This was compounded by other raw material costs as well leading to a larger end user price which immediately required the attention of the company.
3. In addition to these, Whirlpool also felt that the service support was an unique selling proposition since most of the Asian companies did not have an elaborate service network. In case of Whirlpool they had operations in 170 countries which made it easy and they wanted to make it more effective.
It is important that these issues are addressed in their ERP solution. The ERP solution was expected to provide a solution to these key issues. Primarily, it was expected to reduce the cost of production:
2. Reducing the stock on hand and the inventory, both raw material, intermediate and finished goods. This was expected to bring down the holding cost of the product as well. This would also reduce the cost of production.
5. The company also tried to build relationships with various vendors across the globe which would result in outsourcing some of the products that these people can produce for much lesser. This will again bring down the price of the product further.
6. The transportation cost and the raw material cost though they have increased, optimizing the supply and by clubbing together supplies, moving them to the nearest point for fabrication work would all bring down the cost of production.
All this would bring down the cost of the end product for the customer. This was what the customer expects. Also cutting down the cost of production would improve the profit margins that the company had. Implementing ERP would bring down the material movement; reduce the stock holding costs in terms of both raw materials and finished goods. There will also better production planning. All this would help in reducing the cost of production further and increasing the margins the company had. ERP