Strategic Information Systems Management - Owens Corning - Assignment Example

Strategic Information Systems Management Name: Tutor: Course: Date: 1. Why does OC face increasing competition from their rivals and what was their original strategy in competing with their competitors? Owens Corning (OC) is facing competition from its rivals due to industry consolidation and globalization. The company is not competing on price which is an edge used by competitors. Previously, the company dominated in assets and efficiency in production. Howard (2013) observes that the construction industry in the recent decades has transformed dramatically. Two key trends have been observed; large firms expanding into new regions and consolidation due to joint ventures, acquisitions and mergers. This shows that global trends changed the business environment and how firms related to stakeholders. Regional cooperation lowered trade tariffs while opening up of emerging markets was made possible owing to increase levels of income for the middle class consumers (Kaplinsky, 2000). OC did not welcome organizational change which is important in keeping the company abreast with growth. Reducing tariffs through market access concessions lead to biased market access. OC was blinded by traditional rivals and could not anticipate the threat from low-cost and disruptive competitors. At a global scale, especially in North America and Europe, organizations with technologies and business models that are different from those of market leaders are on the rise. Such organizations hurt themselves more than the challengers when the market leaders respond by setting off price wars (Barney, 1999). Upon realization, Collins and Porter (2005) suggest that companies change course in one of two ways; defensive and offensive strategies. Those taking on the defensive make attempts to differentiate their products where they have to meet a stringent set of conditions. On the other hand, those taking the offensive route usually launch low-cost businesses (Corsino et al., 2009). However, a dual strategy succeeds where firms generate synergies between the new ventures and the existing businesses. Therefore, OC would be better off transforming itself into a low-cost player to become a solution provider.  2. Initially, how was the business organized, what problems resulted from this structure and what other problems required attention? OC was organized into business units with independent supply chain processes, sales and commercial facilities. However, the supply chain process became demanding, poorly integrated legacy software application and redundant personnel and processes. In addition, the company lacked data integration at enterprise level which led to high-cost supply, customer dissatisfaction, poor planning and inaccurate demand forecasts. Corsino and Passarelli (2009) using econometric analysis found that diversification within market segments positively affects competitive advantage of constituting firms. With increase in product variety at OC, the business units were able to gain competitive advantages over rivals. However, the propensity to innovate among rivals to innovate eroded the advantage at the focal point. This is evident in the way the company failed to implement modern business information systems and research tools. Information technology (IT) is an actual cause and driver in forming a business strategy and it changes the way businesses compete (Laudon & Laudon, 2010). While traditional competitors device new efficiencies and products, new market entrants are less expensive but more innovative. OC was less innovative in implementing the latest strategic information systems. There is need to create, reinforce and document new policies and rules in operations. Duarte and Machado (2011) opine that new ways should be reinforced by customs and norms that replace the old ways of doing things (Leenders & Fearon, 2004). For example, OC should emphasize team work across departmental boundaries by developing teams and moving away from functional departments. Change goals set should correspond to the specific rewards. 3. OC implemented SAP to resolve their issues. Did this work? Why/Why not OC implemented Systems Applications and Products (SAP) to resolve issues surrounding cost reduction, product scheduling, materials management and market forecasts. Fortunately, the SAP system was able to eliminate the 500 legacy systems which were complex and localized. Although the implementation of SAP planning and logistics software worked in materials management, logistics and back-office operations it lacked real integration into sales and operations, and manufacturing processes. Indeed, the systems failed to engage OC as one organization capable of joining other top performing companies. Grabski et al. (2013) argues that ERP systems implementation in firms can be problematic and monumental disasters if not handled carefully. When top management owns the implementation of SAP ERP, it becomes easier to handle issues of process design, testing and training of end users (Bhagwani, 2009). This means an enterprise-level approach that is customer-centric is required to lift and transform the supply chain of OC through setting strategic objectives, integrating customers and suppliers and changing the manufacturing mind-set to supply chain flexibility. Changes in two-thirds of all organizations globally fail. Such failures have tremendous cost to companies in time, resources and money. According to Duarte and Machado (2011) common reasons for failure of change programs are related to lack of training, lack of incentives tied to the change initiative, lack of commitment from the top, and change overload (Leenders & Fearon, 2004). Moreover, if the SAP change program at OC is to succeed, senior management should show commitment. It is through actions and not words that people reveal their values. From management’s behavior, employees infer what is relevant. 