They’re a leading provider of exterior building solutions, but the secret to Cornerstone Building Brands’ success is embedded in the organization’s innovative interior.
As North America’s largest manufacturer of exterior building products, Cornerstone Building Brands (NYSE:CNR) is one of the industry’s most forward-thinking 2-year-olds. The result of a 2018 merger of legacy building supply enterprises NCI Building Systems and Ply Gem Building Products, the Cary, NC-based firm is a leading manufacturer with #1 market share in vinyl windows, vinyl siding, insulated metal panels and metal wall systems.
Cornerstone Building Brands represents much-needed consolidation in the highly segmented building products market. By bringing together top tier names in exterior and interior building products, Cornerstone Building Brands solidified its leadership position right out of the gate.
And then the ultimate spoiler—COVID-19—took the field.
Critical times—like the pandemic—illuminate weaknesses across every industry and are reshaping the way companies will build and manage their operating structure in the future. For Cornerstone Building Brands, it’s shining a light on how imagination and daring can create more resilient supply chains, and stronger results for investors.
Setting the Standards for Excellence
Last year’s Cornerstone Building Brands was focused on driving integration across the two legacy firms with major focus on network optimization, sales and ops planning, and driving synergies across the organization. With more than 67 manufacturing facilities across the U.S. and Canada, supported by a network of 40 distribution and brand office facilities, identifying the right size, the right manufacturing network helped to create an agile supply chain organization focused on driving synergies through major initiatives like network optimization and deploying effective sales and operations planning processes.
As technology and digitization have enhanced the visibility, flexibility, and rigor of modern supply chains, companies have moved quickly to embrace new solutions, but there’s a common problem: Without strong organizational support, tech solutions are bound to fail. Faced with the daunting challenge of making organizational changes to support them, the hoped-for advancements simply don’t bring the hoped-for results.
Recognizing the critical impact that supply chain strategy has on shareholder value, the decision was made to move Cornerstone Building Brands’ operations and supply chain leadership into the C-suite. In having the supply chain organization reporting directly to the top, it created an environment where they could remove structural barriers and drive synergies between the two legacy brands while enhancing performance and process maturity and effectively leveraging spend.
Organizationally, NCI and Ply Gem had different levels of maturity, and it became clear that there were pockets of best practices that were available and developed in one part of the organization in a specific function that could very easily be ported to a different part of the organization. By nurturing the best of both organizations, bringing together great talent, and sharing those best practices across the organization, Cornerstone Building Brands could leverage the complexity of the supply chain to create a far more resilient and robust company.
In the modern enterprise, the connection between supply chain and CX is improving bottom lines; the qualities that define strong supply chains, such as transparency, flexibility, and responsiveness also reflect customer demand.
Ramit Bajaj, the company’s senior vice president of supply chain, weaves CX into all aspects of supply chain management. “Customer expectations are changing more rapidly than ever before,” he stressed. “Seventy three percent of B2B buyers say they want personalized, digital B2C-like experiences and most expressed their desire to have the ability to buy online on their own or learn about our products on their own. Our customers expect to be able to find information online, order products, and receive delivery notices automatically and instantaneously.
“This same level of expectation is also within our supply chain. We are looking at innovation at all levels of our organization and across all functions with the goal of providing better value to our customers. We want to offer convenience, peace of mind, added value, and best in class service to deliver upon our promise of being a preferred supplier and partner.”
One virtue in maturing an organization capability is contingency planning which became evident during the pandemic. In the run-up to discovering the emerging pandemic, Cornerstone Building Brands undertook a rigorous full-fledged network assessment and disaster planning, running scenarios from a capacity and footprint perspective.
Supply chain leadership created a central framework and best practices that allowed for the necessary flexibility for all the company’s business units to react swiftly and effectively to changes at the local and regional levels. Visibility within the supply chain allows Cornerstone Building Brands to see how the organization adapts to market movements, which are often specific to a geographic region or to a product profile. Those insights power flexibility, responsiveness, and agility.
Cornerstone Building Brands’ size and scale brought the leverage necessary to drive down significant spends and maximize efficiencies. “About 18 months into the merger we brought the teams together, aligning the organizations, performing scenario capability analysis, network analysis, supply and demand assessment, and appropriately addressed some of the supply and demand issues we had,” Bajaj said.
Central to those efforts was building a data analytics team whose insights could enhance visibility and reliability within the supply chain. Bajaj brought in DeAnna Harner, a supply chain veteran with a deep background in data and analytics to lead the team. Their approach would differ from traditional supply chain management strategies; instead of having a separate data and analytics team for each of the company’s functions, for example, the transportation department having a dedicated transportation data analyst, the idea was to create a single core team to share best practices across the organization’s entirety.
Great analysts were the first hires for the core team. “Because of our breadth of categories, channels, and businesses we have numerous data sources to manage,” she explained. “People who have that ability to make things simple, efficient, and repeatable are people who can take anything you give them—whether its inventory, spend analytics, freight management, KPIs—and make sense of that information so it can be effectively assessed and monitored on demand to make the decisions we need to optimize our business and better support our customers.”
The first step was to determine what data to measure. “As you can imagine, across a large organization everyone has their own way of measuring. Governance and accountability were very important, as was the need for providing data that would be actually utilized by leadership, instead of just giving lots of reports that lack clarity and wouldn’t drive business results,” Harner said.
Establishing consistent reporting across multiple systems was a challenge well worth meeting. “You manage what you measure,” she explained. “If you spend the time and effort to build this type of team, you can provide leaders with the information needed to drive results. And we do.”
