Whirpool’s Global Supply Chain initiative

EXECUTIVE SUMMARRY

 

Whirlpool Corporation is a global manufacturer and marketer of major home appliances and nearly 50 manufacturing and technology research centers on the globe. The company markets Whirlpool, Kitchen Aid and other major brand names to consumers in more than many countries. Thus, Whirlpool’s global supply chain process and management can be complex with various areas of concern for the company’s current business challenges’ involving their supply chain management and that Whirlpool is moving towards a better supply chain initiative process relating to their SAP and ERP systems that enables to appreciate its business processes as reflected through its high level balanced scorecard. Thus, it is useful to basically realize that changes and strategic planning of the supply chain initiative is really a relevant source of profit growth and market stability for Whirlpool. In their supply chain initiative, Whirlpool can usually spread various functions necessary to overlay a coordination system along with responsibilities and structures to bring together successful activities within the company among the company’s business partners, the selection of partners, the design of incentives and the design of processes to monitor performance, set goals and solve problems. The strategic and operational activities and the design of the coordinating system will have to provide value on a better, useful supply chain management as Whirlpool may seek to provide prescriptive ways to pursue an optimizing approach given the assumption of a completely rational decision maker.

 In principle, there could be such behavioral dynamics on supply chain management that emphasizes key concepts in terms of understanding Whirlpool’s visible stretches of wasted inventory and unmet supply chain process as Whirlpool supply chain limps along, never quite achieving its full potential as a source of competitive advantage or of the reduction of the entry barriers to other competitive settings in improving performance of such resource process. The related issues and or problems require more than IT implementation or optimization algorithms in such observation of the company, there seems to a palpable orientation in managers and executives who purposefully address the behavioral issues in supply chain planning as an optimization problem with objective to minimize forecasting accuracy. Whirlpool Corporation is now using SEEBURGER technology to provide a standardized business integration solution for thousands of trade customers that use Electronic Data Interchange (EDI) to automate business transactions. SEEBURGER adapters embedded in the SAP Net Weaver(TM) technology stack will eliminate the need for multiple solutions and also support Whirlpool’s global use of the my SAP Business Suite as well as the company’s initiatives to implement the Net Weaver platform.

 The use of SEEBURGER adapters for data translation and communications will simplify Whirlpool’s network architecture, both by allowing the company to move away from non-SAP-compliant solutions and by eliminating the need to use trade customer integration solutions from different vendors. In addition, AS2 connectivity services provided by SEEBURGER will aid Whirlpool’s efforts to migrate more suppliers and customers to the AS2 standard in order to reduce costs and maximize its investment in global data synchronization through the UCCnet data pool service. Whirlpool is currently using SAP Net Weaver’s master data management (MDM) capabilities to synchronize product item information with UCCnet, the SAP Exchange Infrastructure (SAP XI) to provide integration broker services, and the SEEBURGER AS2 adapter to meet UCCnet’s requirement for Internet-based AS2 document exchange and that data synchronization effort will help Whirlpool comply with its trade customers’ demands for uniform product information, while also lowering supply chain costs by reducing invoice and product shipment errors.

ANALYSIS AND DISCUSSION OF WHIRLPOOL’S GLOBAL SUPPLY CHAIN INITIATIVE USING THE BUSINESS ARCHITECTURE FRAMEWORK

 Great companies don’t stick to the same supply networks when markets strategies change. Rather, such organizations keep adapting their supply chains so they can adjust to changing needs. Adaptation can be tough, but it’s critical in developing a supply chain that delivers a sustainable advantage. Most companies don’t realize that in addition to unexpected changes in supply and demand, supply chains also face near-permanent changes in markets. Those structural shifts usually occur because of economic progress, political and social change, demographic trends and technological advances. The best supply chains identify structural shifts, sometimes before they occur, by capturing the latest data, filtering out noise, and tracking key patterns. They then relocate facilities, change sources of supplies, and, if possible, outsource manufacturing. Companies that adapt supply chains when they modify strategies often succeed in launching new products or breaking into new markets.

