Harsh Saxena

827947

FOUNDATIONS OF SUPPLY CHAIN

MANAGEMENT(MGMT90119)

ASSIGNMENT-I

Table of Contents
1

Introduction.................................................................................................................... 2
1.1

Company Profile....................................................................................................... 2

Main Body....................................................................................................................... 2
2.1

Supply Chain Issues and their Causes at Whirlpool..................................................2

2.2

Change of Fortune at Whirlpool................................................................................ 3

2.2.1

Facilities:............................................................................................................ 3

2.2.2

Inventory........................................................................................................... 4

2.2.3

Transportation.................................................................................................... 5

2.2.4

Information........................................................................................................ 5

2.3

Other Initiatives to deal with Supply Chain Problems...............................................6

2.3.1

Outsourcing....................................................................................................... 6

2.3.2

Technology......................................................................................................... 7

Conclusion...................................................................................................................... 8

Bibliography................................................................................................................... 8

Page 1 of 12

1 Introduction
1.1 Company Profile
Whirlpool Corporation was founded in 1911 by three brothers namely Frederick, Louis
and Emory Upton. Whirlpool in 1980s expanded their markets to South America,
Canada, China, India and Europe. Whirlpool has become the leader in home appliances
with annual sales recorded approximately $20.9 billion, in the year 2015 and there are
70,000 employees, with 69 manufacturing and technology research centers around
the

world

with

its

main

headquarter

in

Michigan,

United

States.

Whirlpool

manufactures appliances across all major categories, including fabric care, cooking,
refrigeration, dishwashers, countertop appliances, garage organization and water
filtration (Whirlpool Corporation, 2016)
According to Manhattan Associates Whirlpool has a demand of around 2.5 million of
products to meet their customer and builders demand. Whirlpool approximately
provides their products to 30,000 retailers worldwide by acquiring goods from 7,000
suppliers by manufacturing from their 40 facilities. (Manhattan Associates, 2014)
Whirlpool became the largest home appliance industry by acquiring Maytag in year
2005 and today they give stiff competition to the major home appliance players like
Bosch Siemens, LG, Samsung, Electrolux, Haier etc. (CSI Market, 2014)

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2 Main Body
2.1 Supply Chain Issues and their Causes at Whirlpool
Whirlpool has decided to take a bold step to became global and they started with
geographical expansions and business acquisitions but rather than benefitting them,
this step has brought more complexity in their supply chain management. In 2000,
their performance of delivering their products showed a major downfall as, they were
not able to meet their delivery targets and the major issues encountered were with the
inventory management system. Inventory at storage locations were either in too much
quantity or less quantity and also there was an issue of having inventory at wrong
locations. In 2000, the whirlpool performance on inventory availability rate was
recorded

83

%,

which

is

very

low

as

compared

to

industry

standards.

(Assignmentpoint, 2014)
In addition to this the company has also failed to deliver their products to their
customers in an allotted time period as their distribution system was not able to
handle large number of customers as they were expanding with some more associated
problems like no proper order communication with retailers and customers, issues in
forecasting and improper functioning of facilities. Also one major drawback of their
supply chain management failure was least incorporation of latest technologies. These
are the major factors which led Whirlpool to face these above issues. (Mishra, 2013)
Whirlpool was also facing supply chain issues from their integration with Maytag as the
acquisition was very challenging for whirlpool as these both companies were of almost
same size and maintaining the supply chain management with the production, sales
and distribution flow was a difficult task. (MacMillan, 2008)
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2.2 Change of Fortune at Whirlpool

Supply Chain Drivers that helped Whirlpool to ameliorate in their supply chain
management system are stated below as:

2.2.1 Facilities:
Whirlpool first step was to understand the customer needs as the customer desires
change continuously and this is driven by factors like availability of products with a
challenge of carrying less inventory from retailers and customers want products at
much faster pace. (Manhattan Associates, 2014)
Changes made by Whirlpool into their facilities were:

Whirlpool closed down some of their major facilities and brought the count from
47 to 25 as with less facilities it is easy to manage inventory. (Manhattan
Associates, 2014). Better responsiveness can be achieved by reducing the

number of stages in supply chain. (MacMillan, 2008)

Distribution center were planned according to the rate at which products leave
the center. Products which are costly i.e. slow moving are placed at the main
center facilities like expensive or customized refrigerators and stoves, while fast
moving products which are used widely by consumers are placed near loading
docks. (Barrett, 2009)

This changes of reducing the facilities and change in the functioning of distribution
centers has helped them in being more coordinated, efficient and responsive.

