The Sherwin-Williams Company uses Oracle E-Business Suite to spread operations worldwide.
by Fred Sandsmark, November 2011
When the Sherwin-Williams Company’s famed Cover the Earth logo—a can of paint pouring over a globe—debuted in 1893, it was more an expression of aspiration than of fact. But like a good coat of paint, the idea stuck: the logo and phrase became the company’s official trademark in 1905, and within a few decades Sherwin-Williams products were available throughout the Americas. A century after the iconic image appeared, Sherwin-Williams management has continued its ongoing commitment to “Cover the Earth” with a comprehensive push into international markets.
But the planet Sherwin-Williams covers today is quite different than it was in 1905. In 2011, the Cleveland, Ohio-based company isn’t shipping finished product out into the world. “You don’t want to transport paint—it’s heavy, so shipping costs a lot,” says Alberto Elli, vice president and controller for Sherwin-Williams’ Global Finishes Group. So in the twenty-first century, Cover the Earth means acquiring local operations—manufacturing, supply chain, sales, customer service, and more—the world over.
This international push requires systems and processes that can support diverse local businesses, ensuring consistency and quality, both in products and financial operations. “As we looked to grow from a domestic-focused company to one where we are an active global player we recognized that the application set we had was not scalable outside the United States,” explains Tom Lucas, Sherwin-Williams’ chief information officer. The company’s domestic enterprise resource planning (ERP) system couldn’t handle international accounting and tax rules, regulatory regimes, and languages. “We needed a different application set to be an effective global partner,” Lucas recalls. Any new system also needed to provide local operating units with autonomy and flexibility, while allowing Sherwin-Williams to centralize data for better decision-making and overall efficiency.
Starting in 2005, Lucas and the IT team at Sherwin-Williams began rolling out Oracle E-Business Suite globally as the company’s business leaders simultaneously picked up the pace of acquisition and expansion. Since then, three Oracle instances have been deployed, and the application suite has been organized into five key processes, including one that helps paint recipes and manufacturing processes spread smoothly around the world. The Oracle applications have also allowed for globally centralized data that improves efficiencies and compliance, fuels growth, and bolsters the bottom line.
Deploy Globally, Work Locally
Three factors drove Sherwin-Williams leadership to pursue global markets. First was the opportunity to open new markets. Second, the company’s industrial customer base was increasingly global in nature; American manufacturers were setting up operations around the world, and international manufacturers were looking for quality finishes that Sherwin-Williams could supply. Third, the company’s supply chain was becoming increasingly global, as raw material sourcing became a global business.
But there were challenges associated with establishing or acquiring operations in multiple countries. Sherwin-Williams’ people needed to understand and adhere to environmental, financial, and other regulations that vary by country or even by locality. “We at Sherwin-Williams are proud to enact the strictest standards,” says Elli.
The IT systems at acquired companies were a different obstacle. Some were so basic or broken that they required, for all practical purposes, a completely new deployment, according to Chandrasekhar A. Yadati (Chandra), manager of Sherwin-Williams’ global ERP team. The few sites with workable ERP systems needed to be temporarily integrated with the Oracle system that Chandra’s team was busy building. “One of the big drivers for picking Oracle was the need for a standard platform through which we could manage our operations in all these locations,” Chandra explains. “We wanted to make sure we had the appropriate foundation.”
But Chandra and his team knew they couldn’t simply deploy identical applications at each site. Each system needed to comply with local laws and regulations and preserve the valuable local business relationships that came with the acquired company. “They’re all individually different, so we had to be adaptable,” Chandra says. “That’s a critical aspect for success, because with ERP you’re only going to gain benefit if the system is accepted and used properly.”
The closer a process gets to the customer, the truer it is, Elli says. “Customer service in Argentina is very different than customer service in China,” he explains. “The customers are different, and you have different laws and local regulations.”
