Managing the Value Chain Amit Khattar Enrollment Number: 6010090920123

CASE ANALYSIS OPERATIONS AT WHIRLPOOL Assignment: 1. Whirlpool launched several initiatives in operations management in the 1990s and early 2000s, as a result of which, by the early 2000s, it product availability, inventory, and the lead time improved. Critically discuss the initiatives taken. 2. Whirlpool launched several e-initiatives to streamline its operations. How far did these initiatives contribute to the success of Whirlpool? Also discuss the importance of integrating e-initiatives with the other organizational processes Analysis of Assignment 1: Long before corporate social responsibility and corporate governance became a focus of business and society, Whirlpool Corporation employees were conducting business with integrity and extending a helping hand to stakeholders in times of need. Throughout the years, Whirlpool has built a culture of doing the right things based on living up to their commitments to stakeholders. Background Synopsis: Near the shores of Lake Michigan, Lou, Emory and Fred Upton created the Upton Machine Company in 1911 to produce electric, motordriven wringer washers. The company's first major order for 100 washing machines came almost immediately. A problem arose when a cast-iron gear in the transmission failedin every single machine. Upon learning of the issue, Lou Upton replaced the defective parts with a new cut-steel gear. Impressed with the fledgling company's business ethics, the customer doubled its order to 200 washing machines In the late 1980s, Whirlpool Corporation set out on a course of growth that would eventually transform the company into the leading global manufacturer of major home appliances, with operations based in every region of the world. At the time, Dave Whitwam, Whirlpool's chairman and CEO, had recognized the need to look for growth beyond the mature and highly competitive U.S. market. Under Mr. Whitwam's leadership, Whirlpool began a series of acquisitions that would give the company the scale and resources to participate in global markets. In the process, Whirlpool established new relationships with millions of customers in countries and cultures far removed from the U.S. market - and the company's roots in rural Benton Harbor, MI, U.S.

Managing the Value Chain Amit Khattar Enrollment Number: 6010090920123

The company had launched initiatives to have a competitive edge in the market. Some of the key initiatives that were driven internally were: 1. Globalization of a key function 2. Push and Pull Manufacturing 3. E-Initiatives Details of the Initiatives: 1. Globalization of a key function: In this process, Whirlpool globalized its procurement and product development functions. Whirlpool first globalized its procurement function. Being a global player, Whirlpool selected and partnered with the best suppliers globally. The company was clear of the objectives, which were: a) It would use products which are high quality and low cost materials and components and b) Deliver the best value to the customers Globalization of procurement was a win win for Whirlpool, as suppliers found it a lucrative partnership, due to the companys global presence, it gave them an opportunity to sell globally. For Whirlpool, it could get the best products at cost effective prices. As a second step, Whirlpool also globalized the product development. The intent behind taking this step was, to evolve quickly from the regional platforms to a global platform, while ensuring that the company meets the unique needs of consumers in all the diverse markets they serve. This would be achieved through a transfer of technology and knowledge around the globe - the product reaches the marketplace faster. The benefits realized from globalization of product development were: a) Fewer platforms gave the company the flexibility to design global products with regional features, such as energy efficiencies b) Performance variations were reduced c) Engineering costs were reduced d) Better performance and better features were delivered to the customer, hence increasing demand and the customer base 2. Push and Pull Manufacturing: In 1992, Dittmann was handed over the responsibility of restructuring the Whirlpools logistics in North America. Dittman chartered a team that consisted members from manufacturing, sales,

Managing the Value Chain Amit Khattar Enrollment Number: 6010090920123

procurement, accounting and material management. The team identified the opportunity areas in the manufacturing strategy that was being followed at Whirlpool, which was a Push method. The strategy had its strengths and weakness, which are elaborated in the table below: Strengths of the strategy Plants operated at full capacity Weaknesses of the strategy High Inventory: Oversupply at the distribution channel Unavailability of products: Production system was predesigned which did not allow flexibility for nonstandard orders. Hence a delay of 4 weeks to deliver. Low Efficiency

The companys supply chain chartered the vision, Winning companies will be those who come the closest to achieving an inter-enterprise pull system. They will be linked in a short cycle response mode to the customer. The illustration below shows the difference in the Pull and Push Model.
PUSH BASED MANUFACTURING Supplier Push Material Supply Push Production Customer Push Distribution Consumption

PULL BASED MANUFACTURING Customer Push Consumption Push Distribution Supplier Push Production Material Supply

Source: ICFAI Center for Management Research

Managing the Value Chain Amit Khattar Enrollment Number: 6010090920123 Whirlpool adopted the Pull strategy of manufacturing in the 1997, which indicates that the organization had clearly outlined the potential benefits of the Pull strategy, once implemented. Whirlpool used the Pull strategy in two different ways to ensure it optimizes the benefits in its manufacturing and planning system: Factory Production: a) Production was based on actual customer demand b) Production time was reduced significantly as any order received was immediately sent to the plant and the order was executed c) Response time for customers order fell drastically from four weeks to five days d) Reduced cycle time and improved accuracy of forecasting demand Production Planning: a) Reality applied to Distributed Resource planning (RAD) application replaced the older application that was used in the Push strategy b) With the implementation of RAD, the cost of production and inventory was drastically reduced Whirlpool also launched a hybrid model, to cater to the demands of suppliers, who were comfortable with the Push model. The Hybrid model has the components of the newly designed Push strategy and the Pull strategy. 3. E-Initiatives: These initiatives were launched at Whirlpool, with the intent to enhance the communications with the suppliers, reduce the gaps between the suppliers and sales operations and to provide a better and faster service to the end customers. As a result of these initiatives, by the early 2000s, Whirlpool has a product availability of 90 to 95 per cent, inventories were reduced by 15 to 20 percent and the lead time became as low as five days.

Analysis of Assignment 2:

Managing the Value Chain Amit Khattar Enrollment Number: 6010090920123