SCM-Assignment (1) – Format (10 Marks)

Group members: (Indicate Name and PRN)

1) Neeraj Garg (19020841021)

2) Atulya M (19020841066)

3) Sukesh Marla (19020841086)

4) Swaroop SVS (19020841206)

Topic presented -: Leading a Supply Chain Turnaround

Date presented: 10/9/2020

Assignment-1 - Summary Report:

Introduction:

The case is all about how whirlpool was able to execute a turnaround in its fortunes by fixing its
Supply chain with the help of a suite of technological tools and putting in processes to support them
and fix the supply chain issues. It is the journey of a supply chain transformation starting from 2000
to 2003 which starts with sales people ridiculing the supply chain as a “Sales disabler” to something
which excels at getting the right product at the right place and the right time while keeping the
inventory level at historical lows. The Issue in front of the North American leadership team was that
the supply chain was in shambles with issues in Availability rate, forecasting errors leading to
increased storage costs, Inadequate inventory for some high-Volume SKUs leading to stock outs and
carrying a misnomer of being the fifth biggest appliance manufacturer in US with the lowest delivery
performance. The Author, Vice president of global supply chain, is tasked by the chief executive to
fix the supply chain – from being a liability to something which could give the company a competitive
advantage over its peers. The senior leadership team of the Supply chain come up with a suite of
technological tools something which the company had too little appetite for given a previous
unsuccessful attempt of implementing ERP system which had a less desired effect. The are successful
in convincing the north American leadership team to go ahead with the implementation with a hefty
budget which was the highest supply chain investment in the company’s history.

Devising the strategy: Usually, the imagination of a supply chain starts with the manufacturing
facility and goes downstream to the customer. The challenge with such a system is that they run of
steam by the time they reach the end point. Hence, Whirlpool started with customer requirements
as the starting point and moved backwards to build a world class supply chain by believing that the
strategic relevance is all from the consumer back. The objective of this world class supply chain to
get the right product to the right place at right time and all the time. As simple as it may sound, the
complexing of the same lies in the fact that whirlpool makes a diverse line of washers, dryers,
refrigerators, dishwashers and ovens with its manufacturing facilities located in 13 countries and
catering to the demand of customers from above 100 countries. The battle plan to fix such a supply
chain is to bring in new technologies, processes, talent and roles to make sure the execution is well
planned and disciplined enough. The design of overall strategy is by Understanding the customer
needs, Identifying the priorities of the trade partners and benchmarking themselves against their
competition in various parameters. In the customer end, it was important to give a date and hit the
date for delivery promptly. While working with trade partners entailed identification of 27
competencies in which they are being judged followed by benchmarking the firm against its
competition with the help of intelligence from consulting firms. This helped realize where they stand
and where they are headed at.

Selling the Revolution: This section speaks about how the senior leadership was able to involve all
the stakeholders like trading partners, internal customers, brand general managers etc who would
be affected by the changes that were being proposed. It had a series of meeting with internal and
external stakeholders where they would start by essentially saying “Here’s What we’re doing. What
do you think?” and persisting in their objective to convince them that this is an initiative to help in
expense reduction and working capital initiatives. When they would ask what could they get for 80%
of the proposed cost, the response was to break out each component of the plan into a stand alone
initiative and explain the kind of impact it could have.

Getting Focussed: This involves getting focussed in the firm’s data approach through a new sales and
operational planning process which had the ability to pull the long- and short-term perspectives of
sales, marketing, finance, manufacturing and produce forecasts that all participants could place their
bets on. It also included a web based CRPF tool in collaboration with other trade partners to share
forecast. When there was a consensus built based on the forecast of whirlpool and other trade
partners, the error rates reduced from around 100% to 44-45 %. One percentage of reduction in
error meant increase in cost savings and revenue in tens of millions of dollars. It also included a
project management office which ensures the completion of projects on time, on budget and on
benefit with strict performance metrics.

Engaging talent: As much as this whole tale was about technologies and processes, it is also about
how to catch the imagination of people at different levels to makes sure they are actively engaged in
this initiative. There were several initiatives designed in this perspective with a new competency
model wherein employees were rewarded with higher pay scales even while being in the same
hierarchical level but by upskilling themselves. A supply chain advisory board was formed with
experts from academia and industry to keep questioning the senior leadership team to validate their
initiatives making sure that they are moving on the right path. As many employees as possible in the
supply chain were encouraged to get PMI certified so that the whole process is disciplined and the
execution is perfect with project charters and weekly reviews.

Sustaining Momentum: After achieving the initially set goals, the focus shifts to continuous
improvement which involves delivery of three new capabilities per month. Some of these are a Plan
to sell strategy for high volume SKUs and Build to sell strategy for Low volume SKUs which helps in
balancing inventory levels and at the same time giving a high priority to the SKUs which generate
more sales and are of strategic importance to the plans of the firm. The other initiatives to keep the
momentum up were enhancing the partner stores, event management technology and lean
management techniques.

Conclusion: All these initiatives helped improving the availability rate to 93% from 88%, Reduced the
Holding inventory to 26 days from earlier 32.8 days, Reduced supply chain costs and working capital
costs by $20 Million and $100 Million respectively. This indicates the implication of supply chain
turnaround by generating more income through improvement inn cost savings, Sales revenue
through better forecasts and reduction cost of last sales. The case ends by stating the future plans
ahead wherein the firm aims to improve in resale of returns and disassembly of products,
redesigning of products to make them smaller in order to achieve supply chain economics, Improve
forecasts, Optimize transportation to speed up the distribution process and getting closer to
customers to know them better.