4. OC made a number of important changes. What were these and what were the results First, OC integrated a number of functions such as logistics, customer data integrity and materials management that had impact on customer experience into one group. Consequently, a group of 350 employees has been formed under the head of customer supply chain operations. Secondly, OC differentiated the supply chain processes from organizations operating many processes. It resulted in faster operations, improvement in service provision and leveraging resources across the enterprise. Thirdly, OC became flexible to customer responses hence keeping the costs low. This change enabled OC to quickly not only respond to big changes in demand but also improve on lead times for product delivery. Durant (2011) observes that for organizations to succeed, they have to seek ways of serving customers better, surviving in better contested markets and creating new advantages. This view is also shared by Burger (2007) who suggested that organizational change should be goal oriented and directed to move the organization form current to more improve and desirable states. By responding to changes, OC was able to realize growth and improvements in the way it relates to customers and its own staff. People are central to organizational change because it involves change in employee behavior, processes, behavior and organizational structure (Durant, 2011). There is need for replacement in ideas and behaviors embedded in the corporate culture. An essential part of change to OC is redirecting people’s attention. OC can do things differently by developing skills in people. Elsewhere, Galpin (1996) notes that one way to understand organizational roles in making the changes to happen can be done through employee training. SAP processes and OC employees should all be aligned to support change. Specifically, competencies and skills enable people to work differently (Collins & Porter, 2005). Employees must understand the functional requirements of the job and the dynamics of the change process. 5. What will be their biggest challenge in continuing their improvement effort on their supply chain? First, customers will still need more flexibility and customized service that lower costs in their supply chains. OC will be required to integrate, partner and form alliances with customer in the supply chain. Since customer demands keep changing, creating processes that ensures demand is filled each time remains a challenge. Second, putting supply chain issues to all the stakeholders requires education and redefinition of the roles and responsibilities of employees. These challenges involve integrating people, processes and technology at all levels of management. Since the supply chain is centered on customers, OC realizes that it would have to educate its employees, create process architecture and enable technology for higher performance levels. According to Kearney (2013) global value chains and intense competition lead to substantial shifts in supply chain functions. This means that firms must move beyond constraints and tap from supply chain practices. Dittmann (2014) regrets that supply chains once functioning as autopilot currently face a risk in the domestic and global markets. Companies need risk management strategies and tactics to overcome challenges in the global supply chain. OC is not cushioned to huge economic swings and natural disasters that affect its supply chain. Firms with global supply chains, including OC, face risks such as foreign regulations, longer lead times, regulatory and environmental compliance and legal issues. Supply chain disruptions have repercussions that affect the financial health of the firm, some of which are far-reaching and devastating. References Barney, J.B. (1999). How a firm's capabilities affect boundary decisions, Sloan Management Review, 40(2): 137--145. Bhagwani, A. (2009). Critical success factors in implementing SAP ERP Software. Graduate School University of Kansas. Burger, R. (2007). Organizational Change. John Wiley and Sons. Collins, J. & Porter, M.E. (2005). Strategy and competitive advantage. John Wiley and Sons. Corsino, Marco and Passarelli, Marica, (2009). The Competitive Advantage of Business Units: Evidence from the Integrated Circuit Industry (2009). European Management Review, 6(3): 182-194. Dittmann, J.P. (2014). Game-changing trends in supply chain. University of Tenessee. Duarte, S., & Machado, V.C. (2011). Manufacturing paradigms in supply chain management. International Journal of Management Science and Engineering, 6(5), 328-342. Durant, M.W. (2011). Managing organizational change. Howard Press. Galpin, T. (1996). Connecting Culture to Organizational Change, HR Magazine, 412): 85-90. Grabski, S.V., Leech, S.A. & Lu, B. (2013). Risks and controls in the implementation of ERP systems. The International Journal of Digital Accounting Research, Vol. 1, No. 1, pp. 47- 68. Kaplinsky, R. (2000). Spreading the Gains from Globalization: What Can be Learned from Value Chain Analysis? Journal of Development Studies, 37(1): 117-146. Kearney, A.T. (2013). Creating competitive advantage through the supply chain: Insights of India. CSCMP India. Laudon, A. & Laudon, S. (2010). Competitive advantages with information systems. John Wiley and Sons. Leenders, M. R., & Fearon, H. E. (2004). Purchasing and supply chain management (11th ed.). Chicago: Irwin. Read More