Whirpool Europe Case Study

9-202-017

REV: DECEMBER 15, 2003

SUDHAKAR BALACHANDRAN

RICHARD RUBACK

Whirlpool Europe

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.

Company Background

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...