Whirlpool’s traditional sales growth
Whirlpool’s traditional sales growth and model of efficiency was evident from the initial stages of this development. The company has a reputation for containing great consumer retention rates; thus, the ERP process and innovative changes was vital to the operations management of the company to enhance their competitive edge. Operations management found that it needed to see efficiency in customer requests for timely orders, continuous manufacturing flow, high product reliability and availability, and persistence in its striving to improve its communication.
This performance indicator would increase customer satisfaction versus forcing customers to seek products elsewhere. Processing time and management of customer orders would be simplified, and it was determined that there would be a 18% reduction of order-taking employees. Management found that storage of all project data in a single location was a requirement to this innovation. This element of control and scheduling would minimize inefficiency in operational processes and decrease the costs associated with continuing growth and business.
Therefore, a reduction in inventory would occur and warehouse space would be reduced by 15% due to eliminating shipping errors and returned products errors. Operations management was focusing on performance measures surrounding annual average inventory values (Balachandran & Ruback, 2003, 3). This new system would bring about a new method for storing data, and organizing where the data needed to be stored to allow for strong decision making to occur following analysis of profits. The 51 days sales of inventory was expected to be reduced to 29 days, as days were lost due to transit time and obsolete units.
The ERP structure would make the supply chain more efficient and visible to managers, accountants, employees, and customers. Furthermore, operations management would aid in resolving conflicts surrounding the use of resources. Product availability and resource requirements would contain similar information versus duplicating the work at different European divisions. This consistency would allow for better communication between the different distribution centers and prioritize deployments and enhancements (Balachandran & Ruback, 2003, 3).
As communication is essential to Whirlpool across its divisions, this will allow for interrelating between the teams. Collaboration on the joint technology is fundamental for instantly communicating with team members across the European nations. This communication and analysis could then be presented to executive managers about revenue increases. Collecting the raw data and analysis of this data would take several years in order to determine patterns, trends, expectations, and feedback from consumers about the company’s progress.
These performance measures and indicators would show that the costs of implementing this change were beneficial (Balachandran & Ruback, 2003, 4). It had already been determined that costs of this implementation included buy-in by employees and creating, testing, and documentation costs for employees. In addition, capital expenditures for the innovation would increase from $4. 3 million in 1999 for capital equipment to $6. 9 million in 2001. License costs would range from $300,000 to $600,000 over those years (Balachandran & Ruback, 2003, 4).
Long-term wise ERP is essential for Whirlpool. Question 3: To the Chief Financial Officer and the V. P. of Logistics: The purpose of this statement is to confirm that without ERP, management operations will fail to retain its current capacity of making profitable decisions. ERP is in the best interests of Whirlpool. My support for this innovation resides on 4 major points: 1) Operating Efficiency Levels 2) Communication requirements between distribution plants and headquarters 3) Decision-making and analysis requirements 4) Standards of performance and quality of customer service
To blatantly disregard the fact that our organizational structure and policies are at stake would be strategically disastrous. We are forecasting a 25% increase in kitchen appliance sales in Europe (Balachandran & Ruback, 2003, 2). These sales will allow us to leverage our continued sales strengths in these global locations. As we have marketed our goods to two types of customers, new home contractors and every day consumers, we are finding it difficult to meet their demands. Inventory and distribution centers are not easily sharing information across the different functions or organizations.
Our cliental is seeing that we are only 79% of the time matching our products with their demands. Customers expect immediate availability of products and prefer that standards be met which decrease the turnaround time in which they obtain their appliances. It is our responsibility to effectively make operating decisions that are based upon analysis that is exact. ERP will allow us to foster an environment of efficiency and cohesion, versus disparate communication and incompatible information exchanges across our technology divisions.
We are currently seeing that decisions on prices and inventory levels are being made based upon incomplete and outdated information due to this communication lapse. As operating management experts we feel that steps and planning must be taken to increase inventory visibility across our supply chain. We feel that suppliers and customers will continue business with us knowing that we are remaining competitive. Most importantly, we are aware that ERP has long term cost savings that reduce inventory costs, inaccurate processing, misplaced money on warehouse spaces, and loss of important sales days.
Chief Financial Officer and the V. P. of Logistics- As a specialist in operating management, I steadfastly believe that only through ERP can we continue our enhancements, development, and success. We are losing precious reputation every time we are unable to provide our customers with their products in a reasonable time. As we all know: Time IS money. Please pursue ERP for the best interests of OUR company. Thank You.
Reference: Balachandran, Sudhakar & Richard Ruback. (2003). Whirlpool Europe Article