Managing Know-How

Winners of the IMA-American Express "India CFO Awards" write exclusive case studies on how they helped their companies overcome crucial strategic problems. In the last of this series, V Balakrishnan, CFO, Owens Corning India, winner, India CFO Award 2002 for Excellence in Information & Knowledge Management, writes about how he made information management more seamless and aligned it to the company strategies

Owens Corning is the world leader in glass fibre reinforcements and in particular the composites industry. The $5 billion MNC employs 17,000 people worldwide with sales and research facilities including joint venture and licensee relationships in more than 30 countries.

The company was born on November 1, 1938, three years after Corning Glass, which had briefly experimented with glass fibre manufacturing in the 1920s, first approached Owens-Illinois with a proposal to join forces in the production of glass fibre.

The Pink Panther became Owens Corning's corporate mascot on August 15, 1980. And on May 12, 1987, Owens Corning made legal history as the first company to trademark a colour "" in this case, pink.

When Owens Corning decided to set up shop in India, there was no way its operations could be less efficient than anywhere else in the world.

More so because the planned $120 million investment at Taloja in Maharashtra was the largest manufacturing facility by Owens Corning outside the US.

It was therefore necessary for Owens Corning India Ltd "" promoted 60 per cent by Owens Corning and 22 per cent by Mahindra & Mahindra, with the remaining shareholding split between the American Investment Group and ILFS Trust "" to operate with world-best information and knowledge management systems.

I joined Owens Corning India in 1998 and after a stint in the plant took charge as the Chief Financial Officer and was also responsible for information systems (IS).

The company was in a continuous process business which meant that its information technology systems had to be robust and highly geared to cater to the changing needs of the organisation round the clock, throughout the year and provide an environment that would focus on meeting customer needs.

Leveraging the cutting edge of technology and aligning it to the organisational priorities and strategy would be the key to winning in the market place.

A key factor that has resulted in the success of the implementation of IS is our attention to detail. Having a state-of-the-art technology is not everything if it cannot be rightly applied to meet business needs.

One of the salient features of our organisational profile is the high level of engagement, energy and intellectual capital prevailing in our employees across the company and hence the embrace to change in IS was a seamless one without much education.

All the 445 employees of the company "" 390 of which are employed at Taloja "" are at the minimum graduates and the spectrum ranges from engineers to PhDs. Here I need to acknowledge the pivotal role played by my IS team in making the difference.

Sharing of information is the key to a high-performance organisation like Owens Corning India. All employees were given a unique e-mail identity with which they could communicate not only amongst themselves, but with the rest of the world.

An e-mail ID is not a major task but controlling such a vast number of e-mail accounts in terms of security, virus infection and abuse is always demanding and challenging in today's dynamic environment.

This has been vastly fulfilled by making an effective Electronic Communication Policy which is being strictly adhered to by all employees.

The entire network is fully protected by firewalls. Today, we do business electronically without any major down-time and without any fear of viruses since the system is well equipped to face any major disruptions.

The nature of our business, and given its interface with the Owens Corning network located in different time zones, requires our employees to communicate with the rest of the world at all times and from all locations.

We have a remote access facility which enables the employees to communicate from any location in the world. A number of employees have laptops so that they can operate from wherever they are "" in office or outside the office.

Others are well-trained in using the Virtual Private Network (VPN) and can access their e-mail from home or from a cybercafe.

In order to be in touch with the headquarters, we are connected to the US with a dedicated link (frame relay circuit) and to its local offices via a leased circuit.

Owens Corning India uses the frame relay circuit between Taloja and Ohio for various communication needs including monitoring of furnace and messaging.

There is a 512 kbps circuit dedicated to the company for 365 days a year. We did some re-designing in the network and as a result, the recurring cost has come down by 50 per cent from Rs 9 million a year to Rs 4.5 million a year.

One of the main objectives was to provide web-based applications to support the ERP package operating in the company. Owens Corning India has adopted an ERP called SCALA as the backbone to its transaction processing system.

SCALA has its own constraints due to handicaps on localisation and providing effective support to end-users. This ERP is being supported with web-enabled applications which are compatible with SAP.