 VALUE PROPOSITION

Building an adaptable supply chain requires two key components: the ability to spot trends and the capability to change supply networks. To identify future patterns, it’s necessary to follow some guidelines:

Track economic changes because as nations open up their economies to global competition, the costs, skills and risks of global supply chain operations change in the rise of specialized firms and companies to see if they can outsource more stages of operation.

Make out the needs of the company’s ultimate consumer’s not just immediate customers which amplify and distort demand fluctuations.

Whirlpool should ensure that product design teams are aware of the supply chain implications of their designs and must also be familiar with the three design-for-supply principles: commonality, which ensures that products share components; postponement, which delays the step at which products become different and standardization, which ensures that components and processes for different products are the same.

  

RESOURCES

Whirlpool’s global platform provides their operations with resources and capabilities no other manufacturer can equalize as Whirlpool’s global procurement, product development and information technology organizations help the company operations reduce costs, improve efficiencies and introduce a continuous stream of relevant innovation to consumers as the management was inspired by innovations and designs, customers around the globe trust Whirlpool to make their lives easier and their brands are connecting with customers in ways that will last a lifetime. Moreover, Whirlpool Corporation is searching for ways to realize useful efficiencies in its supply chain operations within its eight factories and eleven regional and sixty local distribution centers that could monitor and track facets of its supply chain, from toaster scheduling to deployment and inventory planning. Whirlpool chose to implement a broad range of i2 solutions to integrate and drive greater efficiency through its supply chain and wanted to work with the thought leaders in the supply chain space, says J.B. Hoyt, Whirlpool’s Project Director of Supply Chain. After researching several alternatives, including systems integrators, Whirlpool executives selected i2 Business Optimization Services (BOS) to implement these solutions.

 The i2 BOS methodology is a framework of tools and techniques consisting of intellectual property and service offerings required to model build and operate an integrated planning framework to synchronize supply chain operations. With i2 BOS, companies can optimize key business workflows. The first is that the i2 BOS team has great knowledge of the software tools and how the tools work. The second benefit is the intellectual property. The i2 BOS team has the knowledge of where the industry is going, where the future of supply chain planning is going to take advantage of things that are coming down since its implementation of i2 solutions, Whirlpool has achieved significant results in its targeted areas of improvement.

 

PROCESSES

Whirlpool’s trade processes migrated to the SEEBURGER- based AS2 service with UCCnet connectivity that customer’s system will be used to demonstrate the benefits of AS2 and UCCnet to other trade customers with the vast majority of their business coming in on EDI over a value-added network for Whirlpool Corporation’s Global Information Systems. SEEBURGER will help move more trade customers to the AS2 communication platform and expect to see significant cost reductions with VAN elimination while bringing more suppliers and customers into the UCCnet and AS2 fold. 

Whirlpool Corporation’s transition to such connectivity solution set is part of the first phase of its SAP Net Weaver and SAP XI implementation. The company is then using the SEEBURGER’s SAP consulting services to deploy the adapters, link to UCCnet and configure the message formats required for each trade customer. The implementation is significant because it reflects two major IT trends for consumer packaged goods companies today. The move to consolidate on a single global platform – my SAP Business Suite and related applications to reduce costs and enable the service oriented architecture required to efficiently link business processes and the push for global data synchronization through UCCnet of providing reliable electronic communication among trade customers support Whirlpool’s efforts in important fields.  

