Challenges and the Drivers for Change at Whirlpool Corporation
Whirlpool Corporation is a business that focuses on promoting brand names such as Whirlpool, Maytag, KitchenAid, Jenn-Air, Amana, Brastemp, Consul, and Bauknecht, to name a few, to the vast and geographically disjointed global market. This marketing process presents the challenge of increasing costs associated with logistics and supplies.
The company deploys a lean manufacturing strategy. Hence, it does not have an inventory of any raw materials. However, supplying to large and geographically disjointed markets is challenging, especially in terms of meeting urgent orders due to prohibitive costs that arise from the need to alter the means and mode of transportation.
Addressing supply chain challenges enhances the capacity of an organization to compete with other businesses in the same industry (Bakshi & Fiksel, 2010). For the supply chains of organizations such as Whirlpool to deliver a competitive advantage, they must reduce the overall cost of running a business. Challenges of Whirlpool Corporation oscillate around the reduction of the overall cost of maintaining efficient, effective, and responsive supply chains, sustainability, quality services, and reliable and dependable products that are delivered in a fast and flexible manner to meet the corporation’s performance objectives.
Drivers of Change
The challenge of Whirlpool’s Corporation can be addressed by ensuring the cost-effectiveness of supply chains and logistics management. Bullinger, Kuhner, and van Hoof (2002) assert that effective supply chain management in an organization reduces costs that are associated with transportation, warehousing, and supplies. To this extent, Whirlpool Corporation’s change is driven by the need for ensuring that products and services are availed whenever they are required by increasing the number of products that need to be availed in the market.
The corporation is incredibly committed to implementing value creation strategies for its brand to ensure innovation, cost productivity, consumer retention, and/or maintain consistent product quality. Consequently, its change is driven by the need to guarantee excellent quality and cost for all its products. The strategy seeks to transform its supply network to guarantee the efficient delivery of products to the corporation’s consumers.
The Benefits of the Change to the Supply Chain
Changes made on supply chains should present benefits after resolving the major challenges in the supply chain and logistics management for any corporation. Fundamentally, supply chain management entails overseeing the movement of goods and services, finances, and information from the point of production to wholesalers and then to the consumers.
It also encompasses the integration of operations among companies and/or within an organization (Ketchen & Hult, 2006). Supply chain management is an important function in Whirlpool since it “…must rely on effective supply chains, or networks, to compete in the global market and networked economy” (Ketchen & Hult, 2006, p.574). The changes in Whirlpool Corporation were made to ensure that the organization optimally gains from the benefits of the adopted supply chain and logistics management approaches.
Upon making the appropriate changes in the logistics system, Whirlpool Corporation benefited from the witnessed creation of stronger networks, high efficiency in its operations, and timely deliveries to its consumers. The timely distribution of products to customers is critical in ensuring positive and sustainable business in the short and long-term. The benefits experienced by the corporation upon change implementation arise from the fact that an effective supply chain management must guarantee minimal inventory holding to eliminate costs associated with damaged stocks, expired stocks, and/or other expenses (Holweg & Pil, 2001).
Khajavi et al. (2014) reveal how a strategic position of the circulation centers is a resourceful method that companies deploy to eradicate unnecessary operational expenses while enhancing responsiveness to clients’ orders. Fewer stages in a supply network promote responsiveness. The phases are bound to advance consumer fulfillment with the services or commodities supplied by a particular business.
Change at the corporation is instrumental in addressing the challenges that accompany the implementation of logistics and supply management approaches, especially ensuring that items are availed to the market at the right time when they are required without holding stock buffer. This process calls for incredible forecasting of the consumption trends. This benefit is consistent with the company’s lean manufacturing approaches that define its operational characteristics. Achieving the lean manufacturing objective suggests that the corporation can run a supply chain that is sustainably flexible, reliable, and dependable.
Whirlpool’s Strategy concerning its Supply Chain
Whirlpool’s supply chain strategy is founded on the need to ensure sustainable, flexible, and reliable supply chains, which can build and maintain good customer relationships. This strategy responds to the concerns raised by Maloni and Brown (2006) who assert that supply chain managers deserve to have plausible information about the impact of supply chain and logistics strategies on the physical and environmental participants, especially when faced with modern problems that are associated with production processes and the distribution of products.
The corporation’s strategy also reflects the need for “reliable, flexible, and cost-effective business systems that are capable of supporting customer differentiation” (Bullinger et al., 2002, p.3533). The strategy also reflects the need for resolving the problems experienced by human resources due to the multifaceted and evolving logistics network issues and drifts, which are incredibly difficult to foresee.