2.2.2 Inventory
Whirlpool started solving their inventory issues by amalgamating their warehouses to get
better understanding about their resources.
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According to Tharp, Whirlpool started with Just in time method to manage

their inventory. According to this approach merchandise sent to retailers was cut
down, also for retailers managing the cost of inventory got lowered with better
tracking of products this increases the belief of retailers on Whirlpool. (Tharp,

2009)
Whirlpool also came up with new strategy of rather than keeping inventory of
products with different colors, they will manufacture products in single color i.e.
White and as the requirement will come they will appropriately color the
products as per order. This strategy has benefitted them with further reduction
in their inventory management cost. (Thomas, 1995)

As per above statements, the company was able to improve their relation with
retailers and also availability of customized products to customers were improved
at much faster rate.

2.2.3 Transportation
Whirlpool needs to improve their efficiency and accuracy in timelines while delivering
of products to their larger number of customers across the globe by keeping the cost
low. So some of the techniques used were.

Whirlpool started using the strategy of full truck load shipment with product
mix, rather than going for multiple shipments of less loaded trucks. This
strategy helped them in completing more than 63% of the shipments in

appropriate timelines keeping the low transportation cost. (Cooke, 2008)

Company started using Intermodal transportation for longer distance travel
which has helped them in achieving certain amount of cost benefits.
(Corporation, 2012)
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2.2.4 Information
Implementation of Information systems like CPFR and EDI (discussed below) has
helped the Whirlpool in better communication and forecasting part, which has
benefitted them in production planning and communication with trade partners.
2.2.4.1 CPFR Implementation

Whirlpool was facing 70% forecast error and demand variability issues. So company
officials and its key trade partners believed that CPFR implementation will offer them
opportunity for improvement in forecasting.
After incorporation of CPFR the forecast error dropped down to 11% and also company
trade partners across the globe experienced the reduction in weekly demand
variability with this new forecasting technology.
(Sagar, 2003-2004)
2.2.4.2 Electronic Data Interchange (EDI)

Electronic Data Interchange is an electronic way of transferring data across

organization and within trade partners. Whirlpool incorporated this system to reduce
the paper work of 600 suppliers who are associated with them. This implementation
has helped them to achieve more accuracy and less transactional errors when dealing
with global data. (Mishra, 2013)
As per the management at whirlpool, EDI implementation helped them at
achieving two benefits:

Eliminated paper work for Whirlpool 300 suppliers.

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Data interchange operation cost was reduced after implementing EDI,

saving cost of $600,000 yearly.
(Mishra, 2013)

2.3 Other Initiatives to deal with Supply Chain Problems

2.3.1 Outsourcing
Whirlpool want to focus more on their production, sales and customer satisfaction, so
they outsourced their logistics activities to Penske Logistics company. This company
was good in handling the routing system of Whirlpool warehouses and distribution
centers and also they are focusing on areas like Cross docking, travel mode selection
and shipment load panning. (Penske, 2010)
Outsourcing brought several benefits to Whirlpool:

On- time loading increased by 13 percent.

On-time departure also increased by 13 percent.
On-time delivery to Least Developed Countries increased by 12

percent.
Penske also helped Whirlpool in saving $1 million and also in gaining close to $5
million from Maytag savings from the bid process and re-adjusting surcharges.
So total savings Whirlpool supply chain made was more than $40 million from
Maytag Integration.
(Penske, 2010)

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2.3.2 Technology
Whirlpool supply chain management and Information Technology teams together
planned for replacing their outdated production scheduling and distribution systems
with a streamlined, standardized solution. The new upgraded systems had a common
platform for master scheduling system, inventory planning and distribution planning,
with addition of collaborative tools for forecasting and replenishment. (Anthes, 2005)

The system improvements roll-out procedure proceed in phases, starring from North
America with implementation of an advanced planning and scheduling (APS)
system then followed up with Europe, Latin America and Asia with implementation of
SAP modules like Production planning and Demand management modules.
(Anthes, 2005)

Implementation of Technology has brought several benefits to Whirlpool:

Forecasting errors reduced by 50 percent and Inventory issues of finished

products were reduced by more than 20 percent.

