WHIRLPOOL EUROPE Harvard Business School Case N9-202-017 Case Software 2-202-711 (3rd edition; Revised 5/20/02) Copyright © 2001 by the President and Fellows of Harvard College
This case was prepared solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Exhibit 1Whirpool Europe's Manufacturing Sites Location Amiens France Norrkoping Sweden Poprad Slovakia Neunkirchen Germany Schorndorf Germany Cassinetta Italy Naples Italy Siena Italy Trento Italy Isithebe South Africa
Products Washers and Dryers Microwave Ovens Washers Dishwashers Washers Refrigerators and Cooking Appliances Washers Chest Freezers Refrigerators and Freezers Refrigerators and Freezers
Source: Company documents.
Exhibit 2A Project Atlantic Implementation Groupings a Wave West Belgium France Netherlands Plus: Warehouse Mgt and Physical Dist.
Wave South Italy Portugal Spain
Wave Central Czech Republic Hungary Poland Slovakia
Wave North Denmark Finland Ireland Norway Sweden United Kingdom
Source: Company documents. a
Austria, Germany, and Switzerland were not part of Project Atlantic.
Exhibit 2B Wave Implementation Schedule West South Central North Start Date: May-99 May-00 Mar-01 Jan-02 End Date: Apr-00 Feb-01 Dec-01 Aug-02
Source: Company documents.
Exhibit 3
Wave West South Central North Source:
1997 Data for Whirlpool Europe
DSI 45 51 67 55
Product Availability 73.5% 83.1% 76.8% 83.2%
Company documents.
Units Sold 2,271,139 1,415,949 977,665 1,443,156
Revenue Margin (000s US$) (000s US$) 477,784 58,859 283,549 46,241 185,625 43,678 280,901 29,818
418,925
51648.29
37,875
13,773
1147.74
Exhibit 4
Wave West South Central North Source:
Improvements in DSI and Availability by Year and Wave
2000 25%
Improvements by Year by Wave 2001 2002 2003 40% 35% 35% 40% 25% 40% 40% 40%
Company documents.
2004
20% 40%
2005
20%
Exhibit 5
Margin Improvements by Year by Wave
Margin Improvements by Year by Wave
West South Central North Source:
2000 0.06%
2001 0.25% 0.10%
Company Documents
2002 0.25% 0.25% 0.13%
2003 0.25% 0.25% 0.25% 0.13%
2004 0.25% 0.25% 0.25% 0.25%
2005 0.25% 0.25% 0.25% 0.25%
Exhibit 6
Forecasted Other Expense Savings by Year (000s US$) 2000
2001
2002
2003
2004
2005
0
190
411
442
474
506
Finance Headcount
81
135
216
324
405
405
Warehouse Space
18
72
155
230
274
288
Bad Debt Expense
102
512
922
1,024
1,024
1,024
Information Systems
420
840
840
1,280
1,280
1,280
621
1,749
2,544
3,300
3,457
3,503
Order Desk Headcount
Source:
Company Documents.
2006
2007
537
569
405
405
288
288
1,024
1,024
1,280
1,280
3,534
3,566
Exhibit 3
1997 Data for Whirlpool Europe
Wave West South Central North Exhibit 4
DSI 45 51 67 55
Units Sold 2,271,139 1,415,949 977,665 1,443,156
Revenue (000s US$) 477,784 283,549 185,625 280,901
Improvements in DSI and Availability by Year and Wave Improvements by Year by Wave 2000 2001 2002 25% 40% 35% 35% 40% 40%
Wave West South Central North Exhibit 5
Product Availability 73.5% 83.1% 76.8% 83.2%
2003 25% 40% 40%
Margin Improvements by Year by Wave Margin Improvements by Year by Wave 2000
West South Central North Exhibit 6
0.06%
2001 0.25% 0.10%
2002 0.25% 0.25% 0.13%
2003 0.25% 0.25% 0.25% 0.13%
Forecasted Other Expense Savings by Year (000s US$) 2000
2001
2002
2003
0
190
411
442
Finance Headcount
81
135
216
324
Warehouse Space
18
72
155
230
Bad Debt Expense
102
512
922
1,024
Information Systems
420
840
840
1,280
Total
621
1,749
2,544
3,300
Order Desk Headcount
