IIBMS MIB CASE STUDY SOLUTIONS – When formulating its purchasing strategy, what other strategy alternatives besides an alliance with another company could Whirlpool Corporation have pursued

IIBMS MIB CASE STUDY SOLUTIONS – When formulating its purchasing strategy, what other strategy alternatives besides an alliance with another company could Whirlpool Corporation have pursued

 

 

www.answersheets.in

info.answersheets@gmail.com

+91 95030-94040

Purchase Management

CASE 4
Faced with intense competition, increasing expectations from customers, reduced product life cycles, and localized geographic markets, Whirlpool Corporation (a Fortune 500 manufacturer of appliances) realized that the need to achieve a competitive advantage from its sourcing and material efforts was greater than ever. Part of the strategy to achieve this advantage involved pursuing an alliance with a key steel supplier. Steel is a major component used across all of the company’s finished products (such as washing machines, dishwashers, refrigerators, and others). The purchasing managers at Whirlpool faced a number of questions with regard to their purchasing strategy:
• What do we need to do to be competitive?
• Who is best suited to be the primary steel supplier?
• What do we need to know, and how do we get the information required to answer this question, especially with regard to our organizational culture, technological roadmap, and where both organizations are moving in the long term?
• How do we implement a strategic alliance?
• How do we establish a strategic alliance in terms of confidentiality agreements, termination agreements, and negotiation strategies?
• How do we provide the supplier with evaluations to ensure that this alliance continues, with regard to continuous performance, goal achievement, and commitment?

When formulating its purchasing strategy

• What do we do if we do not meet our objectives—change the situation or simply terminate the agreement?
Whirlpool realized it needed to reduce the number of steel suppliers it used and locate a supplier with a common desire to enter into a longer-term alliance. Whirlpool’s organizational goals were to leverage the selected supplier’s technical capabilities through early supplier involvement, day-to-day redesign support, and process improvement. At the same time, top executives realized that in order to obtain these benefits, it was important that the supplier partner perceive value in the relationship.
While all of this was occurring in 1984 at Whirlpool, the management team at Inland Steel was considering a different set of questions. Four vice presidents of marketing at Inland Steel, an integrated steel producer located in the same geographic region as Whirlpool, were reviewing their market strategies and the recent changes that had occurred in their strategic alliances. They had made the decision to reduce their customer base, and were forming a new management plan. This was part of Inland’s Customer Relationship Management strategy, which entailed reducing their customer base in order to serve only their preferred customers that would yield the highest long-term profitability for the company. This strategy was a direct result of Inland Steel’s total quality management program, which dictates that to delight the customer one must identify key markets and focus on those markets.
A major component of this market strategy was to approach key customers with the idea of entering into long-term agreements. In doing so, Inland Steel realized that the best opportunity for reducing costs was to become involved early in new product design with key customers. However, to achieve this objective, the vice presidents realized that significant capital investment would be required to update Inland Steel’s facilities with state-of-the-art steel processing technology to align technologies with key customers. In some cases, this involved some degree to risk, as aligning capital investments with specific key customers could “shut out” new business with other potential customers. However, the management team reached a consensus that the only way to succeed in the current market structure was to reduce costs through early involvement in customer new product designs, and to back this up with capital investments in design capabilities and new facilities.
Meanwhile, Whirlpool executives were mulling over whether Inland Steel was the right supplier to form an alliance with. Whirlpool Corporation had used Inland Steel as a supplier for several years, but had used many different steel suppliers during this period. The strategy of forming a formal buyer-supplier partnership was a relatively new one. As these two companies explored the idea, it became obvious that a complementary common strategic vision existed between the two companies, which could make such a partnership a reality. This common vision was based on the fact that the Whirlpool Corporation needed to sustain a competitive advantage and support its direct customer relationships, while Inland needed to manage the transition inherent in a customer-focused market strategy. Thus, Whirlpool Corporation sought to work with Inland Steel to realize reduced costs vis-à-vis the competition, and Inland sought to obtain a major share of Whirlpool’s steel contract. While this initial concept seemed straightforward, it required almost seven years to make it a reality.