PROFIT AND GROWTH

Whirlpool success involves customer service and reduced supply chain costs providing financial impetus to drive the remaining systems work, a Web-based collaboration tool for sharing and combining the sales forecasts of Whirlpool and its major trade partners, the advanced planning and scheduling system boosted in North America from 83 percent to 93 percent by having inventories by 20 percent from freight and warehouse costs and Whirlpool spends a lot on manufacturing materials. Its biggest buys worldwide are steel (3-6 million annually), followed by plastic resins and parts (5-5 million), motors and pumps (more than 5 million), fabricated steel components (0-0 million) and electrical and electronic components (5-0 million) Whirlpool company is looking to develop world class suppliers which is capable of meeting today’s needs preparing for the quality, cost and delivery requirements of the future. Whirlpool’s global initiative focused on establishing its presence in North America, Latin America, Europe and Asia and acquires the appliance business which gave the company a solid European operations base. Thus, Whirlpool expanded its involvement in the market and established and appliance joint venture partner and strengthened its position in Latin America and Europe and building a solid manufacturing and marketing base in Asia. 

PARTNERSHIP

Whirlpool provides the software, training and telephonic support services to their internal applications development group and does on-site support for building new types of applications over the ongoing development of the product in providing the basis of Whirlpool’s ongoing relationship with the supplier and started the working relationship that led the management to communicate with SAP using the tool, give input to other development improvements and develop Lighthammer partnership application functions that have saved significant dollars and improved plant productivity. Whirlpool views the relationship with Lighthammer as ongoing and plans to continuously work with the supplier to improve upon and meet new demands as they are encountered as it has provided a tool set that gives the best of both worlds and continue to manage and deliver value within application landscape and provide Whirlpool with a path of transition to migrate to our global strategy to help drive operational excellence and when applicable, real-time performance management, providing for the capability of a global sustainable competitive advantage that will be drive customers’ needs.

 Customer operating partnerships are customer-vendor arrangements that involve tightly linked extended supply chains and offer great gains, including 20 to 35 percent share increases, most profitable accounts and a shift to a strategic positioning as a highly service-differentiated supplier as well as direct-sales relationship with value-oriented top customer executives and highly-defensible competitive position with switching costs. The most desirable customers are seeking more intensive operating partnerships within capable suppliers entailing that price is not the primary factor creating opportunity for managers who develop and offer useful arrangements. Generally, managers who fail to initiate partnerships with their best customers run the risk of losing them and the lion’s share of their company’s profitability and have the capability to develop arrangements with their highest-profit customers. It is crucial to understand that appropriate management measures must be put in place.

 Whirlpool Corp. has lived through some difficult IT and e-business hardships and flawed enterprise resource planning implementation and an Web partnership but Whirlpool has learned from their mistakes and is forging ahead with a methodical e-business strategy. The company’s biggest e-business accomplishment of the was not a Web initiative, but the creation of an overarching IT strategy that includes an Internet technology portfolio stretching across major corporate customers and suppliers in referring to their supply chain at getting products to the right place at the right time – the right supply chain strategy, the satisfaction of consumers at the end of the supply chain. Most supply chain initiatives do the opposite: They start with the realities of a company’s manufacturing base and proceed from there. A highly disciplined project management office and broad training in project management were key to keeping work on budget and on benefit and be part of Whirlpool’s supply chain business approach toward quality and productivity enhancement as new product development. Improving customer service via the Web is central to its approach, to live up to their commitment to the customer as Whirlpool is moving ahead with its e-business plans after facing difficulties in the past. Whirlpool was ensnared by SAP implementation for ERP that had gone awry, leading to fourth-quarter distribution and fulfillment problems. Whirlpool admitted it was facing delays in shipping small orders of appliances since moving to the SAP software and ERP implementation to consumers through its Web site, then direct the consumers to participating appliance dealers.  

