Whirlpool Europe Case Memo

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Whirlpool Europe

Case Memo

Background

Whirlpool International BV (WIBV), the European business part of Whirlpool has grown to take up a considerable market share at 13%, but it faces a potential customer loss because of its disparate information system, relatively high products unavailability and delay of orders. To fix the problem, there is a choice to apply a new enterprise resource planning (ERP) system named Project Atlantic, which can improve WIBV’s operating effectiveness and efficiency in sales, marketing, operation and financing activities.

Findings

Currently, the company implements different information system in different plants, distribution centers and sales offices, thus it creates obstacles for communicating among those institutions. Additionally, the over 20% unavailability of products, together with the delay cause by redundant reserved, allocated and in-transit time will lead to potential loss and reduction in market shares.

Therefore, the overall benefits of the ERP system including are brought to solve the above problems. Firstly, the Project Atlantic is able to cut the days of inventory by 12 days in each district, saving net working capital in business operation and reducing the cash investment in inventory. Secondly, since the efficiency of information system among plants and center improved, the unavailability can be offset by more flexible goods transformation and it can boost sales year by year. Next, also because of the enhanced efficiency of communication, the labor force costs and the amount of returned products can be brought down. In conclusion, all of the benefits of the ERP investment are exactly reasonable. As for the costs, the capital expenditures will also bring depreciation tax savings. However, the costs of hiring consultants may be too much. The annual salary paid to the consultants takes a large part of the cash outflows, and the timeline...