When formulating its purchasing strategy

The vision was made a reality by first understanding that reducing cost did not simply mean lowering the price paid per ton of steel, but rather to take cost out of the business processes, which takes much more time. Linkages throughout every step of the value chain, not just between purchasing and sales, had to be established (See Exhibit 1). The end goal became to maximize profitability at both companies, while not relying on explicit formulas and equations formalized in contract form. Along the way, the companies encountered a number of obstacles. However, as the vice president of purchasing at Whirlpool Corporation described the process, “Neither of us let these problems get in the way of cost reduction efforts, which in the long run far exceeded the changes in market steel prices.”
Overcoming the obstacles in the relationship required a seamless organization and the elimination of levels of bureaucracy. Functional personnel in each firm had to be able to communicate directly with their counterparts in the other firm, all the way to the chief executive office. The underlying foundation of the relationship was challenged many times during the early years. “The reason why this relationship works,” says the vice president of marketing at Inland Steel, “is that Whirlpool Corporation created an environment that allowed questions to be laid out on the table every time a new issue came up.”
A Roadmap to Trust
The following is a timeline of the development of the strategic relationship between Whirlpool Corporation and Inland Steel. In 1984, Inland Steel began to share its market strategy and management vision with Whirlpool. The sharing was unique because the supplier (Inland Steel) actually took the initiative when pursuing the strategic alliance. By 1986, Whirlpool had reduced its supply-base from eleven steel suppliers to seven, and Inland had invested over $1 billion in new capital investment. This investment was specifically designed for Whirlpool’s steel requirements in the appliance industry, which could not be used in their other major market, the automobile industry. Inland Steel needed to be granted access to Whirlpool’s engineering personnel to identify the different ways that Whirlpool Corporation was using steel and convert these into process specifications. At this point, Inland was given assurances that it would receive a larger volume of Whirlpool’s orders. One of the most important of Whirlpool’s later actions was that the company actually did place the orders it said it would.
In 1988 and 1989, the alliance was reevaluated by Whirlpool Corporation, and Inland’s orders from Whirlpool increased by 30%. Simultaneously, Inland began the first of their joint cost-reduction projects, which sought to eliminate cost from the business processes. By 1990, Whirlpool had reduced its number of steel suppliers to four. The companies held a joint leadership meeting to bring discussion of the alliance to top management’s attention and to formally develop a supplier council. The companies also developed a long-range vision, which was deemed critical to the success of the partnership.

When formulating its purchasing strategy

The alliance solidified in 1993. By this time, Inland Steel had established resources at its technical center dedicated to the needs of Whirlpool. In 1994, Whirlpool increased its orders to Inland Steel by another 15%, bringing the total to approximately 80% of Inland’s total steel requirements. At this point, the two companies were sharing joint strategies, and Whirlpool’s organizational restructuring was developed around the Inland Steel relationship. Purchasing management was actively involved in top-level strategic planning. To date, the strategic relationship between Whirlpool and Inland Steel is in place and producing benefits that a traditional relationship could not have produced.
Issues and Concerns
In the process of developing greater trust between the two organizations, the companies had to address a number of issues directly. First, different employee practices between the two companies often led to conflict. This conflict was reduced in part by promoting greater cross-cultural interaction, such as having a purchasing manager work at the supplier’s plant, which helped to smooth over any differences in corporate culture that existed. The sharing of cost data was also problematic, but this happened in segments so as to target specific cost drivers in different areas of the business process. In the long run, by focusing on quality improvements and reject-rate reduction, hourly labor costs became almost a non-issue. Even though Whirlpool had several CEOs during this period, the relationship between the companies remained intact because of the level of trust that had developed over time. The relationship was no longer between people but rather between organizations.

When formulating its purchasing strategy

Inland Steel was also concerned that a single-sourcing policy might cause it to lose touch with the market, and was concerned with confidentiality of information. At the same time, Whirlpool was concerned about the technological risks of relying on only one supplier. However, these concerns were ultimately dwarfed by the belief that both companies would be low-cost producers in the long-term because of the relationship.
Mechanisms to Support the Relationship
Executive management at both companies recommend that organizations considering pursuing partnerships need to think early on how they will deal with issues such as those just mentioned. Although no single right answers exist, there are different approaches to these issues that must be tailored to the specific situation. For example, significant organizational realignment was needed so that people could work specifically with their counterparts in the other firm.
The creation of a supplier council was also instrumental to the relationship. This approach permitted the sharing of strategies and tactics so that each party became aware of each other’s activities. Senior management discussion, both structured periodic meetings and informal spontaneous telephone conversations, also helped promote greater trust. Quarterly performance reviews by Whirlpool were helpful to Inland for understanding how well they were meeting performance expectations. Engineers from Inland were also co-located at Whirlpool’s product development center, which created many other informal avenues for communication.
Whirlpool has begun to apply the same “customer service” principles used by Inland to their own customer based. Whirlpool’s CEO has redefined his company’s mission as a fabric-care of a food-preservation enterprise rather than as a washing-machine or refrigerator maker. Whirlpool sales executives recognize that certain distribution channels make up the majority of their sales volumes – in this case, what they call the “Power Retailers”, such as Circuit City, Sears, and Electric Avenue. These retailers demand 100% availability, and Whirlpool’s logistics managers meet this expectation. A second set of customers, building contractors and government agents, purchase in smaller volumes, but also require higher levels of customer service. Thus, they promise close to 95% availability for this group. Finally, the “Discount Outlets” and “Mom and Pop” operations require 85% availability, as they purchase infrequently and in smaller volumes. In effect, a different customer service standard is set for different customers, depending on their importance.
The underlying outcome for both parties in this agreement is that the relationship became viewed as a covenant, which implies a greater commitment than a contract. In the words of one Inland Steel executive, “A covenant implies a promise that is enduring and provides a way to manage expectations. The single most important tenet of the relationship is the need to satisfy the end consumer who purchases the finished appliance. By focusing on this covenant, the relationship should survive and prosper over the long term.”