Chandra and his team—which today numbers nearly 40 trained Oracle professionals—began large-scale Oracle implementation in 2005 by deploying Oracle E-Business Suite for manufacturing, operations, customer service, and financials in Mexico. Additional modules and countries have been added every year since, extending the Oracle system’s footprint into other business areas and geographically into South America, China, and Southeast Asia. Oracle Product Information Management Data Hub was added in 2008, and Oracle Business Intelligence Enterprise Edition was deployed in 2009. Global product and customer hubs came online in 2011.
On a high level, the rollout has been coordinated through a carefully designed—and always evolving—long-term plan. “We believe in doing a successful implementation, learning from it, and moving on with best practices,” Elli says of the company’s steady approach.
Chandra says that since the first implementation in Mexico in 2005, a suite of Oracle applications has been implemented, country by country, to quickly wrest full value from the software and avoid costly custom interfaces to legacy applications. Lucas adds that a layered governance model—with local, regional, and companywide governance processes that incorporate input from both business and IT representatives—helps keep the Oracle deployment consistent and coordinated between countries and regions.
Today, more than 32,000 Sherwin-Williams employees are touched by three Oracle E-Business Suite instances: a global human resources management system used by more than 30,000 domestic employees; an Oracle E-Business Suite instance for the Americas; and an Oracle E-Business Suite instance for Asia. (ERP users numbering more than 2,000 work in the United States, Canada, Mexico, Argentina, Chile, China, Malaysia, Singapore, and Vietnam.) One Oracle team manages all the applications.
All three Oracle instances—including the one serving Asia—are housed in a data center in the United States and managed from the corporate headquarters in Cleveland. This physical centralization helps Sherwin-Williams’ Oracle team pool resources and leverage internal expertise. And frankly, Sherwin-Williams’ Oracle team doesn’t spend much time at headquarters—particularly when rollouts or upgrades are underway. They are in the manufacturing plants and offices where their tools will be used. Chandra himself logged half a million miles of travel in two-and-a-half years.
“ERP implementations and ERP support and maintenance are a full-contact sport,” Lucas says. “They’re not things you can do from the office. You have to get out on the shop floor, watch the trucks come in, talk to the businesspeople, and participate in the month-end close. We’re very active across our divisions in getting people into paint stores and plants so they can have a good perspective of what’s going on.”
That approach extends to a Sherwin-Williams program called A Day in the Life, in which the headquarters IT team works for a day in a retail paint store. There, they unload trucks, tint paint, and wait on customers. “A back-end IT person gets to appreciate where we make our money and how hard it is to serve a customer,” Lucas says of the program; in this way, they understand how the systems they create and support contribute to the company’s bottom line. It also makes them happy employees: Sherwin-Williams has been among Computerworld’s “100 Best Places to Work in IT” for three years running.
Fine-Grained Formula Management
As Sherwin-Williams’ Oracle E-Business Suite deployment has matured, it has been organized into five key processes that provide visibility, control, and efficiency throughout the business: Forecast to Plan, Formulate to Build, Procure to Pay, Order to Cash, and Accounting to Reporting.
The depth and detail of these processes demonstrate how thoroughly the Oracle team at Sherwin-Williams understands the underlying business operations they support. Nowhere is that more apparent than in Formulate to Build.
Formulate to Build leverages Oracle Process Manufacturing but spans six different Oracle E-Business Suite modules for product information management/inventory, product development, advanced supply chain planning, process execution, quality management, and process manufacturing financials. The process also centrally manages items, formulas, routings, recipes, and revisions, all while sharing relevant information among all related business areas.
You might say that Formulate to Build allows Sherwin-Williams to transport data about raw materials and finished paint, instead of transporting the goods themselves. “You want to produce paint locally, and you want to sell it locally,” Chandra reiterates, and Formulate to Build enables production to happen efficiently and consistently anywhere in the world.
