REV: DECEMBER 15, 2003
SUDHAKAR BALACHANDRAN RICHARD RUBACK
By the spring of 1999, Whirlpool Corporation (WHR:NYSE), the worldwide leader in the home appliance industry, had nearly ten years experience selling to the European market and had grown its European market share to a sizeable 13%. Whirlpool Europe’s chief financial officer and its vice president of logistics were evaluating an investment in an enterprise resource planning (ERP) system. Named Project Atlantic, the system would re-organize the information flow in all of Whirlpool Europe. If successful, the project would improve operating effectiveness and efficiency in Whirlpool’s sales and marketing, operations and logistics, and finance areas. The cost of the project, however, would be substantial, and would include the direct costs of the system and the personnel that would be required to complete the complex implementation. Senior management had quantified the costs and benefits, and now needed to evaluate them.
In 1989, Whirlpool Corporation entered the European market, paying $470 million to purchase a 53% stake in the appliance division of Dutch-based Philips Electronics. The companies formed a joint venture firm named Whirlpool International BV (WIBV) and one year later, launched a dualbranding program which added the Whirlpool name to the Philips product lines. In July 1991, Whirlpool purchased Philips’ 47% stake for $600 million to become the sole owner of WIBV. Over time, Whirlpool developed three pan-European brands to differentiate its product line: Whirlpool, Bauknecht, and Ignis. Other regional brands like Laden, sold exclusively in France, were also created. Whirlpool Europe manufactured products based on sales budgets or forecasts, and then held them as finished goods inventory. European manufacturing operated 11 plants, ten located in Europe and one in Africa. Each plant produced a specific product line across all brands. Exhibit 1 provides a plant listing. Unique country requirements, such as language, products attribute preferences, and electrical specifications resulted in multiple stock-keeping units (SKUs) for the same model. In total, Whirlpool Europe manufactured 6,900 SKUs. Orders moved from manufacturing to one of two central distribution centers and then on to one of 12 regional distribution centers before reaching the customer.
Research Associate Aldo M. Sesia, Professor Sudhakar Balachandran of Columbia University, and Professor Richard S. Ruback prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2001 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
In each major European market, a country sales office—responsible for sales generation and forecasting, order processing and fulfillment, billing and cash collection—was the primary interface with customers. Whirlpool Europe operated many stand-alone information systems that were developed by individual plants, distribution centers, or sales offices specifically to meet their own business requirements. Information could not be easily shared across functions or organizations, and was often inconsistent and irreconcilable. The sales organization, for example, had to access as many as 13...