Whirlpool’s supply chain strategies focus on developing successful relationships with consumers, trading customers, and all stakeholders who are involved in its global businesses. Strategies such as the establishment of successful relationships and closer alignment of strategic intent in supply chains enhance sustainability in modern supply chains. For example, Whirlpool’s financial communities have recognized that sustainability is central to the improvement of shareholders’ value through the advanced cash flow.
Thus, the supply chain strategy must improve cash flow, an issue identified in the case study as one that is hindered by the holding of inventories by trading partners. Therefore, as Maloni and Brown (2006) suggest, the new approach to supply management adopted by the corporation is critical in enhancing the utilization of assets, increasing customer satisfaction, and the creation of global brand awareness. Indeed, Whirlpool’s Corporation believes that competitive advantage is one of the supply chain management strategies that act as critical success factors for sustainability in its line of business.
Ciliberti (2009) addresses the valid generic mechanisms for achieving excellence coupled with market success. Such mechanisms include differentiation and cost leadership. At Whirlpool, the significance of these strategies concerning sustainable supply chains is pegged on the idea that the most important supply chain management strategies are the ones that result in low-cost operations. Consequently, as evidenced by the corporation’s supply network strategy, supply chain effectiveness can be enhanced by aiming to achieve low-cost leadership within its industry.
Demand, Capacity, Scheduling, and Inventory Challenges
Demand, capacity, scheduling, and inventory comprise the basic scenario encountered by manufacturing organizations, including Whirlpool. The main challenge here involves coordinating the opinions raised by the supply chain’s manufacturing, sales, and marketing personnel. The primary area of conflict between the different arms of an organization entails what to produce when to produce, and where what is produced is needed at a particular time.
Inadequate coordination in supply chains translates into random variations in terms of the production schedule, transfer expeditions, and inconsistent and unreliable shipment and distribution networks. Such poor coordination also leads to inconsistent customer services, reduced future demand visibility, and the location of inventories in wrong places within inappropriate times (Moon & Alle, 2015).
These challenges result in lean logistics network practices due to the high accumulation of wastes. The situation erodes cost leadership in the competitive marketplace since an organization may end up losing economies of scale, have a poor proprietary technology, and/or experience preferential accessibility of raw materials (Ciliberti, 2009).
Whirlpool’s major constraining factor when it comes to the re-designing of its supply chain entails fulfilling customers’ orders and ensuring that delivery is made within 48 hours. The company has its strategy strongly anchored on the improvement of cash flows, reduction of operation costs, and the provision of the right services to customers. To comply with this strategy, Whirlpool should aggregate its processes following its move to have Maytag systems integrated within its framework. This plan is consistent with the need to improve visibility within its supply chains.
Process aggregation guarantees reliable and credible forecasts. Indeed, “while item/location forecasts may be unreliable, the aggregated forecast at the overall item level is more stable” (Moon & Alle, 2015, p.335). Proration can be applied in adjusting the forecasts made in the high-brand levels. This strategy offers an opportunity for making better distribution and shipment decisions while at the same time ensuring that production upholds the demand requirements to facilitate planning and scheduling at the level of any Whirlpool Corporation’s production plant and hence the attainment of the goal of delivering the product within 48 hours.
Bakshi, R., & Fiksel, J. (2010). The Quest for Sustainability. Supply Chain and Logistics Management, 49(6), 1350-1358.
Bullinger, J., Kuhner, M., & van Hoof, A. (2002). Analyzing supply chain performance using a balanced measurement method. International Journal of Production Research, 40(15), 3533–3543.
Ciliberti, F. (2009). Codes to coordinate supply chains: SMEs’ experiences with SA8000. Supply Chain Management: an International Journal, 14(2), 117-127.
Holweg, M., & Pil, F. (2001). Successful Build-to-Order Strategies start with the Customer. MIT Sloan Management Review, 43(1), 74-83.
Ketchen, G., & Hult, T. (2006). Bridging organization theory and supply chain management: The case of best value supply chains. Journal of Operations Management, 25(2), 573-580.
Khajavi, S. H., Partanen, J., & Holmström, J. (2014). Additive manufacturing in the spare parts supply chain. Computers in Industry, 65(1), 50-63.
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Moon, M., & Alle, P. (2015). From S&OP to business integration. The International Journal of Applied Forecasting, 15 (2), 333-345.