When formulating its purchasing strategy

IIBMS MIB CASE STUDY SOLUTIONS – When formulating its purchasing strategy, what other strategy alternatives besides an alliance with another company could Whirlpool Corporation have pursued

IIBMS MIB CASE STUDY SOLUTIONS – When formulating its purchasing strategy, what other strategy alternatives besides an alliance with another company could Whirlpool Corporation have pursued

When formulating its purchasing strategy

Questions:
1. Discuss what the following statement means: ‘It can take years for a buyer/seller partnership to begin delivering results.’
2. Discuss the advantages of having point-to-point contact (Exhibit 1) between functional groups at different companies. Are there any disadvantages to this approach?
3. What role does trust play in the relationship between Whirlpool Corporation and Inland Steel? Provide examples from the case that illustrate trust within this relationship.
4. Why is it important to have a strategic fit between the companies involved in a buyer/seller alliance or partnership?
5. When formulating its purchasing strategy, what other strategy alternatives besides an alliance with another company could Whirlpool Corporation have pursued?
EXHIBIT 1
Supply Chain Linkages Between Whirlpool Corporation and Inland Steel
Supplier Buyer
Manufacturing <——————————> Manufacturing
Human resources <——————————> Human resources
Accounting <——————————> Accounting
Engineering <——————————> Engineering
Sales/Marketing <——————————> Purchasing

When formulating its purchasing strategy

Welcome to Answer sheets
 
We at Answer sheets offer all types of online academic assistance, be it homework help, coursework help, case study help, Assignment help, Project Reports, Thesis, Research paper writing help.
And for each service, each subject and each topic, we dedicate an expert writer who has knowledge in that specific field of study. Experience impeccable academic writing service like never before.
Our experts understand that the time of the customers is very precious. The professors of universities and colleges are very rigorous about the submission deadlines of projects or assignments. Hence, the key objective of our case study help service is to deliver the assignments to the customers even before the promised submission deadlines.
We keep the quality measures for all papers which mean we will provide best essays. Our editing services are also excellent. Before submitting any essays, we will check whether the papers writer well or not. The high standards of academic writing will exceed your expectations. With our quality service, we have satisfied more number of people across the world and also work with different universities in Australia, UK, USA, Dubai, Oman, etc.
At our Answer sheets services, our experts are familiar about the formatting styles that are followed in the academic world. Our experts have a great knowledge about the formatting styles such as MLA, Harvard, APA, Turabian, and many others. All types of formats for the case study help are available at our case study help services. In addition, our experts can solve the case studies as per the instructions of the customers.
The experts of our Answer sheets services are highly qualified and professional. We have CAs CFAs & PhD on our panel who have years of experience in the writing of case study / Assignments.
At our Answer sheets services, our experts never plagiarize the content from the other sources for the solutions of case studies. We have strict policies regarding plagiarism at our organization. We have never faced any complaint so far regarding plagiarism from our customers. We use new technologies and modern plagiarism checking software’s to detect plagiarism from our papers.
 
Case Study Solutions, Assignments done by MIB, CA, PhD, & CFA
The experts of our Answer sheets services are highly qualified and professional. We have CAs CFAs & PhD on our panel who have years of experience in the writing of case study. In addition, our experts have the expertise of how a case study should be done by using the information that is mentioned in the case study. All the experts of case study help services are competent and they have all the skills that are required in order to solve a case study. A case study that is solved by our experts looks professional and will surely fetch great grades.
 
O % Plagiarism
At our Answer sheets services, our experts never plagiarize the content from the other sources for the solutions of case studies. We have strict policies regarding plagiarism at our organization. We have never faced any complaint so far regarding plagiarism from our customers. We use new technologies and modern plagiarism checking software’s to detect plagiarism from our papers.
 
Best Price Guarantee
You get premium service at the best market price. Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors, in case they do – “We will beat the price”.
 
Confidentiality
We keep our clients’ personal data confidential. In addition to this payment, info is protected, so you no need to worry about any factors. Feel free to refer to the support team for more information and get some essential details related to the payment methods. Our company aims to keep all your details safe; our advanced security standards will exceed your expectations.
 
Benefits:
Quality Control and Simplicity
We only focus on the quality and offer best quality essays for all time. So you will receive well-crafted and 100% unique content. Need some alterations? You have great chances to get the essays for free.
Direct Communication and Support:
You can easily control the writing process based on your needs; we help you a lot. You can approach our writers directly and requesting drafts. Our dedicated team of experts is available to offer responsive support for 24/7. So just contact us, we ready to help you.

IIBMS ANSWER SHEETS

IIBMS MBA CASE STUDY ANSWER SHEETS,

IIBMS MBA CASE STUDY SOLUTIONS,

IIBMS EMBA CASE STUDY ANSWER SHEETS,

IIBMS EMBA CASE STUDY SOLUTIONS,

IIBMS DMS CASE STUDY ANSWER SHEETS,

IIBMS DMS CASE STUDY SOLUTIONS,

IIBMS MMS CASE STUDY ANSWER SHEETS,

IIBMS MIB CASE STUDY SOLUTIONS,

MBA IIBMS ANSWER SHEETS,

EMBA IIBMS CASE STUDY SOLUTIONS.

  

  M: +91 9503094040

  info.answersheets@gmail.com

  http://answersheets.in

Leave a Comment