Oregon Glass

Making Unrefusable Offers to the Market

Oregon Glass is a tempered glass manufacturer selling to the door and window industries in the northwestern United States. It's a $13 million per year business which employs approximately 150 people.

The company was founded in 1953 as a flat glass distributor. In 1979 they began manufacturing tempered glass. When the current owners bought Oregon Glass in 1988, 83% of its market was the wood door industry. Business was good and quality was very poor ­ but the customers didn't care. They were making so much money, they simply threw away the bad and bought more.

In the early 1990s environmental legislation was passed which effected the lumber industry. The price of lumber increased 200% to 300% practically overnight. The wood door makers' ability to compete was seriously hampered. As a result, Oregon Glass' largest customer ­ representing 30% of their business ­ was bought out by a company which had its own tempering facility. Within a few months a $3 million customer turned into a $130,000 customer. Shortly thereafter, Oregon Glass's second largest customer closed shop.

In 1995 Oregon Glass was in trouble. The market was becoming more competitive. Their customers began looking at product cost and were no longer willing to pay for scrap. Oregon Glass' on-time delivery was a dismal 60%, annual employee turnover was 125% and they were losing money.

Several key executives had read The Goal and decided to re-read it. The company president then attended a one-day TOC Overview given by Eli Goldratt. The decision was made to pursue Theory of Constraints.

After attending a 2-day Production Workshop, and with the help of the AGI Network, Oregon Glass was able to improve its on-time delivery from 65% to 99%. Their constraint was then in the market.

In early 1996, key executives from Oregon Glass attended a Jonah Program (External Constraints Course) in order to construct an unrefusable offer to their market. They began focusing within the company on global issues rather than local issues. The sales team and the plant started working together to make decisions based on how they affect the company as a whole.

Oregon Glass went to its customers to identify their key issues. The common theme was the problem with the way the glass was traditionally packed and labeled. As a result, Oregon Glass designed an innovative delivery rack which revolutionized the delivery & labeling system -- resulting in 50% additional capacity for the customer and 7% less internal scrap. These results, coupled with Oregon Glass' ability (in some cases) to provide two hour service if the glass is broken or scratched, allowed Oregon Glass to double its price. The company's profits in the fourth quarter of 1996 and the first of 1997 ­ traditionally slow periods ­ were the best ever.

As with all good ideas, the competition copied the rack system ­ even offering it at a lower price. Oregon Glass' response: more innovative, unrefusable offers to the market geared toward solving their customers' problems.

Their next offer focused on lowering material cost by improving the glass yield of their customers. The customers cut glass out of large sheets (102" x 130") down to an average of 6 square feet. The rest of the glass was thrown away. Oregon Glass offered to buy back what would have been scrap and in turn sold these smaller pieces to the door industry (which often needs only small panes of glass). This reduced the original customer's scrap by 14% and created a true win-win situation.

Sales people now see it as their job to gather the undesirable effects (UDEs) of the customers on a continuous basis, and to use their findings to construct offers. This has lead to Oregon Glass earning the reputation of being innovative and creative, allowing them to charge a premium for their products because the customers view their relationship with Oregon Glass as a partnership to solve problems.

This has resulted in Oregon Glass's value doubling in the last year and a half. The company is now being bought by a competitor.

This success story was presented first at the Jonah Upgrade Workshop in March 1997 in San Antonio, TX and then updated at the Jonah Upgrade Workshop in May 1998 in London. Both presentations are available on video, respectively JSA-6 and JUK-14.