Essay on Whirlpool Corporation - Giving Erp a Spin
640 WordsMar 1st, 20133 Pages
February 26, 2013
Whirlpool Corporation – Giving ERP a Spin
1. How was the organization prepared for the change?
Whirlpool thought they were ready to go live with SAP until September 18, 1999. Whirlpool seemed to be making all the right moves, like dispatcher assignment, having centralized pricing, and vendor interfacing. Even the best laid plans don’t always work. Everything seemed to be going smoothly at first because there were only 1000 system users, once 4,000 users were on the system, performance deteriorated which lead to 4-8 weeks delivery delays to which some customer cancelled their order and went with a competitor. Whirlpool should never have gone live until they realized what impact the red flags…show more content…
The interfaces was too complex and there was a lack of management participation 5. Evaluate the steps that were taken in the ERP activities. Which were done well and which could be improved?
The dispatcher assignment –the fact that Whirlpool will consolidated 22 field offices into one hub, even though it takes away the intimate knowledge, it still saves money.
Centralized Pricing – no wonder it takes 110 days to reprice its entire product line, when you are trying to manage an 180,000 line report. The centralized pricing will make Whirlpool more competitive in its 170 countries worldwide. Very smart move.
Vendor interface – the fact that Whirlpool will save $600,000 a year to move to Easy EDI is a no brainer. It will also allow the customer to have accurate data on their orders along with better customer satisfaction. Remember the best customer is a return customer.
6. Do you think SAP should be held accountable for any of the problems faced by Whirlpool? Why?
Yes I think SAP should be held responsible, after all it is their systems and name that were on the line. If they knew that there were Red Flags, why would they allow Whirlpool to make the decision to go-live? Even though SAP said that many companies have multiple Red Flags and hundreds of little problems, when compared to just two that Whirlpool had, SAP
There's a good chance that you chill your milk in its refrigerators, wash your clothes in its washers or bake cookies in its ovens. After all, Whirlpool strives to be in "Every home...Everywhere." As the world's leading manufacturer and marketer of major home appliances, the company has certainly forged a strong presence in households around the globe.
A $10.5 billion corporation, Whirlpool has its home base in Benton Harbor, Michigan. Competing in a $70 billion global industry for major home appliances, the 61,000-employee company considers its distributors and partners to be critical players in its continual quest to maintain industry leadership. This being the case, it is in Whirlpool's best interests to operate with utmost efficiency while providing top-notch service to members of its selling chain.
Until recently, providing outstanding service was no problem. But Whirlpool's other processing methods, particularly for its middle-tier trade partners--which comprise 25 percent of its total partner base--were inefficient and costly in time and money. These are the sellers who generate 10 percent of the company's revenue, but aren't large enough to have dedicated, system-to-system connections with Whirlpool--so they typically submitted orders by phone or fax.
Wanting to infuse greater efficiency into this process, Whirlpool turned to e-business, developing a business-to-business (B2B) trading partner portal that enables these sellers to order online. To make the portal work, the company needed to integrate it with its SAP R/3 inventory system and Tivoli systems management tools. Whirlpool looked no further than the company with which it has collaborated on several other projects over the years: IBM.
Following the guidelines of the IBM Application Framework for e-business, Whirlpool built its portal with IBM WebSphere Application Server, Advanced Edition, IBM Net.Commerce (now part of the IBM WebSphere Commerce Suite family), IBM HTTP Server, IBM VisualAge for Java and IBM Commerce Integrator with IBM MQSeries.
Working in concert, these technologies have enabled a fast, easy Web self-service ordering process that has cut the cost per order to under $5--a saving of at least 80 percent. Whirlpool has also gained an unexpected benefit--an extendible e-business platform that it plans to leverage for other applications.
"IBM e-business solutions run on many different platforms that scale from the very small to the very large," says Jim Haney, vice president of architecture and planning at Whirlpool. "When you've got that level of scalability as well as flexibility, that's pretty powerful."
“There are features that come out of the box in the current suite of IBM tools that, a year and a half ago, we tried to build ourselves. Now, we can bring applications to market much faster.”
