DÜSSELDORF, GERMANY (Nov. 13, 4:05 p.m. EST) — A September 2001 Harvard Business Review study provides some perspective on the ambitious information-technology integration project that PolyOne Corp. is in the midst of today.
Michael Hammer's report, “The Superefficient Company,” assessed the IT conversion undertaken by Geon Co. in 1999, after it spun off its vinyl chloride monomer and PVC resin operations into OxyVinyls LP, a joint venture with Occidental Chemical Corp. Tom Waltermire, who joined Geon eight years ago and in May 1999 became that firm's chairman and chief executive officer, now holds those same posts with PolyOne.
Hammer wrote of the OxyVinyls spinoff, “While Geon's actions were strategically sound, they were operationally disastrous. In effect, Geon erected a high (intercompany) wall where it had just demolished a low (intracompany) one. VCM and resin production had only recently been integrated with compounding, and now they were again torn asunder, this time becoming parts of separate companies.”
Data had to be entered twice, resulting in an 8 percent error rate on orders that Geon placed with OxyVinyls, and order-fulfillment cycle time tripled. On the production side, the two firms became less aware of each other's inventories, shipments and levels of demand.
In retrospect, Geon's problems may appear particularly dire. But Hammer suggests they were actually no worse than those faced by most companies.
“There was, however, one crucial difference,” he wrote. “Geon saw them … and took action.”
The two companies worked closely to connect their processes and computer systems. They tightly integrated their forecasting process, and changed their performance measures.
“Geon's purchasing agents used to be evaluated primarily on the prices they negotiated for materials. … Now, they are held accountable for the availability as well as the price of the materials they buy,” Hammer said.
He went on to note that Geon recently has gone a step further, integrating its processes with those of its customers, by doing such things as placing inventory sensors in some of its major buyers' warehouses.
As a result, Geon now can manage all steps in the chain as a single process, with much less friction, overhead and error.
“The payoffs have been dramatic,” Hammer wrote.
That is relevant because Waltermire now is trying to work the same kind of magic within PolyOne's far-flung empire. And he will be the first to tell you that PolyOne's restructuring is “considerably more complex” than that which he oversaw at Geon and OxyVinyls. “But we're applying the same fundamental principles,” he said at K 2001 in Dusseldorf.
“In the vinyl compounds business, you develop a few [new products] per month. In color concentrates, it's 50 a month, and in smaller quantities. But there is a definable, repeatable process that you can bring to that,” he said.
Waltermire said his Geon experience provided “a great foundation for what we're doing today — I am so happy that we had that experience to build on.”
Regarding the current information-systems overhaul, he said PolyOne's 125-person global IT team is about four times the size of the one he had at Geon, and deals with many more products scattered in dozens more locations around the globe.
“This is where business is truly being integrated at the grass-roots level. We're installing common business practices, so that people on the shop floor are doing the same thing all over the world.”
Additionally, he said, “It is setting us up to have a global e-commerce capability. We'll look the same to customers all over the world.”
