klaus Mikkelsen, global development leader for Owens Corning’s supply chain and technology solutions group. The CEO insisted IT initiate a project to give managers the information they needed.

Previously, managers who wanted insight into gross margin and other aspects of the business had to access information through a loosely coupled environment of reports, delivery systems, and extraction programs to move sales, pricing, gross margin and other data from the company’s multiple ERP systems to business users such as business and product line managers, pricing analysts and promotion planners. What the CEO wanted was a system to deliver information in a way that would change the behavior of managers by making them aware of the factors affecting margin as they made decisions.

To deliver this kind of information, “we needed to form new partnerships with the business to understand what actionable information was,” Mikkelsen explains. “We didn’t just want to know they needed prices. We needed to know what they would do when they got the information.” The team ultimately ended up drilling down from the price through several hundred items until it got to the margin.

At this point, a conventional IT development group would take this knowledge and “go away for six months and build the solution,” Mikkelsen says. That wasn’t his idea of an effective partnership. Instead, “we have to implement the rules right then and there, in a few hours or a day or two.” This required the group to develop iteratively and incrementally, keeping the pieces that worked and adding to them.

To support this kind of rapid development, the IAP team turned to tools from Ascential, Kalido and Metreo. Ascential provided the extraction/transformation/ load layer based on DataStage for data delivery. Kalido provided the data warehouse layer and Metreo, a narrowly focused business intelligence tool, provided the pricing and gross margin application.

Using these tools, IAP could provide a solution that enabled both ad hoc and canned reporting at both aggregate and detailed levels about key metrics such as price, profit, gross margin, customer, order, invoice, territory and product. It would give Owens Corning’s managers improved access to timely, accurate, consistent and, most important, actionable data they could use to not only see margin erosion but also spot the causes and fix them.

“Ascential cut the time it took to get the data,” Mikkelsen says. “Kalido allowed us to do a logical design, and when we were done, just hit a button.” Kalido would automatically generate the physical system. Another tool, Corporate Radar, provided sales reporting and planning. With the help of the tools, the Owens Corning team began work on the first iteration May 24, 2004 and had a fully functioning system in production on July 30, 2004. “We went through five iterations in 10 weeks,” Mikkelsen says.

The biggest challenge turned out to be managing the number of people involved. At various points the team consisted of participants from four vendors and four business groups. “It was a lot of people, but “this was all about collaborating on defining outcomes and actionable items,” Mikkelsen notes.

The payback from the effort came quickly. IAP initially was expected to increase gross margins by one half of 1 percent, an improvement that was estimated to add millions in profit in the first full year of operation. The project did far better than that, Mikkelsen reports. From an investment of hundreds of thousands of dollars, Owens Corning will have experienced tens of millions of dollars in return in the first year and expects to realize similar returns in subsequent years.

WHAT THE JUDGES SAY
Owens Corning recognized the need for a strategy to better manage its business decisions and performance. As part of its initial scope, Owens Corning focused on ways of leveraging existing data to help better execute pricing and gross-margin decisions for all its products, customers and markets worldwide.

As part of the project initiation, the core team met with key stakeholders to understand what actionable data was required for change and what architectural decisions needed to be made to prevent data redundancy and costly development cycles.

By working with a collaborative team, Owens Corning followed an iterative model to successfully implement a flexible and scalable solution that leveraged Ascential DataStage for data delivery, Kalido for data warehousing and Metreo’s Pricing and Gross margin application for canned and ad hoc reporting.

In a relatively short timeframe, Owens Corning recognized the true power of data analysis and harnessed the right mix of people, process and technology to create clear standards and a common platform. The outcome of the project initiative enabled the organization to make educated, very focused and time-sensitive decisions with proven results.

DRILL DOWN
Organization
Owens Corning
Project
Owens Corning Information Access Project
Project goal
In late 2003, Owens Corning recognized the need for better information and systems to support pricing and gross margin management. The company had experienced several consecutive quarters when manufacturing output and sales shipments met or exceeded goals, but margins continued to be under pressure.
Project payoff
Today, the solution is helping more than 150 OC users analyze and improve sales, margins and profits, using data that spans all of the company’s products, sales territories and customers. The result is an organization that is better equipped to increase profits and value for customers by leveraging information to support greater efficiency, more effective pricing and more certain business results.
Tools used
Ascential Software
Kalido
Metreo
Project team
The initial investigative work, started in early 2003, was led by Jamile Shibley. The project was split between two teams: GM, which focused on the business aspects, led by Jeff Bernholtz; and IA, which focused on infrastructure and technology, led by Klaus Mikkelsen.
The IA team also included:
Donna Saunders, project technical lead and owner of the ETL and distribution layers
George Getic, technical member
Beth Phlegar, solutions architect and owner of the presentation layer
Cheryl Porrett, technical member
Kelly Termin, technical member
Pam Snell, technical member
Mark Gallagher, technical member
Chris Peruski, the team’s business analyst

Photo: Front row, left to right: Pamela Snell, Marilyn Scuralli, Klaus Mikkelsen, Amy Tuohey, Beth Phlegar

Back row, left to right: Dave Cooper, Cheryl Porrett, Chris Peruski, Kelly Termin, Bill Huntley, Mark Gallagher

PHOTO BY SANTA FABIO

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