Critical appraisal of Whirlpool's Supply Chain Management
Products and Services
Critical review of Operations
Contribution to business performance
Changes in Internal Forecasting Process
Business Performance Results
Criteria for trade Partner Fit
Critical Evaluation of System
Customer Centric-Supply Chain Management System
Collaborative Supply Chain
Current System Changes
Planning and sourcing decisions
Drawbacks of Whirlpool delivery system
Factors for taking supply chain management decision
Figure: Supply Chain Performance factors
Reduced Cost and Inventory
Future trends in home appliances supply chain management
RFIDs to Individual Products
Vendor Managed Inventories
Challenges for home appliances businesses in managing supply chain
Multiple Channels Conflicts
Short life Cycles
Whirlpool is renowned as a global electronic appliances manufacturer and marketer. The company's products and operations are present throughout the globe. The company has gained tremendous growth rate through effective implementation of supply chain methodologies. The comparison of previous results for the business reveals that an overall improvement in revenues is observed after implementation of supply chain management. Furthermore operational results are also improved significantly as availability increased at 97%, cost of freight and warehousing was reduced by 5%, and finished goods inventory got reduced up to 20% as compared with previous results.
The implementation of solution for supply chain management improved procurement, planning, sourcing, production, and delivery to customers. The management initiative to implement a standardized approach for all supply chain functions has integrated business processes. These processes are regarded as central for automating and facilitating efficient supplies to customers. The management also implemented a collaborative approach for supply chains integration allowing the vendors to share key information and replenishment of inventory according to requirements.
The business operations are influenced with significant developments in global business environments. The organizations have invested to research and develop process innovations and techniques to automate business operations. Similarly the traditional view of inventory management, logistics, warehouse management, delivery, and customer's services are also adaptive of changes. The businesses are compelled to reduce cost of operations in global recession. It also requires providing efficient customer service with appropriate technology solutions.
The following sections are focused to critically review existing Whirlpool operations in conjunction with the requirements and drawbacks of existing system. The effects of implementing latest solutions are also evaluated in terms of business performance. The latest trends and challenges of the supply chain management of home appliances manufactures are also elaborated. The overall critical evaluation of secondary literature provides a broad base for issues challenges, and solutions available to facilitate growth.
Supply Chain Management:
Supply chain management is a discipline that has revolutionized the business processes of large as well as small corporations. The approach was introduced in 1990s and continuous innovation in the field has not only aligned it with the changing business requirements but at the same time added multiple advantages. The organizations focusing on the integration of procurement, production, deliver, and post delivery services implement supply chain management solutions.
The business environments and dynamics have changed during last two decades. Globalization, technology, business consolidation, customer focus, government policy, and regulations are major factors influencing the supply chain management practices (Coyle, Langley, Gibson, & Novack, 2008). The rate of changes in the practices can also be estimated at the pace of organizational and business environment's progression. The organizations resisting changes and failed to adopt progressive practices had no choice but to fail.
Supply chain management is a practice that has enabled the corporations to source raw materials, as well as finished goods from global markets with ultimate ease. The businesses are also enabled to take decisions about the best target market for their products. The manufacturing decisions are also taken into account in terms of best possible places for manufacturing (Coyle, et al., 2008). The availability of global transportation, delivery and service infrastructure has also impacted business decisions.
Technology is regarded as a major enabler of the business support supply chain can provide to assist its stakeholders. The best use of technology can enable the business to adopt technologically viable decisions for business process automation and optimization of business process performance. There are multiple technology oriented solutions that are implemented through effective use of available technology i.e. usage of RFIDs to trace assets.
Vendor managed inventories (VMI) are also a significant development enabled through implementation of technology oriented supply chain management practices (Coyle et al., 2008). The phenomenon of collaboration among strategic business partners is also a notable change in perspective. The organizations widely share their goals, aims, and objectives in order to achieve an integrated approach for business development. It is also noted that supply chain management enables the vendors, distributors, and customers as partners.
A long-term relationship is viewed rather than a onetime deal with all important stakeholders. The organizations within a single and collaborated supply chain share their strengths to facilitate business growth. The sharing of resources also creates synergy and as a result the partners gain competitive advantages. The retail, automobile, food, pharmaceutical, and crisis response industries are major beneficiaries of supply chain management's innovative and technology oriented solutions.
Critical appraisal of Whirlpool's Supply Chain Management:
The global home appliances manufacturer and marketer was incorporated at a small scale in 1911 to manufacture and sale motor driven washing machines. Currently the company is a global giant in manufacturing home appliances from laundry, kitchen, home appliances to filters and accessories. The revenue of the company is reported at $19 billion as at 2011. The corporation employees 68,000 individuals in its 66 manufacturing and research centers across the globe (Whirlpool Corporation b).
Products and Services:
The company is a major manufacturer, distributor, and marketer of electronic appliances including fabric care, cooking, refrigeration, dishwasher, counter top appliances, and water filters (Whirlpool Corporation a). The global presence of the company requires a diligent systems planning and operations. The changes experienced throughout the world regarding procurement, manufacturing, distribution, and deliveries of electronic appliances required an integrated planning approach. The company was lately using in-house and outsourced system solution to perform individual business processes.
Critical review of Operations:
The critical review of the procurement, manufacturing, distribution, supply, and delivery system of the company in North American region reveals following issues. It was ranked as fifth in delivery performance in an overall comparison with its competitors. The corporation was holding large amounts of inventories yet at the same time did not appropriately deliver. The availability of the products was calculated at 83%. The cost of deliveries and holding large inventories was an additional disadvantage.
The company's had an advanced ERP solution but lack of integration and business processes approach was the major cause of business losses as well as the salient features of the products were also undermined by the customers. The system i.e. production scheduling, SAP R/3 ERP accounting and order processing, demand forecasting, and distribution planning were working as standalone business applications.
These systems were not integrated as a result they were unable to add value for the organization. The supplies, manufacturing plans, and delivery of the products were handled in an unorganized and random manner. The old procedures were unable to support business planning and as a result the company could not produce desired results. The competitors were gaining market share through implementation of technological and innovative supply chain management solutions.
The previous planning and operations of the company reveals that inadequate approaches were applied on North America as well as around the globe. The supply chain solutions were primitive despite the presence of sophisticated system. The management could not focus on the long-term plans for all business processes (Basu & Wright, 2008). The operational plans were also not aligned with each other to compliment the organizational efforts. The requirements for a globally expanding manufacturer and distributor of home appliances were changed and as result it required a concentrated and synchronized approach.
Contribution to business performance:
Whirlpool Corporation decided to implement changes in the supply chain management solutions integrated with the business processes approach towards improving of the current systems. The approach adopted to correct production scheduling and delivery mechanism was focused to create an impact on the overall business performance. The declining sales and unsatisfied customers with increased cost of operations is the primary focus of the initiative.
Advanced planning and scheduling system (APS) was initiated as a step towards the integration of business and processes involved in the company's operations. The applications enabling the integration of supply chain integration and optimizations were procured from i2-supply chain planner. Three modules including scheduling, Deployment, planning & inventory planning were being installed in the year 2001 and early 2002. In mid-2002 the company also installed and implemented i2 Trade Matrix collaborative planning, forecasting and replenishment (CPFR) system.