1. INTRODUCTION
“Logistics is the most challenging of all business processes due to its extreme cross-functional, nature and this challenge increases exponentially in a global environment.”
-J. Paul Dittmannn, Vice-President, Whirlpool 1997
Whirlpool was founded in 1911 by three brothers - Frederick, Louis and Emory Upton. Their company, then called Upton Machine Corporation (Upton), was set up at St. Josephs, Michigan, USA. In the 1980s, Whirlpool expanded into markets in Europe, Mexico, India, Canada, China, South Africa, Argentina, and Brazil. In 1987, Whirlpool and Sundaram-Clayton of India formed TVS Whirlpool Limited to make compact washers for the Indian market (Whirlpool Corporation acquired majority ownership in 1994).
Today Whirlpool Corporation is headquartered in Michigan, United States and is the world's leading manufacturer and marketer of major home appliances having an annual sale of more than $19 billion in 2011. There are 68,000 employees and 66 manufacturing and technology research centres around the world. Whirlpool was ranked as No. 1 in Fortune Magazine’s 2011 World’s Most Admired Companies list in the Home Equipment, Furnishings industry. It was also named as 2009 Top Companies for Leaders list, becoming ninth in North America and 15th globally.
2.SUPPLY CHAIN ISSUES AT WHIRPOOL
Whirlpool’s supply chain encompasses more than 40 manufacturing facilities supplied from 7,000 different suppliers from every corner of the world. These facilities import as well as export products to separate regions and delivered to about 30,000 retailers worldwide. Besides retailers, the company also delivers products to builders and directly to consumers’ houses. Whirlpool has 2.2 to 2.5 million units in inventory at any given time.
While the Whirlpool brand has long been associated with reliable household appliances, its supply and delivery performance in 2000 was far from being reliable. The unfortunate irony of the situation is that availability was low even while total inventory levels were often too high. These inconsistencies were frustrating to retail partners and customers. It was clear to executive leadership that these supply chain management issues had to be fixed.
Thus some of the issues can be short-listed as:
- Oversupply in distribution channel.
- Slow response to non-standard orders (waiting time of 5 to 10 days for retailers.)
- Inadequate Inventory for some SKU’s leading to stock outs.
- Excess inventory which were transferred forcefully to distributors.(Almost 15 temporary buildings for stockpiles)
- Lack of communication between ordering and manufacturing units
- Large number of forecasting errors led to increased storage cost (result = locking of working capital)
- The increasing paperwork caused increase in operational costs and issues with vendors
- Too many 3PL’s resulted in transactional and adversarial relationships. (Issues included contract variations with no common metric to measure and check distribution)
- Vendors started demanding to publish all trade item information to the global data pool for product information.