BENEFITS Revenue and Gross Margin Increase I) Increase in Product Availability
Wave West South Central
Product Availability 73.5% 83.1% 76.8%
Increase in Prod. Availability 18.5% 8.9% 15.2%
Units Sold 2,271,139 1,415,949 977,665
Revenue (000s US$) 477,784 283,549 185,625
North
83.2% Unit Price Wave
105040 0 0 0 Wave
Wave
Wave West South Central North Wave West South Central North
26260 0 0 0
Additional Products Sold (Cumulative) 2001 2002 2003 68276 105040 105040 11027 23629 31505 0 14861 29721 0 0 12700
2000 5278997 0 0 0 Profit Margin 1997 0.12 0.16 0.24 0.11
Wave West South Central North
Additional Products Available 2001 2002 2003 168064 147056 0 44107 50408 31505 0 59442 59442 0 0 50799
105040 0 0 0
2000
West South Central North
280,901
Additional Products Available (Cumulative) 2001 2002 2003 273104 420161 420161 44107 94515 126019 0 59442 118884 0 0 50799
2000
West South Central North
1,443,156
201.02771669
2000
West South Central North
8.8%
2000 653495.73 0.00 0.00 0.00
Additional Revenue from increased sales 2001 2002 2003 13725392 21115987 21115987 2216673 4750013 6333351 0 2987374 5974748 0 0 2553006
2000 0.0006
2001 0.0025 0.0010
Pofit Margin Improvement 2002 0.0025 0.0025 0.0013
Profit from increased sales 2001 2002 2003 1733402.39 2719562.88 2772352.84 363710.35 791254.36 1070839.19 0.00 706819.73 1428576.32 0.00 0.00 274323.79
II) Increase in Gross Margins
Additional Profit from Increased Profit Margin on the e Wave West South Central North
Revenue (000s US$) 477,784 283,549 185,625 280,901
2000 286670.4 0 0 0
2001 1481130.4 283549 0 0
2002 2675590.4 992421.5 241312.5 0
Total Profit Increase
2000 940166.13
2001 3861792.14
2002 8126961.36
2003 12187982.85
Inventory Savings 2000
Wave West South Central North
DSI
42 51 67 55
Revenue (000s US$) Profit Margin 483,063 0.124 283,549 0.163 185,625 0.235 280,901 0.106
37.2 46.8 67 55
Revenue (000s US$) Profit Margin 491,509 0.126 285,766 0.164 185,625 0.235 280,901 0.106
33 42 62.2 55
Revenue (000s US$) Profit Margin 498,900 0.129 288,299 0.167 188,612 0.237 280,901 0.106
33 39 57.4 50.2
Revenue (000s US$) Profit Margin 498,900 0.131 289,882 0.169 191,600 0.239 283,454 0.107
New DSI 45 51 67 55
2001
Wave West South Central North
DSI
New DSI 45 51 67 55
2002
Wave West South Central North
DSI
New DSI 45 51 67 55
2003
Wave West South Central North
DSI
New DSI 45 51 67 55
2004
Wave West South Central North
DSI
33 39 55 45.4
Revenue (000s US$) Profit Margin 498,900 0.134 289,882 0.172 193,093 0.242 286,007 0.110
33 39 55 43
Revenue (000s US$) Profit Margin 498,900 0.136 289,882 0.174 193,093 0.244 287,284 0.112
New DSI 45 51 67 55
2005
Wave West South Central North
DSI
New DSI 45 51 67 55
Savings due to reduction in Returns Wave West South Central North
Wave West South Central North
2000 1.00%
Wave West South Central North Total
2000 2297399 1415949 977665 1443156
2000 689219.71 0.00 0.00 0.00 689219.71
2001 2339415 1426976 977665 1443156
Products Sold 2002 2003 2376179 2376179 1439578 1447454 992526 1007386 1443156 1455856
Percentage Reduction in Returns 2001 2002 2003 2.00% 2.00% 2.00% 1.00% 2.00% 2.00% 2.00% 2.00% 2.00% Savings due to Reduction in Returns 2001 2002 2003 1403649.07 1425707.51 1425707.51 428092.71 863746.59 868472.32 0.00 595515.30 604431.61 0.00 0.00 873513.46 1831741.78 2884969.40 3772124.90
2000 0 81 18 102 420 689 1310
Order Desk Headcount Finance Headcount Warehouse Space Bad Debt Expense Information Systems Reduction in Returns Total
