Whirlpool Corp: Reducing Complexity and Boosting Performance
The future of procurement at Whirlpool Corporation is “poised for a transformative journey,” explains David Nagy, Whirlpool Corporation’s Director of Global Strategic Sourcing.
Home to the likes of Whirlpool, KitchenAid, Maytag, Consul, Brastemp, Amana, Bauknecht, JennAir, Indesit, Yummly and InSinkErator, Whirlpool Corporation has delivered US$800mn in cost reductions in 2023 by moving away from a short-term tactical model, to a long-term strategic approach.
Against a backdrop of geopolitical uncertainty and consistent supply chain challenges, manufacturers around the world are trying to leverage the potential of their procurement operations and transforming their previously profitable operating models, to control costs, increase resiliency and support sustainability efforts. Whirlpool Corporation are already seeing the benefits of their strategic changes, as they start to show demonstrable benefits to their operational performance.
Procurement delivering cost savings
A central part of the strategy has been close work with product design teams to find opportunities to reduce the complexity of designs. “Procurement partners closely with engineering and manufacturing to identify opportunities to reduce part complexity by standardising designs, specifications, or materials across our products,” says Nagy. “This enabled not only economies of scale, but also streamlined operations and improved quality, all of which can improve cost.”
Another pillar of that strategy is selecting and partnering with suppliers who can help achieve operational excellence. By having a common goal of delivering parts both on time, and with a high quality, Whirlpool Corporation Has reduced operational costs and allowed its teams to focus on delivering new and innovative solutions to the market. Nagy believes that these methods are already helping to deliver results: “We’ve seen improved operational performance which has ultimately improved our cost position. We expect this forward momentum to continue into 2024 and beyond.”
Reducing risk for a resilient supply chain
The overall goal of the transformation has been to maintain a resilient and agile supply base that reduces vulnerability of disruptions and improves the speed of company reactions. This package of measures includes constant evaluation of their supply base and using dual sourcing to protect from problematic disruption.
“Dual sourcing provides flexibility in the event of a supply chain disruption, allowing us to shift supply between alternate approved suppliers,” says Nagy. “We regularly assess the various risks in the supply chain and where dual sourcing could be most beneficial. We then partner with engineering and manufacturing to approve alternate sources on the most critical components. We also are constantly evaluating our supply base footprint by monitoring geopolitical instability, natural disasters, and other supply chain disruptions to understand where vulnerabilities exist and how we can proactively mitigate them.”
The benefit to the end user is still central in their approach. Since implementing their supply chain resilience strategy, Whirlpool Corporation have seen a reduction of supply chain interruptions resulting in reduced logistics costs and less manufacturing down time. “Ultimately this improves order fulfilment and stabilises cost, leading to improved customer satisfaction,” adds Nagy.
Supplier selection and responsible procurement
“Responsible sourcing is at the heart of everything we do in procurement,” begins Nagy, discussing how their selection of supply partners is critical in meeting their sustainability goals. Whirlpool Corporation regularly updates their supplier code of conduct, which is a requirement for all their suppliers, to make sure they select and collaborate with partners who are aligned with its ethical standards and business standards.
“We also assess our supply base performance across a spectrum of responsible sourcing criteria including environmental, social, and ethical business practices, which has helped us identify key partnership opportunities and deepen connections with suppliers that are aligned with our standards,” adds Nagy.
The company’s responsible sourcing strategy is embedded fully into its procurement processes to make sure that cost control and supply chain risk strategies are never at odds with sustainability strategies or wider corporate values. The company has already made significant progress with ESG targets, with a commitment to net-zero impact of operations by 2030, and creating shared value throughout the product lifecycle. The company is also reporting 100% of large manufacturing sites achieving a 10 year commitment to be zero waste to landfill, and 100% of electricity consumption by US plants expected to be covered by the activation of two offsite virtual power purchase agreements.
Strategic plans for the future
With the future of Whirlpool Corporation’s procurement moving from a short-term tactical structure, to a long term strategic approach, Nagy is confident that methods like reducing complexity, careful supplier selection and dual sourcing will continue to benefit the company and their customers around the world. “We will continue to focus on creating a resilient supply chain, reducing complexity, and sourcing responsibly along with doubling down on innovation and supplier relationships in order to unlock our full potential and deliver on our mission to earn trust and create demand for our brands in a digital world,” he concludes.
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