Web-based applications are split into two parts: the first part of it is an Intranet application called OCILink.

It contains a corporate overview with organisation charts, details of plant, production and applications, human resource policies, each employee page, management videos, music, polls, surveys and weekly highlights.

The second part relates to knowledge-sharing among groups. Our manufacturing process is highly technology-oriented and extremely sensitive. This makes it important that our employees constantly share information regarding the technical parameters.

So, we have developed and launched a Manufacturing Information System (MIS) that records results of each and every step in production, web-enables workers to have easy access to database, has sufficient security features to check any leakage of proprietary process technology, gives graphical representation of all cause and effect in each process area and links with the process logic circuits.

The MIS has played a critical role in objectively evaluating individual performance and driving extraordinary results.

Other web applications cover complete import documentation for consignment logistics information, barcode reader for warehouse (fewer errors result in lesser customer complaints), achievement and development process software, computerised cheque printing system, training assessment systems, income-tax investments of employees, US GAAP reporting, forex management system, export documentation system, intimation to customer on dispatch and resource allocation.

One of the latest additions have been MyInfoworld, which is primarily an employee's data bank on compensation and benefits, income tax, ADP and so on. The tangible benefits arising out of these applications would be about Rs 1.6 crore.

The spread of information technology in the company being so vast, it is possible that issues in terms of misfit or down-time of hardware might crop up. Therefore, we have standardised the hardware across the organisation on Compaq servers, laptops and desktops.

We have also set up a B2B website and are testing and operating it for initial customers and vendors.

Customers can also check the status of their shipment and download documents related to test certificates, for instance, from the website.

Vendors can upload documents related to material dispatch and so on. Both customers as well as vendors can check the status of the commercial position on this B2B website.

Seldom is it seen that a company which makes a large investment in a greenfield project as us breaks even within one year of starting commercial operations.

Owens Corning India began commercial production in 1999 and achieved that remarkable turnaround to post a net profit in 2000.

From then on, the company has been profit-making in spite of some challenging times in the business. The forward-looking management information systems leveraging technology to its fullest had a big role to play in this feat.

The various initiatives that we have undertaken in the field of knowledge management have been recognised by Owens Corning. We had been engaged by the parent to develop a Six Sigma Tracking Tool that is used across some 60 sites worldwide. It is a prestigious project that has enhanced the image of the organisation.

One question that is asked is: what is a CFO's role in knowledge management? Knowledge Management is all about process and aligning strategy to what your company knows.

It is a process requiring appropriate corporate culture, good technology, metrics and an organic quality of growth, right information to right people and understanding of what needs to be retained. One would end up linking knowledge, business strategy and IT.

Given all this, a CFO is at an advantage of capturing the organisational knowledge which is into processes that are aligned well to the business strategy that he or she is aware of, and use IT as a tool for capturing this knowledge through a well-designed process.

This knowledge is mostly converted into business data and as the central repository, the CFO is able to leverage the knowledge availability across the organisation and channelise it through processes to drive superior business results.

In my role as the CFO of the company, I along with my highly-charged IS team, have been able to make information management more seamless than experienced earlier. Some of the initiatives or strategies might look small but these have contributed immensely to the productivity of the organisation.

As I look back on what we could have done differently, I feel that web applications could h ave been accelerated. We also need to make progress in knowledge management throughout the organisation ""a challenging task.

As we move ahead, the challenge is to implement SAP in the company. We have advanced rapidly in a very short period of time, doing things differently and we are preparing ourselves to meet stiffer challenges.

OTHER CASE STUDIES IN THIS SERIES WERE WRITTEN BY:

Ravi Sud of Hero Honda (October 21, 2003): winner, India CFO Award 2002 for Excellence in Information & Knowledge Management

Ashok Sinha of BPCL (October 28, 2003): winner,India CFO Award 2001 for Excellence in Information and Knowledge Management

Sanjeev Agrawal of Stanchart (November 4, 2003): winner, India CFO Award 2002 for Excellence in Mergers & Acquisitions