DISCUSSION OF THE INFORMATION COMMUNICATIONS AND TECHNOLOGY CHALLENGES FACED BY WHIRLPOOL IN IMPLEMENTING ITS GLOBAL SUPPLY CHAIN

 The supply chain organization was the part of the business that Whirlpool’s salespeople were in the habit of calling the “sales disablers” in 2000. Whirlpool was behind the eight ball, tying up too much capital in finished goods inventory and yet failing to provide the product availability to the customers needs as the availability hovered around 87 percent on the delivery performance of the four biggest appliance manufacturers in the U.S. as Whirlpool is in the fifth place. The company is now proposing a new suite of IT solutions for which the company had little appetite and had flipped the switch on a massive new ERP system, with less than desired effect. Normally, Whirlpool ships close to 70,000 appliances a day to North American customers. Even though the situation was soon righted SAP remains a valued partner, the experience of being treated as a sort of poster child for ERP folly had left scars.

Purchasing and supply management are keys to the Whirlpool Corp.’s strategic gamble that it can remain profitable while it restructures, reduces costs and expands manufacturing operations worldwide in the face of a global economic slowdown. Already recognized as one of the world’s best cost-management organizations, the purchasing group at Whirlpool is reorganizing to deliver best-value materials to regional assembly plants. That will be done, says Roy V. Armes, corporate vice president for global procurement, by optimizing the supply base for the world’s largest major appliance company. That means finding the best possible suppliers globally. Whirlpool today is for the performance of the global supply chain. But in 2001, the company utterly new to the supply chain organization to lead its e-business efforts. By contrast, Paul Dittmann, the vice president of supply chain strategy, was a Whirlpool veteran with a tenure spanning a quarter century. ‘’Sales had risen to record levels in 2000 as their launch of some innovative products coincided with an up tick in housing starts. With the rest of the company chugging on all cylinders, there was only one thing holding Whirlpool back: to their supply chain’’ Whirlpool CEO has said. At the top level, it’s a simple formulation: getting the right product to the right place at the right time.

 Whirlpool makes a diverse line of products with manufacturing facilities in different countries and sells those through retailers big and small and to the construction companies and developers that build new homes. I agree that Whirlpool needed to formulate a battle plan that would include new information technology, processes, roles and talents by defining their strategy as the company aims to be world-class in supply chain performance by focusing on customer requirements as their approach to developing their supply chain strategy would start with the last link involving the consumers and then proceed backward. The overwhelming tendency in a manufacturing organization is to think about the supply chain as something that originates with the supply base and moves forward. It’s understandable: This is the part of the chain over which the company has control. But the unfortunate effect is that supply chain initiatives typically run out of steam before they get to their end point and real point. Whether or not they make customers’ lives easier becomes an afterthought. Whirlpool asked about their overall availability requirements, their preferences in communicating and would like to see along the lines of e-business along which performance was varying in importance according to the customer. Strategy does not simply address the needs of the moment. It anticipates the challenges of the future.

A component of the supply chain strategy was identifying the probable range of future operating scenarios based on industry, economic and technological trends. The enterprise resource planning (ERP) solution, has shipped to customers worldwide a as the world’s premier ERP solution, designed to take full advantage of the industry’s renowned, standards-based SAP Net Weaver(TM) platform that brings new functionality, flexibility and innovation to customers from automating end-to-end processes within an organization to extending processes beyond the enterprise to the entire ecosystem of customers, suppliers and partners, providing companies with one solution to increase efficiency and manage the innovation and growth of their organization giving businesses the flexibility to sense and respond to market changes and continuously align their operations with evolving supply chain demand for services-based business processes which combines software applications and the underlying software infrastructure and enables customers to expose and leverage ERP delivers many new features to help companies improve efficiency and free up resources to invest in innovation and growth. New and enhanced user roles and self-services make the solution easier to use, increasing user productivity and solution adoption.

 New role templates provide appropriate applications, information and services to specific user groups and range from job-specific ones, such as plant manager, to general roles, such as employee or manager. ERP features comprehensive analysis, forecasting and reporting tools that support all standard ERP processes such as human capital management, financial operations and corporate services. These enhanced analytical tools are embedded in all processes, adding real-time data analysis capabilities to ERP’s traditional back-office role. This gives employees and executives the appropriate insight into company activities for effective decision-making at all levels of the organization. Analytics from all business processes can be fed into and retrieved from the business information warehouse in ERP. On the B2B side, the company has developed WhirlpoolWebWorld.com, a portal that describes as a doorway for their partners, vendors and trade suppliers and other employees as the site has about 50,000 users and Whirlpool expects to have 25 percent of its North American supplier base and of its procurement organizations worldwide. Whirlpool Web World includes Partner Store, where dealers order from Whirlpool and the company’s Internet-enabled Global Procurement system, accessible by employees and suppliers.