That’s important because consistent global paint production is much harder than faxing a generic recipe from one plant to another. “Raw materials are very specific to local countries,” Chandra explains. “For any kind of solvents or oil resins that we require from suppliers, the tolerances and specifications need to be adjusted to reflect what’s available in the local market.”
The manufacturing process also needs to adhere to varying environmental regulations—both for the country where a paint is being created and applied, and for the country where a painted product will be sold. “In the chemicals industry, there are a lot of compliance-related activities in terms of volatile organic compounds (VOCs) and the types of metals and other materials in our paint,” Chandra says. “In many cases, there are different requirements in terms of what we can use within the U.S. or European markets. Each country is very specific.”
Formulate to Build enables each Sherwin-Williams plant to respond quickly and accurately to these myriad rules. “Once a paint formula is developed [in Sherwin-Williams’ customized formulation system, which is not based on Oracle technologies], it needs to be commercialized, and that’s where Oracle comes in,” Chandra explains. “The formula goes through the Oracle E-Business Suite workflows in order for the paint to get ‘built’ in any location.” Before Formulate to Build existed, a paint recipe might take two months to be sent to and customized for a given market; now the same process is immediate.
Because Formulate to Build uses Oracle Process Manufacturing 12.1.2, Sherwin-Williams product managers know with great specificity the raw materials used in every gallon of paint. “We’re able to track which batch was made with which version of which formula,” Chandra says. “There’s a lot of fine-grained control that we can exercise if we ever have to trace our lots. Oracle Process Manufacturing functionality naturally supports this in Release 12.” (For more reasons why Sherwin-Williams is adopting Oracle E-Business Suite 12.1.2, see “New Functionality Covers Sherwin-Williams’ Needs.”)
And because Formulate to Build is integrated with the rest of Oracle E-Business Suite, flexibility extends to finance and accounting processes. Formulate to Build supports standard costing and variance reporting (which are company standards), but the process can also be configured to work with other accounting regimes, such as first in, first out (FIFO) and last in, first out (LIFO) methods and average costing, as dictated by market conditions or government regulations.
Neither Sherwin-Williams’ global Oracle rollout nor the Formulate to Build process could succeed without Oracle’s ability to centralize data. And the converse is also true: it wouldn’t be possible for Sherwin-Williams to centralize data if its Oracle system did not extend into the far corners of the company’s global operations.
Sherwin-Williams managers have centralized data, Lucas says, for reasons common in today’s global business environment. “We want to run off the same data elements globally when it comes to vendors and products and customers,” he explains. “We want to have high-quality data integrity. We want our raw materials called the same thing around the world. All of these things generate efficiencies for us.”
Centralized data displayed on dashboards, Lucas says, makes day-to-day decision-making both more efficient and accurate. “It gives people here in Cleveland visibility at any time,” he says. “They don’t have to wait for reports at the end of the month, and they don’t have to log in to disparate systems to check yesterday’s margins and sales and trends. They have a much better ability to make decisions based on data.”
Elli agrees. “Oracle solutions give us a better view of our product margin and let me compare the profitability of the different divisions within the global group,” he says.
An added benefit of centralized data, Chandra says, is the ability to create and deploy standard business processes—such as Formulate to Build—wherever they are needed. This in turn helps the IT team develop and share good ideas worldwide. “We can make sure we’re leveraging best practices from one area to another, which allows us to have a common footprint in all countries, from a business perspective.”
Avoiding the Squeeze
That common footprint also enables the Oracle team at Sherwin-Williams to wring even more efficiency out of common, non-customer-facing business processes—such as accounting, manufacturing, logistics, and supply chain—by delivering them as shared services. Shared services at Sherwin-Williams are organized along the company’s Americas and Asia Oracle E-Business Suite instances and therefore are delivered regionally: the U.S. and Latin America are one shared-services region, and Asia is another.
