Whirlpool's supply chain in 2000 proved problematic, with only 87% of products available to customers despite inventory, high logistics costs, and issues following an ERP implementation. To address this, Whirlpool devised a four-year transformation strategy involving benchmarking competitors, engaging supply chain experts, and implementing tools to improve planning, forecasting, and customer engagement. This included focusing inventory on high-volume items, building low-volume items to order, and leveraging technology to enhance visibility and processes. The results were improved product availability over 95%, reduced inventory and costs, and increased sales revenue and income.
1. Leading a Supply Chain Turnaround
Whirlpool transformation program over a four-year period
Chakshu Raj | Lokendra Singh Rathore | Rasika Sonkusale | Sharath Shetty
2. Whirlpool
• Whirlpool Corporation is an American multinational manufacturer and marketer of home
appliances, headquartered in, Michigan, United States
• The company is listed in Fortune 500 and has a revenue of $21 billion in annual sales, 93,000
employees and 70 manufacturing and technology research centers in 2016.
The Best Branded
Consumer Products
… in Every Home
Around the World
Create Demand and
Earn Trust Every
day
Product Leadership,
Brand Leadership,
Operating
Excellence, and
People Excellence
Vision
Mission
Strategy
3. •Supply chain in the company proved to be sales disablers as the products were not available to the
customer though it was in the inventory.
•Only 87% of the product was available to the customers.
•More finished goods were there in the inventory tying too much capital in it.
•Failure of newly implemented ERP. Previously
•Before ERP, Whirlpool shipping :70,000 appliances a day.
•After ERP, Whirlpool shipping: 2000 appliances a day.
•Inadequate inventory for some stock-keeping units (SKUs) leading to stock outs
•Large number of forecasting errors leading to increased storage cost
Situation of the Company in the year 2000
4. DEVISING THE STRATEGY
Spotty
Service
& High
Logistics
Cost
Getting the Right Product to the Right Place at the Right Time.
Whirlpool
Man.: 13
Sell: 100
Washers
Dryers
Refri-
gerators
Dish-
washers
Ovens
US Logistics Network
8 Factory
Distribution
Centers
10 Regional
Distribution
Centers
60 Local
Distribution
Centers
20000 Retail
& Contract
Customers
Top Level:
Understanding Customer Needs
•Delivery with Integrity
•Give a Date, Hit a Date
Identifying Trade Partners’ Priorities
•Requirements of Customers
•Requirements by Segments
•Smaller vs Larger retailers, Contracts, Inventory Mgmt.
•27 Dimensions
Benchmarking the Competition
•Comparison with GE
•Cross Industry Information
•Mapping of World Class vs Sufficient/Transitional capabilities
•Among 27 capabilities focus on
Small Investments & Yield Supremacy.
Building the Future
•Identify Future Operation scenario
•Also focus on Economic & Technological trends
5. Selling The Revolution
nemawashi: Root Building
Here’s What we’re
doing. What do you
think?
How our work had
evolved to incorporate
inside experts’ ideas
People on same page.
Meeting 1
Meeting 2
Meeting 3
Meetings with Brand General
Managers & Stakeholders
Q.: What can I
get for 80% of
that total?
Break out each component of the plan into a
stand-alone initiative; Justified with its own
Business Case.
Competitive Analysis: Capability level
comparison & current position on each level
valued by Customer
How level of investment can help in overtake or
vice versa.
6. Getting Focused
New Sales and
Operational Planning
process(S&OP)
CPRF Tool
(Collaborative,
Planning,
Forecasting,
Replenishment)
With CPRF, Web based
tool used to share our
forecasts
PMO
PMO ensures the
completion of projects on
time, on budget, and on
benefit
Performance Metrics to
keep everything on track
Implementing I2 Supply
chain Integrator tool for
planning/forecasting
purposes
7. Engaging Talent
Whirlpool gave heavy emphasis on people’s project management skills.
Disciplined planning & Execution, a model developed by PMI
Hiring top notch people in business and information system side in
order to fill out their project task
Involving Industrial experts in supply chain advisory boards for
challenging the creativity
8. Sustaining Momentum
•Identifying high volume SKUs across
all trade partners & in all channels.
•Ensuring that the replenishment
system for the regional warehouses
keeps them in stock.
Plan to
Sell
•For the smallest volume SKUs, take
out all the inventory & operate on a
pure pull basis.
•The inventory savings on the small-
volume SKUs helps offset the costs of
stocking up on the high volume SKUs.
Build to
Order
Developing new web-based tools.
System-to-system transactions, in which the system talks
directly to a customer’s system for purposes of transmitting
orders, exchanging sales data and paying invoices.
Enhancing the Partner Store
Allows customers to check availability and place orders
via the internet.
Site allows them to find near equivalents of models, for
times when a SKU is out of stock.
Deals on obsolete inventory.
Plan to Sell/Build to Order
Event Management Technology
Allows to be more on top of the movement of goods
through supply chain.
Lean Techniques
Pull Concepts.
Kanban-like triggers to speed up processes.
Reduce Inventory.
Enhance customer service.
9. Product Availability
2001 – 88.3%
2003 – 93%
Today – More than 95%
Holding Inventory
26 days (earlier 32.8 days)
Freight & Warehousing Total
Cost Productivity
7.2% (earlier 4%)
Working Capital
Lowered by almost $100 million
Supply Chain Costs
Lowered by almost $20 million
Design/Redesigning of the
Product
On The Horizon
10. Implication of Supply Chain Turnaround
h On time delivery
h Forecast
i SC Malfunctioning
h Availability
h Sales Revenue
i Cost of lost sales
Sales Revenue
i Inventory carrying
cost
h Inventory turnover
cycle
i Inventory costCost
Income
Spotty: Uneven Quality
Delivering Fast is important but delivering on/before promised date helps.
One of the earliest successes in the turnaround of Whirlpool’s supply chain was the rollout of a new sales and operations planning (S&OP) process. Our previous planning environment had been inadequate. What passed for planning tools didn’t go far beyond Excel spreadsheets. Now, we had the ability to pull together the long-term and short-term perspectives of marketing, sales, finance, and manufacturing and produce forecasts that all the participants could base their game plans on.
Forecasting by CPFR tool. we forecast how many appliances we will sell through a trade partner (Sears, for example) to a given market. And at the same time, that trade partner develops its own forecast. Each of us has some information that the other lacks. With CPFR, we use a Web-based tool to share our forecasts (without sharing the sensitive data behind them), and we collaborate on the exceptions.
Two initiatives taken were absolutely critical to keeping them all on track: a highly disciplined project management office and stringent performance metrics. The job of the project management office was to ensure the completion of projects on time, on budget, and on benefit.
Appointed John Kerr, now general manager of quality for the North America division, was then in charge of Whirlpool’s Six Sigma program. He’s a real black belt when it comes to performance management. “We need to take this action to fix this issue,” John would always counter with, “Please show me the data that allowed you to draw that conclusion.” forced all of us to rebuild the metric “fact base”
I2 supply chain collaborator ensured that the same data is being used for planning/ forecasting purposes by both whirlpool and its trade partners