 

 LIST OF REFERENCES

Ciarlone, L, 2005, Building a house of brands: Whirlpool Corporation’s Blueprint for success,

<http://www.gilbane.com/case_studies/Whirlpool_case_study.html>, Gilbane Report

 

Bowman, RJ, 2000, Whirlpool: Connecting pieces of a big puzzle,

<http://www.glscs.com/archives/07.00.whirlpool.htm?adcode=5>, SupplyChainBrain.com, July

 

Russell, J, 2004, Achieving Operational Excellence,

<http://www.appliancemagazine.com/editorial.php?article=550&zone=1&first=1>,

APPLIANCE magazine, July 2003, Customer Loyalty taken to heart, <http://www.appliancemagazine.com/editorial.php?article=157>, APPLIANCE magazine, April

 

Whirlpool’s annual report

 

 

ANNOTATED BIBLIOGRAPHY

 

Content Technology Works Case Study

Building a House of Brands: Whirlpool Corporation’s Blueprint for Success
August, 2005 Leonor Ciarlone

Whirlpool’s digital asset management architecture provides the enterprise pillar to protect and expand brand value

 

Content Technology Works (CTW) is an industry initiative, administered by The Gilbane Report, to develop and share content technology best practices and success stories. CTW case studies provide organizations with best practices in content technologies and strategies for securing funding, measuring actual value, and driving adoption. The company’s growth strategy has been to introduce innovative new products, strengthen customer loyalty for its brands, continue to expand its global footprint or enhance distribution channels and, where appropriate, make strategic acquisitions which enhance the company’s innovative global product offering. Whirlpool a valuable asset: a corporate brand that communicates innovation, consumer-driven research and development, and excellence in design and performance. Injecting these principles into internal and customer-facing business processes enables the company to invoke a consistent set of emotional responses from consumers including trust, uniqueness, and most important, loyalty.

  

Global Logistics & Supply Chain Strategies

SPECIAL ISSUE: GLOBAL SUPPLY-CHAIN PARTNERSHIPS Whirlpool: Connecting Pieces of a Big Puzzle

By Robert J. Bowman July, 2000

 

Whirlpool leads the market in the United States and South America, and is among the top three producers in Europe. In addition, it is the largest western manufacturer in Asia, according to Steve Whalen, director of supply-chain operations. Many companies fear outsourcing because of the temporary chaos that results when operations are shifted from one party to another. One thing that did change was Whirlpool’s logistics information systems. Prior to the new contract, the company had been developing software for hand-held personal data assistants, in order to collect electronic proofs of delivery and information on product damage. Penske contributed four systems to Quality Express: a logistics management system (LMS) to track shipments at the order level on a real-time basis, a route optimization system known as Route Assist, communications software from Qualcomm and Penske’s license for the use of a common-carrier optimization system from ITLS, part of i2 Technologies as the elements were integrated into Whirlpool’s new ERP system, acquired from SAP AG shortly before Penske was chosen to oversee Quality Express. Whalen says Penske helped Whirlpool to cope with the usual start-up problems arising from the massive ERP implementation.

Whirlpool’s affinity for outsourcing doesn’t stop at the U.S. border. Over the next two years, the company expects to get its third parties more heavily involved in international logistics, both for import/export and in-country operations and that Whirlpool is putting the finishing touches on information systems that control domestic distribution but don’t yet provide the level of detail needed to operate there has to be a goal that should be applied for their global supply chain initiative.

 

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