Transportation and warehouses costs were reduced to 5%.
Whirlpool overall products availability rate increased from 83% to 93%,
and reached 97% within five years of implementation.
(Anthes, 2005)

3 Conclusion
After studying the whole supply chain management case study of Whirlpool, I can only
conclude that after the major downfall in the early 2000 and also facing issues with supply
Page 8 of 12

chain system of Maytag acquisition, Whirlpool came up strongly by implementing proper

measures at right time with good supply chain strategies which has benefitted them in the
long run and still they are one of the top leading home appliance company in the world.

4 Bibliography
Anthes, G. H. (2005, June 9). Case Study: Supply Chain Whirl. Retrieved from
http://www.usanfranonline.com/resources/supply-chain-management/supply-chainmanagement-case-study-whirlpool/#.V8SqkDVc5j8
Assignmentpoint. (2014, October 23). Whirlpool strategic approaches to worldwide
expansion. Retrieved from http://www.assignmentpoint.com/business/marketingbusiness/whirlpool-strategic-approaches-to-worldwide-expansion.html
Barrett, J. (2009, September 24). Whirlpool Cleans Up Its Delivery Act. Retrieved from
http://online.wsj.com/articles/SB125366529324132457
Cooke, J. A. (2008). Logistics : The greening of Whirlpools supply chain. Retrieved from
http://www.supplychainquarterly.com/topics/Logistics/scq200802whirlpool/
Corporation, W. (2012). Whirlpool Corporation Sustainability report 2012. Retrieved from
http://assets.whirlpoolcorp.com/wp-content/uploads/2012_Sustainability_Report.pdf
CSI Market. (2014, October 26). Whirlpool's Comment on Competitors and Industry Peers
[Online]. Retrieved from http://csimarket.com/stocks/compet_glance.php?
code=WHR
MacMillan, D. (2008, October 25). The Issue: Whirlpool Cleans Up Its Supply Chain.
Retrieved from http://www.businessweek.com/stories/2008-10-24/the-issue-

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whirlpool-cleans-up-its-supply-chainbusinessweek-business-news-stock-market-andfinancial-advice
Manhattan Associates. (2014, October 23). Whirlpool spins optimized supply chain with
help from Manhattan Associates. Retrieved from
http://www.manh.co.uk/resources/case-study/whirlpool-spins-optimized-supplychain-help-manhattan-associates
Mishra, A. (2013, November 13). The Operations & Supply Chain Club. Supply chain
Manaement- Whirlpool. Retrieved from
http://opepiimraipur.blogspot.co.uk/2013/11/supply-chain-managementwhirlpool.html
Penske. (2010). Whirlpool Corporation Evolution of a supply chain. Retrieved from
http://www.penskelogistics.com/pdfs/06_whirlpool_case_study.pdf
Sagar, N. (2003-2004). CPFR at Whirlpool Corporation :Two heads and an exception
engine. Retrieved from https://ibf.org/Downloads/Winter_03-04_Article.pdf
Tharp, A. (2009, May 2). The Usefulness of Keeping Whirlpool Supply Chain Up To Date.
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Thomas, M. J. (1995). Gower Handbook of Marketing. Retrieved from Thomas M.J., 1995 .
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bl&ots=o4quM8Oc9G&sig=gSzBS5ZloC1rKZLjxDpJrZBjXGE&hl=en&sa=X&ei=3

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Whirlpool Corporation. (2016, January 29). Whirlpool Corporation Reports Record FourthQuarter And Full-Year 2015 Results. Retrieved from
http://www.prnewswire.com/news-releases/whirlpool-corporation-reports-recordfourth-quarter-and-full-year-2015-results-300211994.html

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