The challenge for every enterprise with active M&A investments are the silos of legacy data that grow over time, burying pertinent data that must be exhumed and made actionable. Operational functions that were previously decentralized and even siloed across individual business units such as procurement, manufacturing, and logistics are now being centralized at the enterprise level to drive best in class processes and leverage the growing scale of the organization. This creates a platform for future growth and will drive operational excellence at a faster and more consistent pace.
Talent Acquisition as the Cornerstone Building Brands of Excellence
Operational excellence in manufacturing and supply chain operations is a competitive advantage that is critical to the success of the business, and Cornerstone Building Brands’ people exemplify superiority. Attracting, developing and retaining talent to meet the strategic priorities of the business is key, and Katy K. Theroux, Executive Vice President & Chief Human Resources Officer oversees the company’s efforts in that regard.
Theroux described the firm’s talent philosophy this way: “It is rooted in six key principles: performance, behavior, development, transparency, differentiation, and accountability. From there we have established a talent strategy to define our talent acquisition, development and retention goals and have been focused on building out the processes, like a performance management process and the creation of our success model, that help identify the behaviors and capabilities that will differentiate our most successful people.”
By creating and cultivating a culture that connects a company’s essential identity to its growth mandate, gives voice to imagination, and encourages communication, Cornerstone Building Brands is equipped for top tier performance at every level of the organization. Pre-merger, NCI and PlyGem had deeply held core values of safety, integrity, innovation, and teamwork. Cornerstone Building Brands built on those essentials to include diversity, equity, and inclusion.
“You will find these elements in our core values and our success model. We are operationalizing them, weaving them into every part of our operation and decision making, and our code of conduct provides the guide rails,” Theroux said. “We are working on learning, understanding, and having a common language around DEI. This is a journey: Whether you are the leader of 10 people or 10,000—or even if you only lead yourself—leadership is all about moving the team toward our shared goals.”
Innovation in the time of Coronavirus
Cornerstone Building Brands’ approach to innovation is inculcated through every level of the enterprise, from the top down. “Innovation at Cornerstone Building Brands is more than a catch phrase. We live it every day,” Chief Innovation Officer Lee Clark-Sellers said. “An example of this is the Innovation Challenge, an annual competition where employees submit ideas around key business opportunities. The challenge has multiple phases, where teams vet out ideas, from both a business and technical perspective. The winning team is awarded a large cash prize and recognition company wide. This program provides a unique Voice of the Employee opportunity, which has led to numerous patents, new products, and services. In the process of the challenge, employees learn how to not only come up with innovation ideas, but how to establish business cases, gather market data, and create prototypes.”
The company reached deeply into their core values of safety, innovation, teamwork, and integrity to ensure smooth, continuous operations and the well-being of their most crucial aspect—their people. As Theroux pointed out, “This year, we have prioritized the care of our employees and the care of our customers as we have continued to manufacture as an essential business. We have implemented safety protocols that have been noted as best in class by safety and health departments that have inspected our facilities over the past six months. From health checks—including temperature scans and required PPE—to restructured operations that allow for social distancing, we have a leadership team focused on the safety of all of our employees.”
As labor continues to be a significant challenge in the industry, Cornerstone Building Brands is developing new products that are easier and require less labor to install and making investments in manufacturing automation. “This is allowing us to shift people to other areas in our facilities while also providing more consistent quality,” Clark-Sellers added.
Clark-Sellers oversees Foundation Labs, a company organization designed to explore opportunities outside of the core activities in Cornerstone Building Brands’ business units that require in-depth research and development. “To help facilitate this scope increase, in 2016 we invested in a research and applied science facility, the Insight Center, located in Research Triangle Park, NC,” she said.
“This innovative facility was established to increase the capacity for research, testing, and innovation for the business units. The Insight Center allows advanced testing and analytics to be applied to new and existing products, including advanced weather and acoustic chambers, and compositional and mechanical test analysis. Having this level of advanced testing allows Cornerstone Building Brands to stay in front of increasing climate changes along with code and regulatory updates to ensure products are designed and tested to meet future conditions, not just today’s requirements.”
The Insight Center also houses Cornerstone Building Brands’ rapid prototyping and small-scale manufacturing capabilities to explore new ideas and concepts. “With advanced material science capabilities combined with manufacturing capabilities, the Insight Center acts as an incubator,” she stressed. “We are now launching one of our earlier concepts for exterior siding, which is a new material science and manufacturing process.”
Enterprise management can be chaotic when the world is turning as expected. To debut a new company built from different organizations with different outlooks, strategies, and cultures in the midst of a cataclysm redefines the very concept of chaos. But with strong, visionary leadership companies can outlast market conditions and keep moving in the right direction. Cornerstone Building Brands is one of the best examples of that forward progress that we’ve seen to date.
In November 2018, Ply Gem Building Products and NCI Building Systems merged to become the single largest manufacturer of exterior building products in North America.
Better together, the combined organization offers unparalleled expertise in creating products and solutions for the commercial and residential construction industries and delivers on decades of experience serving customers and communities across North America.
Since 1984, NCI Building Systems has grown through strategic mergers and acquisitions. Now part of the newly formed Cornerstone Building Brands Building Brands, the organization continues to design, manufacture and deliver a comprehensive range of products for the commercial construction industry—from metal coatings to components, and from insulated metal panels to engineered building systems.
For over 75 years, Ply Gem Building Products has been a pioneer in the residential construction industry, and it continues to lead through innovation. Ply Gem’s comprehensive range of building products includes nearly everything on the outside of a home: from windows, doors and siding to designer accents, stone veneer, and fence and rail.
5020 Weston Parkway
Cary, NC 27513