HBR T h e Spotlight
21st-Centuiy Supply Chain^
Five years ago, salespeople at Whirlpool said the company's supply chain staff were "sales disablers" Now, Whirlpool excels at getting the right product to the right place at the right time-while keeping inventory low. What made the difference?
by Reuben C Slone
a Supply Chain Turnaround ^ ^
hings would be very different today-for me, my colleagues,
and my company - if the votes of Whirlpool's North American leadership team had swung in a different direction on May 3,2001. It was a move I hadn't expected; Mike Todman, our executive vice president at the time, decided to go around the table and ask each member of his staff for a thumbs-up or thumbs-down on the investment that Paul Dittmann and I had just formally proposed. Did I look worried? I can't imagine I didn't, even though we'd spent hours in individual meetings with each of them, getting their ideas and buy-in. We thought we had everyone's support. But the facts remained: Our proposal had a bigger price tag than any supply chain investment in the company's history. We were asking for tens of millions during a period of general belt-tightening. Some of it was slated for new hires, even as cutbacks were taking place elsewhere in the company. And Paul and I, the people doing the asking, were coming from the supply chain organization. Let me be clear: The supply chain organization was the part of the business that Whirlpool's salespeople were in the habit of calling the "sales disablers" in 2000. We were perpetually behind the eight ball, tying up too much capital in finished goods inventory - yet failing to provide the product availability our customers needed. Our availability hovered around 87%. Our colleagues grimly joked that in surveys on the delivery performance of the four biggest appliance manufacturers in the U.S., we came in fifth.
HARVARD BUSINESS REVIEW
HBR The 2Xst-Century Supply Chain. spotlight
And here, with all the credibility that track record conferred on us, we were proposing an ambitious new suite of IT solutions - something, too, for which the company had little appetite. It had been just 20 months since Whirlpool North America had flipped the switch on a massive new ERP system, with less than desired effect. Normally, Whirlpool ships close to 70,000 appliances a day to North American customers. The day after we went live with SAP, we were able to ship about 2,000. A barrage of bad press followed. Even though the situation was soon righted (SAP remains a valued partner), the experience of being treated as a sort of poster child for ERP folly had left scars. So imagine our relief when we heard the first voice say "yes." It was the executive who headed up sales to Sears. Paul and I looked anxiously to the next face, and the next. The heads of our KitchenAid, Whirlpool, and value brands followed suit-a watershed, given that the funding would have to come from their budgets. I could see that J.C. Anderson, my boss and senior vice president of operations, was happy, too. He had tried to voice his support at the beginning of the meeting, but Mike Todman had asked him to wait. Now that it was his turn to vote, he did it with a fiourish:"I am fully committed,"he said,"to moving our supply chain from a liability to a recognized competitive advantage." Only after Todman had heard from everyone in the room - brands, sales, finance, human resources, and operations-did he cast his vote.
costs. Sales had risen to record levels in 2000 as our launch of some innovative products coincided with an uptick in housing starts. With the rest of the company chugging on all cylinders, there was only one thing holding us back: our supply chain. Jeff called me into his office and gave me a two-word order: "Fix it." If that constitutes a mandate, we had one. But it was up to us to figure out what fixing the supply chain would entail. At the top level, of course,...
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