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

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

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