Whirlpool Case Analysis July 12, 2003 Group 3 Cindy Branon Zach Evans Melissa Holder Kendall Joseph Brandon McLain Shane Morgan Whirlpool Case Analysis 2 Whirlpool Case Facts The Whirlpool Corporation is one of four top appliance manufacturers in the world. Whirlpool has annual sales of between $4 and $6 dollars. Whirlpool supplies Sears with Kenmore washers and dryers, which accounts for thirty-seven percent (37%) of Whirlpool’s sales. Since growth of the United State’s appliance market had been evening out, Whirlpool looked to expand operations and sales in Europe.
At that time, Europe’s market for appliances was twenty-five percent (25%) larger than that of the United States and was growing by four percent (4%) a year. In 1989, Whirlpool acquired a majority interest (53%) in Philips, an appliance manufacturer in the Netherlands. In the late 1980’s, the company also acquired the Kitchen Aide Company. Whirlpool has a highly automated factory in Clyde, Ohio, that is the largest of its nature. It is approximately 1. 5 million square feet and employs 3,500 people.
Whirlpool’s information technology (IT) consists of domestic processing for manufacturing, sales, and engineering located in Benton Harbor, Michigan. Parts information technology for the manufactured appliances is located in an Indiana facility. International IT locations have their own data centers. These data centers support local manufacturing, materials, and inventory and are locally managed. Whirlpool also established an eight-node T1 network in a mesh topology to support these systems.
Problems and Opportunities Whirlpool wanted to maintain current growth rates, so it was necessary to consider expanding to markets outside the United States. Whirlpool also looked to increase the quality of its products, improve supplier relationships, decrease costs, and to increase sales. The company hoped to increase supplier relations through acquiring Whirlpool Case Analysis 3 component suppliers and encouraging these companies to lower costs and improve quality. The company also wanted to develop products for special needs customers such as the blind, elderly, disabled, etc. sing computer-assisted development applications. Whirlpool also wanted to integrate ITs’ capabilities into operations such as research and development, the study and forecasting of sales, and the evaluation of its products. Whirlpool also had the problem of integrating the newly acquired Philips Corporation into its own business IT architecture. Whirlpool faced problems with the European culture, telecommunications inconsistency, and different manufacturing standards abroad. Whirlpool envisioned a global information system to establish competitive advantage to enable better sales predictions and improve supplier relations.
Alternatives We believe that Whirlpool has a couple of alternatives. The first being developing and implementing a global IS systems. The company could foster European relations by having a team from all countries involved in working on a global solution. Consulta nts might aid the development of the system by incorporating current national and international telecommunication standards, business practices, and other issues of global magnitude. Once a global system is in place, any acquired companies would be integrated into the existing global network.
This network would ideally be centered in the current US location with connections to each country allowing real-time access and local input. Another alternative would be for Whirlpool to let each country continue to operate its’ own data centers. This allows for competition in each IS shop, and the data would Whirlpool Case Analysis 4 be different among each unique location. Combining data from different shops would pose a definite challenge to the company. However, Whirlpool would not ha ve to spend money to upgrade current systems.
The company might have to spend money to upgrade telecommunication lines to make them compatible with US telecommunication standards. Recommendation We believe that Whirlpool should develop and implement a global IT system. Whirlpool should use IT staff from Europe as well as outside consultants to provide input into the specifics of the system. A global system would enable Whirlpool to serve customers in the United States and abroad better through improved sales forecasts and faster supply service for appliance Components (better supply and demand forecasts for each country).
The first alternative would be the best alternative for Whirlpool. Actual Implementation Whirlpool is still looking for a global solution. According to Dave Whitman, Whirlpool Chairman and CEO, the company has only achieved fifty to sixty percent of building a global company. The first object for Whirlpool to achieve a global company is to integrate the procurement process, and the n technology, and last, product development. Each acquisition is carefully studied to ascertain how it can benefit Whirlpool as a whole.
By combining these three attributes, Whirlpool can become more efficient and produce better products. At this time, Whirlpool has not been able to develop a global information system, although it hopes to some day. In 1999, Whirlpool had problems with an implementation of software from SAP and E-Commerce. The company started the system even though there were problems Whirlpool Case Analysis 5 with it. Eventually, the problems were worked out with SAP, and the company continued to use it.
Whirlpool also implemented web technology for customer research and ordering capabilities for retailers. Eventually, the company would like to add the capability for repair facilities to submit invoices for work completed to receive payment. One-half of sales from retailers were generated from the Internet in 2000. Whirlpool acquired manufacturing facilities in Mexico and in Poland in 2002. Local Whirlpool companies are still fulfilling market niches in their own regions. The company also hopes in incorporate IT strategy into its overall business strategy in the future.