Through the portal, called Whirlpool Web World, several thousand middle-tier trading partners select the goods they want to order by checking off the appropriate SKUs and indicating quantities. Aside from appliance ordering, they can also log on to the password-protected site to track the status of their orders.
"By going with a B2B, Web-based model, we've been able to make ordering easier for both sides of the fence," says Haney. "Before, it was very cumbersome, costly and time-consuming to service this level of trading partner."
Whirlpool's B2B portal is actually in its second generation. Its first-generation portal was developed with low-level products, giving the company a chance to test the Web waters. "It took off faster than we had expected," Haney recalls. "In its first 3 months, the amount of revenue that flowed through the portal was what we thought we would generate in its first 12 months. We got a 100 percent return on our investment in only 8 months."
A platform for now and the future
With the success of its first-generation trading partner portal, Whirlpool was ready to migrate the solution to a bigger, more scalable and easier-to-manage platform. At the same time, the company was also implementing SAP R/3 for order entry. So, it was important for its second-generation portal to integrate with SAP R/3.
"We wanted to invest with a vendor that would be with us for a while, so we checked out IBM and a few others. IBM was our choice for many reasons," explains Haney. "First, IBM has worked with us on joint product development as well as with our SAP R/3 system design and architecture. And, when we talked to analysts, we found that an overwhelming number of Fortune 100 companies use IBM e-business solutions. Finally, we saw that IBM is on top of industry Web standards like Java and XML, which provide the development flexibility that enables us to grow in this space."
After committing to IBM, Whirlpool also decided to develop its e-business platform following the Application Framework for e-business, taking advantage of its rapid development cycles and associated cost reductions. Says Haney, "There are features that come out of the box in the current suite of IBM tools that, a year and a half ago, we tried to build ourselves. Now, we can bring applications to market much faster."
“We'll first look to IBM and its suite of e-business tools to provide the scalability, high availability and capacity needed to support the evolution of our Web applications.”
A first with SAP R/3 integration
Whirlpool is one of the first companies in the world to integrate a Web-based, B2B solution with SAP R/3. Depending on the type of application and transaction involved, Whirlpool's portal can access SAP R/3 either through Commerce Integrator and MQSeries or through WebSphere Application Server. The portal also provides a direct connection to SAP R/3 through the Business Application Programming Interface (BAPI) standard for Java.
Using IBM SecureWay Directory, packaged with WebSphere Application Server, Whirlpool was able to take advantage of the bundled Lightweight Directory Access Protocol (LDAP) server to build its portal. Says Haney, "The close integration of LDAP and WebSphere Application Server results in a faster development process. We have 65,000 entries in the directory, which is running on an IBM RS/6000 server. SecureWay Directory will be our enterprise directory for e-business solutions."
The portal's ordering facility was created with Net.Commerce. IBM DB2 Universal Database for OS/390 resides on Whirlpool's back-end S/390 Parallel Enterprise Servers, in support of SAP R/3. The site itself is powered by IBM HTTP Server and runs on multiple RS/6000 SP servers.
"We didn't have to rewrite any of our order-processing business logic for the Web environment because the logic is still handled by SAP R/3," says Haney. "And now, when we change the rules for calculating delivery dates or pricing promotions, we only need to make those changes in SAP R/3. For our customers, whether they're submitting an order over the phone or online, the end result will be consistent because the same back-end system is handling it."
Evolving with IBM
With the same IBM e-business platform it used for the trading partner portal, Whirlpool has launched a business-to-consumer (B2C) site for U.S. customers to order small appliances and appliance accessories. Drawing 3.8 million visitors each month, the site has generated enough success to enable Whirlpool to achieve 100 percent return on investment in just five months.
Together, Whirlpool's B2B portal and B2C appliance accessory site draw $400 million in annual revenues--8 percent of the company's total revenues. However, the long-term value of Whirlpool's IBM e-business platform--which integrates customer relationship management (CRM) and ERP--lies in its adaptability for future e-business applications. For example, in the company's overseas markets, where major appliances are sold to consumers through direct channels, a B2C ordering site makes good business sense.
"Like anything in this Internet space, our applications will probably evolve every six months or so," says Haney. "With the environment we have in place, we'll first look to IBM and its suite of e-business tools to provide the scalability, high availability and capacity needed to support the evolution of our Web applications."
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