Whirlpool Europe Essay

Each of them can be drilled down to the cost drivers in the categories above using the “bottoms-up” cost model (Exhibit 1).

Whirlpool Europe’s implementation of an enterprise resource planning (ERP) system is a positive business investment. One of the biggest challenges that Whirlpool Europe faces is a disconnect in the information systems. This disconnect has led to a decrease in product availability, loss in sales, and an unreasonably high inventory. A new system will allow Whirlpool Europe to improve operating effectiveness and efficiency. The cost of implementation of the ERP is quite substantial. However, the benefits do outweigh the costs when net present value is calculated and compared. Once the ERP system is implemented, sales offices will be able to view inventory across the entire supply chain to determine what

We should accept the project because of the positive NPV and high IRR. We will gain $532 million in wealth which is a big money on the scale like this. The company has a bond rating of AA that makes the risk relatively low. So we should definitely say yes.

Baldwin's purchasing, inventorying, and production costs over and above the added costs that would be

ABC Inc. is a small Midwest company priding themselves on their timely service and high quality products. ABC Inc. is planning to expand in the summer. Boosting their production lines to output more merchandise can only be done with a larger workforce. For the company to expand ABC turns to their Operations Supervisor Monica Carrols to help with this change. Monica is a veteran with ABC and is the most qualified for the task at hand. With Monica heading the operations and Carl Robins under her management, they should achieve extraordinary things.

The Whirlpool Europe case provides an opportunity to look at different ways to evaluate a major IT investment the company is considering. To undertake this analysis we have to make a few assumptions because the case does not have all the details needed to estimate benefits and investment cost. However, if you were in a company faced with this situation, these numbers would be available.

12. Please return the cost of capital to 9%. Sigma squared is the variance in the rate of return of the project. The calculations for the variance are in the first table of worksheet 2. Determining sigma squared is one of the most challenging tasks in calculating the value of a real option. In this example, we suggest asking managers for their best and worst case estimates of the benefits, given the expected benefits taken from worksheet 1. Just above the table, there is a percentage number for the range surrounding the expected returns, which starts at 20%. This says that the worst estimate is 80% of the expected, and the best is 120% of the expected.

1. If the company had dropped product 103 as of January 1, 1993, what effect would

In general, ERP systems are designed to standardize information entry and create data storage for information sharing across the organization. There are numerous advantages of ERP but skeptics argued on the fact that these advantages can be also achieved by simplification and lean production methods. IT systems could be effective and reliable in the long run but at the same time there is an uncertainty about whether it will align with the concerned business process. For instance, the ERP system implemented at the Korey plant to replace MRP system failed. Though it met the requirements of individual unit and enabled employees with wide range of

Main Problem: The rollout of ERP at the Mirabel plant and then followed by the Saint-Laurent plant did improve, but still had their fair share of challenges. Our area of improvement will be from the results given after ERP went live at Saint-Laurent. The main problem appears to be still be a disconnect between the business vs. project team and properly communicating and training those who will be using the new ERP system (SAP in this situation). While the overall response was positive, not every issue from the Mirabel plant has been corrected and resolved.

There are many benefits can be expected from this project such as it will make over the calculated commercial proficiencies. It will be proved as very important deal by investing in the project. The project can bring more money once it done. The project team is very efficient so they can surely get more benefits.

Q1. ERP projects are expensive and risky. Why did Keda decide to embark on an ERP?

This project is reasonable and worth to take it. It will add more value to the company since its NPV is positive and has an attractive IRR and MIRR (higher than WACC). Moreover, the breakeven occurs in year two, in the middle of the project lifecycle, which is a good sign as well.

Another benefit companies receive from using an ERP is standardized processes and consistent data. This is important in the energy sector and the oil and gas industry because it allows the business to move rapidly to new markets as well as adjust workloads among offices. (Anderson et al., 119) an ERP system will provide managers with pertinent and timely information on when assets need to be replaced among others which will improve the quality of their decisions. (Anderson et al. 119)

In light of the above findings, since there are obvious problems found in Whirlpool¡¦s international business strategy, it is recommended that Whirlpool should refine its strategy as follow: