The Improvement of the Whirlpool's Supply Chain

Introduction

When Maytag was acquired by Whirlpool in 2005, it began analyzing its supply chain politic. Brian Hancock, the vice-president of the company, took the responsibility for the development of supply chain because the system of the company was out-of-date. Executive managers of Whirlpool had realized that the corporation must focus on products and brand as a way to rich the best marketplace. However, as Hancock said, "the marketplace had changed, and supply chain had been something that we had neglected as a company." (The Issue: Whirlpool Cleans Up Its Supply Chain, n.d.)

The well-known theory of supply chain management and the closely related concepts of logistics are considerable cornerstones of competitive strategy, increased shareholder value and market share for a large number of organizations (Coyle, Langley, Novack, & Gibson, 2013). Some specialists assure that most retailers are basically supply chain companies since they buy products produced by other firms and sell these products to their consumers and clients. To investigate major economic principles, it is clear that factors such as store location, merchandising and pricing are significant though supply chain management, and logistics are the key components of progress in the current competitive global business environment. According to Susan Weber, supply chains play the key role that can have a huge impact on making retail organizations successful. The dynamics of today’s world global environment require new perspectives and think­ing (Coyle, Langley, Novack, & Gibson, 2013).

 

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Question 1. Challenges Faced by the Company

Whirlpool was faced with some challenges after its association with Maytag. This union complicated the efforts to manage the supply chain. However, integration gives an opportunity to fix weak sides in the system. Until this aspect of the business has not been enough analyzed and studied, the business structure of the company was costly and exhaustive. To deal with this situation, the company had to cope with the integrating the workforce and cutting costs. To deal with the challenges of inventory implementation and the bullwhip effect, which are often repeated along the chain, the team used integration methodology. The integration of forces influenced the supply chain in reducing inventory damages on vertical and horizontal levels (Coyle, Langley, Novack, & Gibson, 2013).

Drivers for Change of the Supply Chain

The main drivers to change the supply chain were the order management, delivery management, and optimization of the cash flow or supply and demand management. The aim was to manage every order, get a good experience in delivering every appliance carefully, professionally and in 48 hours. To fulfill the goals, they were divided into projects and examined. Lean order fulfillment included inventory management, terms and conditions and order management.

Question 2. Benefits of Change to the Supply Chain

After the change to the supply chain, Whirlpool gained great benefits. The improved management of the corporation helped managers to make fateful moves in the integration of Whirlpool and Maytag. By 2009, Whirlpool closed 100 facilities and completed the construction on ten regional distribution centers. In general, the company has eliminated about $60 million in operating costs from its supply chain (“History & Heritage”, n.d.).

It gave 5% closure of availability gap, provided industry best terms and conditions, reduced administrative errors and transfer cycle terms by more than 24 hours and cut administrative costs by 10%. Damage reduction was possible with the help of improving handling processes, reverse logistics, second channel sales and packaging improvements. It gave a 50% cut of damage costs to the company. Optimizing supply and demand planning by delivering a 10% inventory reduction over a year through a cross-functional leadership reengineered processes and showed an increase in the discipline, retained all stakeholders in the process due to the turnover and raised the focus on the product transitions. Synchronization and  closer collaboration with customers and suppliers, the shift from vertical functional silos to end-to-end process organizations, the emphasis on planning rather than execution processes caused effective leadership (Whirlpool - Video Case Study, n.d.).

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Question 3. Whirlpool’s Strategy Towards Their Supply Chain

However, to receive benefits, an effective strategy had to be created for the company. A supply chain strategy begins with the same features as any other strategy but has some specific issues. It provides the efficient leading to progress of the company’s supply chain management during three to five years (Slone, Dittmann, & Mentzer, 2010). A supply chain strategy has to be based on the satisfaction of cus­tomers’ needs and expectations. The supply chain strategy of the firm suggests different approaches based on capacity, business strengths and opportunities. It takes into account avail­able technological and technical possibilities. Through generating constructive decisions the organization is capable to rich the highest economic profit, which is one of the main targets for the company (Slone, Dittmann, & Mentzer, 2010). Nine months after the new supply chain strategy had been activated, Whirlpool bought Maytag, and it changed its velocity scope. It became much harder to cope with the tasks in this situation. There emerged new requirements for factory buildings, technologies needed to be optimized, and the cash flow required consolidation (“History & Heritage”, 2013). This strategy allowed Whirlpool to become stronger. Because of clarity and sharpness of a new supply chain strategy, the company successfully responded to the customers’ demand. Well-directed Whirlpool’s strategy resulted in improved quality of the work and customer service across every region in all countries. The company makes fundamental efforts every year and optimizes delivery operations and customer satisfaction for profitable growth (Whirlpool, 2013).

Question 4. The Demand, Capacity, Scheduling and Inventory Challenges

To meet the demand, Whirlpool decided to optimize its technology for faster and more reliable package tracking. The essential objective in "schedule actualization" task was to ensure that all retailers know what is being produced and coming to the market since to meet the expectations of customers is critical for the retailers. Moreover, when people buy appliances, they expect to get them delivered as quickly as possible. To win the market, Whirlpool was interested in implementing all these tasks (“Whirlpool - Video Case Study”, n.d.). The vice-president of the corporation, Hancock regrets the company did not move faster, otherwise they could rich all this earlier and gain a bigger share in the global industry (“Whirlpool - Video Case Study”, n.d).

The inventory deployment helped to increase efficiency of the related opportunities and associated costs. That is why it is important to remember that inventory is a valuable ingredient for a good supply chain management, and inventory levels have to be controlled carefully (Coyle, Langley, Novack, & Gibson, 2013).

Observations show that instead of the traditional way of buying major appliances, when people think of every purchase for a long time, for example, is it necessary to get a new washer and dryer, the majority of customers began to act more quickly and buy new machines. The reason for that was that the old ones broke down and had to be repaired or replaced or were treated as "out of fashion". Due to coordinated work of staff, the company has cut order time in half. Because of qualified work of retail partners, decreasing the number of concentrated warehouses and locating them closer to customers, larger regional distribution centers’ goal of delivering the product within 48 hours was achieved. To increase the speed of response to consumers, the company should continue to optimize technologies for faster and more reliable shipment and tracking and improve the logistic system.

Conclusion

As a result of overcoming obstacles, Whirlpool has achieved a great progress in the appliance industry and attracted more consumers. It is a leader in the home appliance industry in more than 140 countries around the world. The established production technology and distribution process allow adapting quickly to the changing needs and expectations anytime and anywhere (Whirlpool, 2013). 

The Whirlpool Corporation had a huge potential to bring people clever home solutions so they can focus on their social and personal life. The company not only stands for brand and leadership but also is always concentrated on doing everything better. High-performing teams that work together can bring the best appliances and services to consumers, rich legacy and create outstanding results for all of the stakeholders.