Shared services save both time and money. “The time it takes us to process invoices has dropped considerably with shared services,” Chandra offers as an example. “In some cases, we’ve been able to negotiate better terms because we have been able to initiate paperless transactions.”
Shared services also enable knowledge sharing. “We want to be constantly sharing best practices and transferring them from one geographic area to another,” he says. “If one area develops a better way to manufacture a product, that knowledge should get transferred to other regions.”
Indeed, the rollout of a twenty-first-century ERP system is helping to solve problems in an old-fashioned way: by bringing people together. Employees from one country often help with Oracle rollouts in other geographies—which is not strictly a top-down process, especially on the business side—so people within the company get to know staff and operations around the world.
“You may have production managers from Malaysia traveling to Vietnam to help them with their implementation,” Chandra explains. “While they’re there, they’re also looking at how business is done.” They take this knowledge back to their home countries, and if they want to implement something they’ve learned, Sherwin-Williams’ central Oracle team is ready to help—because they worked shoulder to shoulder with the business to implement the process.
Some Oracle-powered processes transcend even the regionalized shared services model, Chandra says. “We have some global groups [such as Elli’s organization, the Global Finishes Group] that cross regions, and that’s where we’re putting in business intelligence and data warehouse solutions that let us aggregate information,” he explains. These solutions can, for example, report the total spend across all regions for a purchasing contract with a global supplier.
This sort of business intelligence is vital when the cost of goods is high, raw materials costs are variable, and margins are tight. “We’ve had a pretty challenging environment in the last 18 to 24 months, in terms of raw materials,” Elli says. “We need to be extra careful in looking at profitability. This is really front and center for us.”
Back to the Source
That the Sherwin-Williams IT team is so attuned to the bottom line is a natural byproduct of Lucas’ full-contact philosophy. That mindset also helps IT personnel conceptualize and prioritize projects as the company’s Oracle E-Business Suite system grows and evolves.
Many initiatives and ideas come up through the business, Lucas explains. In one example, Sherwin-Williams’ innovative paint technology recently won the U.S. Environmental Protection Agency’s Presidential Green Chemistry Challenge Award for a new paint formulation utilizing soybean oil and recycled plastic bottles. The product reduces VOCs by 60 percent.
“We are pleased that the White House and EPA have recognized our very talented R&D team that’s committed to innovation and sustainability,” says Chris Connor, chairman and CEO of Sherwin-Williams, regarding the award. “Incorporating simple ingredients like soybean oil and recycled plastic bottles into a first-of-its-kind, powerful paint formula provides a winning transformational combination for our customers and the environment.”
“Businesspeople come to us and say, ‘These are our initiatives, and we need to take the system to the next step,’” Lucas says. “They really drive us more than we drive them. Our role, from an IT standpoint, is to make sure we learn the business sufficiently so we can be a good partner. And maybe even come up with some of those ideas ourselves, because everybody here is geared around increasing sales and improving margins and efficiency.”
Those factors, says Elli, are what allows the company to improve and grow. “In our corporation, cash is king,” he notes. “If you have solid cash flow, you are building shareholder value—and then you have freedom to invest in acquisitions, in dividends, and in share buyback. The Oracle suite is helping us to optimize working capital as well as improve profitability.”
And when those things happen—especially with the company’s acquisitions—Chandra will make sure Oracle E-Business Suite is ready to respond. “Part of the reason we picked Oracle’s ERP solutions was that Sherwin-Williams was changing,” he says. “As the business grows and evolves, additional Oracle modules are easy to add, and we can leverage new functionality that comes with new releases. We have one source for all the information that we need, from operations to accounting.”
“It was not too long ago that technology was a limiting factor,” says Lucas. “PCs were too slow, and business systems didn’t talk. But with infrastructure availability today, and integrated business systems like Oracle, the technology barriers to innovation have been lifted. We now have an unlimited ability to innovate. For a company founded on innovation and trademark customer service, we now have the tools to make Cover the Earth a reality.”