Supply Chain Issues at Whirlpool

Topics: Supply chain management, Supply chain, North America Pages: 6 (1661 words) Published: March 8, 2011
The supply chain at Whirlpool in 2000 was broken. Indeed, a manager there at the time quipped that among the four major appliance makers in the U.S., Whirlpool ranked fifth in delivery performance.

"We had too much inventory, too little inventory, wrong inventory, right inventory/wrong place, any combination of those things," says J.B. Hoyt, who was then supply chain project director. He says a sales vice president approached him one day and said he'd accept even worse performance from supply systems if they would just be consistent rather than wildly bouncing back and forth between good and poor production and shipping plans.

So in 2001, Whirlpool embarked on a multiproject global overhaul of its supply chain systems. The metaproject remains a work in progress today, with a number of systems yet to be rolled out and some major technical issues to be resolved. But managers at Whirlpool say its success to date -- including huge improvements in customer service and reduced supply chain costs -- is providing the psychological and financial impetus to drive the remaining systems work.

[ Get the latest IT news on the Australian government and businesses in Computerworld's Business & Government newsletter ] Whirlpool CIO Esat Sezer says that by 2000, the company had grown by acquisition and geographic expansion to the point that old systems, stitched together by spreadsheets and manual procedures, couldn't cope with the exploding complexity. "Our supply chain was becoming a competitive disadvantage for us," he says. Availability -- the percentage of time a product is in the right place at the right time -- was an unacceptably low 83 percent, even as inventories remained too high overall.

The homegrown supply systems were primitive and not well integrated with the company's SAP ERP system, which had been installed in 1999, or with a legacy production scheduling system, Sezer says. And they weren't integrated with the systems of major wholesale customers or suppliers of parts and materials. "The plans we were creating weren't linking back into reality," he says.

In particular, Sezer says, supply chain systems weren't fine-grained enough, nor were they very good at juggling priorities and constraints except through slow and cumbersome manual methods. Often, they would optimize locally -- a single product line at one location, for example -- but not for the supply chain as a whole.

Here's what Whirlpool was using for its North American supply chain in 2000:

A homegrown production scheduling system, the Whirlpool Manufacturing Control System (WMCS), which was developed in the mid-1980s and extensively modified over the years. SAP's R/3 ERP system, which was installed in 1999 and used for transaction-processing applications such as accounting and order processing. i2 Technologies' Demand Planner (now called Demand Manager), which was installed in 1997 and used for demand forecasting. A system for distribution planning that was custom-developed for Whirlpool in the 1980s that used optimization software from ILOG. Then, in 2001, Whirlpool began to implement an advanced planning and scheduling (APS) system. It included a suite of supply chain integration and optimization tools from i2 -- Supply Chain Planner for Master Scheduling, Deployment Planning and Inventory Planning. Those three modules, the heart of Whirlpool's efforts to fix its supply chain, went live in three phases over 2001 and 2002. In mid-2002, Whirlpool installed the i2 TradeMatrix Collaborative Planning, Forecasting and Replenishment (CPFR) system, a Web-based collaboration tool for sharing and combining the sales forecasts of Whirlpool and its major trade partners -- Sears, Roebuck and Co., Lowe's and Best Buy Co.

The rollout of a component for Web-based collaboration with suppliers, based on SAP's Inventory Collaboration Hub, is just getting under way. And Whirlpool continues to use the old WMCS for production scheduling but plans to replace that...
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