Analysis of Whirlpool Corporation
Analysis of Whirlpool Corporation has provided vital data and strategic understanding about the company’s overall development. Seeking to expand and promote itself, Whirlpool recognized that the enterprise resource planning (ERP) innovation was beneficial for the company. Seeking to enhance itself via this system, the company sought to present this advantage to its segmented European branches and clients. There were many issues that lead Whirlpool to consider implementing ERP. In 1989, the company had a strong drive and motivation to continue growing and developing in other markets.
It purchased the appliance division of Philips Electronics, and entered the company into the European market place. This development launched a dual-branding program which led to international responsibilities. As these global purchases were occurring, Whirlpool found itself expanding its locations to including three pan-European brands and diversifying its brands across Europe. Operations management in turn opened up 11 plants in total. Each plant had to adhere to the particular countries’ requirements, such as language, preferences for product attributes, and electrical requirements (Balachandran & Ruback, 2003, 1).
This expansion also forced Operations to exclude specific brands to be sold in distinct countries, such as Laden was sold exclusively in France. In addition, as each product conformed to a different policy or regulation, multiple SKUs were being used for the same model; causing complexity and duplication. Marketing was therefore forced to create distinct marketing plans based upon each individual location, and insure that policies were being abided by. These rapid expansions to international locations lead to each plant having its own process. Each plant created a specific product line across all the brands.
The unorganized process was further complicated because individual orders were being moved from manufacturing to one of two central distribution centers then to one of the 12 regional distribution centers and then finally to the customer. These orders switched locations so often that efficiency was lost. Finance and Accounting was sometimes misinformed about which orders were filled, for how much, and how often. Operations and Accounting found that resource conflicts occurred due to miscommunication. This severely affects the company’s profit and project performance.
Communication lapses between country sales operations were frequent because each plant was individually responsible for its own sales generation, forecasting, order processing, fulfillment policies, billing, and payment collection (Balachandran & Ruback, 2003, 1-2). Furthermore, this new unstructured organization contained many ‘stand-alone information systems’ in each plant, division, and department. These lacks of interrelation between units lead to issues with IT departments as they tried to resolve technical issues and create enhancements for individual systems.
IT departments found that compatibility issues between systems were occurring, and success in the consumer market was being jeopardized by miscommunication. Analysis of the corporate structure and performance found that 79% of the time the distribution centers were able to match what the customer’s demand was. This meant that customers were faced with wait times or had to switch to another product if what they requested was not in store at the distribution plants.
Sometimes products were not immediately available, so lost sales were seen by Finance and Accounting. Estimates about profit margins were also seen to show that the market place would be growing by 25% for built-in appliances, and Whirlpool did not wish to miss out on this opportunity. The general concern was that customers might have to wait for more than 10 days before delivery of the appliance occurred. Customers typically did not want such long delivery times. Whirlpool found that there would be several performance improvements by switching to a ERP program.
Enterprise resource planning allows for operations management and information management to have information, reporting, and analysis to be part of an all encompassing system. This system will virtually allow every activity, every minute or hour of time, and every dollar spent to be instantly tracked and identified. Technology management would be able to have compatible systems which could communicate easily between distribution plants. This interrelation between the various branches would allow for scheduling or performance data to be analyzed.
Sales objectives, tracking procedures, and time efficiency would raise the quality and quantity of appliances being delivered to the consumer. These high standards play a key role in the strategic variables the company could use to continue in its expansion. Effective decision making processes would allow for less discrepancy and duplication that marketing was seeing in the various brands. Most importantly, Whirlpool was seeking to operate as a team versus individual units and improve the quality of information being exchanged between the groups.