Other Savings 2001 2002 190 411 135 216 72 155 512 922 840 840 1832 2885 3581 5429
2003 442 324 230 1,024 1,280 3772 7072
COSTS
Capital Expenditure Software Licenses Employees cost Consulting Cost Task force Maintenance License Maintenance Total
1999 4300000 600000 2250000 3511200 600000 11261200
2000 8600000 300000 4500000 1663200 300000 1200000 100000 16663200
2001 6900000
2002 4100000
6750000 1293600 600000 1800000 200000 17543600
9000000 739200 600000 2400000 300000 17139200
Income Statement (Without ER 1999
2000
2001
2002
Benefits Gross Margin
178596000
178596000
178596000
178596000
Profit before Tax Tax (@40%) Profit After Tax
178596000 71438400 107157600
178596000 71438400 107157600
178596000 71438400 107157600
178596000 71438400 107157600
Net Cash Flows Present Values
107157600 107157600 107157600 107157600 98309724.7706422 90192408.046 82745328.48 75913145.397
Income Statement (With ERP Implem 1999
2000
2001
2002
Benefits Gross Margin Inventory Savings Other Savings
178596000 0 0
179536166 3478881 1310220
182457792 11925712 3580742
186722961 22107816 5428969
Costs Depreciation Profit before Tax Tax (@40%) Profit After Tax
11261200 860000 166474800 66589920 99884880
16663200 2580000 165082067 66032827 99049240
17543600 3960000 176460646 70584258 105876387
17139200 4780000 192340547 76936219 115404328
Net Cash Flows
100744880
101629240
109836387
120184328
Present Values
92426495.412844
85539298.03 84813843.92 85141608.165
Comparison between ERP Implementation & Without ERP With ERP Project upto 2005 Project upto 2007 Project upto 2010
Without ERP 598311595 539319146.72 735346333.195218 642436268.6 901127678.252797 767326134.9
Benefit of ERP Implementation(in mn) 59 93 134
Margin (000s US$) 58,859 46,241 43,678 29,818
2004
2005
20% 40%
20%
2004 0.25% 0.25% 0.25% 0.25%
2005 0.25% 0.25% 0.25% 0.25%
2004
2005
2006
2007
474
506
537
569
405
405
405
405
274
288
288
288
1,024
1,024
1,024
1,024
1,280
1,280
1,280
1,280
3,457
3,503
3,534
3,566
ear by Wave
crease
Improvements by Year by Wave
2000 25%
2001 40% 35%
2002 35% 40% 40%
2003 25% 40%
2004
20%
2005
40%
vailable 2004
2005
0 0 29721 50799
0 0 0 25400
2004 420161 126019 148605 101598
2005 420161 126019 148605 126998
2004 105040 31505 37151 25400
2005 105040 31505 37151 31749
2004 21115987 6333351 7468435 5106013
2005 21115987 6333351 7468435 6382516
it Margin Improvement 2003 0.0025 0.0025 0.0025 0.0013
2004 0.0025 0.0025 0.0025 0.0025
e (Cumulative)
Cumulative)
creased sales
2005 0.0025 0.0025 0.0025 0.0025
d sales 2004 2825142.81 1086672.57 1804391.49 561412.61
2005 2877932.78 1102505.95 1823062.58 717722.06
ased Profit Margin on the existing (base) sales 2003 3870050.4 1701294 705375 365171.3
2004 5064510.4 2410166.5 1169437.5 1067423.8
2005 6258970.4 3119039 1633500 1769676.3
40%
20%
2004 2005 15989157.69 19302409.07
Margin COGS (000s (000s US$) US$) 59,799 423,264 46,241 237,308 43,678 141,947 29,818 251,083
Inventory Inventory After Change in Before ERP ERP(000s Inventory(00 (000s US$) US$) 0s US$) 52183.212 48704.3312 3478.8808 33158.10411 33158.10411 0 26056.02466 26056.02466 0 37834.42466 37834.42466 0 Total Inventory Savings
Margin COGS (000s (000s US$) US$) 62,074 429,436 46,888 238,877 43,678 141,947 29,818 251,083
Inventory Before ERP (000s US$) 52944.14699 33377.39203 26056.02466 37834.42466
Inventory After Change in ERP(000s Inventory(00 US$) 0s US$) 43767.16152 9176.985479 30628.66563 2748.726402 26056.02466 0 37834.42466 0 Total Inventory Savings
Margin COGS (000s (000s US$) US$) 64,254 434,646 48,025 240,274 44,626 143,986 29,818 251,083
Margin COGS (000s (000s US$) US$) 65,501 433,399 49,013 240,869 45,812 145,788 30,457 252,997
Inventory Before ERP (000s US$) 53586.47269 33572.57866 26430.35123 37834.42466
Inventory Before ERP (000s US$) 53432.70214 33655.69894 26761.04761 38122.76197
3478.8808
11925.71188
Inventory After Change in ERP(000s Inventory(00 US$) 0s US$) 39296.74664 14289.72605 27648.00596 5924.572705 24536.83353 1893.5177 37834.42466 0 Total Inventory Savings
22107.81645
Inventory After ERP(000s US$) 39183.98157 25736.71096 22926.62884 34795.68456
Change in Inventory(00 0s US$) 14248.72057 7918.987987 3834.418761 3327.077408
Margin COGS (000s (000s US$) US$) 66,749 432,151 49,738 240,145 46,652 146,442 31,447 254,560
Margin COGS (000s (000s US$) US$) 67,996 430,904 50,463 239,420 47,135 145,959 32,305 254,978
Inventory Before ERP (000s US$) 53278.9316 33554.43867 26881.06192 38358.38272
Total Inventory Savings
29329.20473
Inventory After ERP(000s US$) 39071.21651 25659.27663 22066.54337 31663.10137
Change in Inventory(00 0s US$) 14207.71509 7895.16204 4814.518553 6695.281348
Total Inventory Savings
33612.67703
Inventory Inventory After Change in Before ERP ERP(000s Inventory(00 (000s US$) US$) 0s US$) 53125.16106 38958.45144 14166.70961 33453.1784 25581.8423 7871.336094 26792.45055 21993.80269 4798.64786 38421.36017 30038.51795 8382.842218 Total Inventory Savings
eturns
2004 2376179 1447454 1014816 1468556
2005 2376179 1447454 1014816 1474905
2004 2.00% 2.00% 2.00% 2.00%
2005 2.00% 2.00% 2.00% 2.00%
2004 1425707.51 868472.32 608889.76 881133.33 3784202.92
2005 1425707.51 868472.32 608889.76 884943.26 3788012.85
n Returns
in Returns
35219.53579
2004 474 405 274 1,024 1,280 3784 7241
2005 506 405 288 1,024 1,280 3788 7291
2006 537 405 288 1,024 1,280 3788 7322
2003
2004
2005
600000 3000000 400000 4000000
300000 3000000 400000 3700000
3000000 400000 3400000
2004
2005
2007 569 405 288 1,024 1,280 3788 7354
ome Statement (Without ERP) 2003
2006
2007
2008
2009
2010
178596000
178596000
178596000
178596000
178596000 178596000 178596000 178596000
178596000 71438400 107157600
178596000 71438400 107157600
178596000 71438400 107157600
178596000 71438400 107157600
178596000 178596000 178596000 178596000 71438400 71438400 71438400 71438400 107157600 107157600 107157600 107157600
107157600 107157600 69645087.52 63894575.71
107157600 107157600 107157600 107157600 107157600 107157600 58618876.8 53778786.05 49338335.83 45264528 41527090 38098248
atement (With ERP Implementation) 2003
2004
2005
2006
2007
2008
2009
2010
190783983 29329205 7072125
194585158 33612677 7241203
197898409 35219536 7291013
197898409 35219536 7322013
197898409 197898409 197898409 197898409 35219536 35219536 35219536 35219536 7354013 7354013 7354013 7354013
4000000 4780000 218405312 87362125 131043187
3700000 3920000 227819038 91127615 136691423
3400000 2200000 234808958 93923583 140885375
3400000 820000 236219958 94487983 141731975
3400000 3400000 3400000 3400000 0 0 0 0 237071958 237071958 237071958 237071958 94828783 94828783 94828783 94828783 142243175 142243175 142243175 142243175
135823187
140611423
143085375
142551975
142243175 142243175 142243175 142243175
88275752.54 83841997.07 78272599.85 71542029.16
Implementation(in mn) 59 93 134
65492709
60085054
55123903
50572388
