Pros and Cons of the Global Sourcing Strategy by Whirlpool (Case Study Sample)

Whirlpool’s China Case
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Whirlpool’s China Case
Pros and Cons of the Global Sourcing Strategy by Whirlpool
Whirlpool recognized that factors such as lack of appropriate technology, delays in transportation, language, and cultural differences, economic and political stability, and the availability of foreign resources could make global sourcing for a company to be a tricky process. Acknowledging the influence of such factors, Whirlpool established an international procurement headquarter in Shanghai. This venture served as a global sourcing strategy to oversee the company’s manufacturing operations in Asia besides giving support to other global operations of the company that sourced components from Asia.
This global sourcing strategy had advantages. For instance, the strategy enabled the company to decrease transportation delays, offer support to the company’s manufacturing, and decreasing language differences in Asia. Other pros of Whirlpool’s global sourcing included gaining market share, lowering capital investments, increased production flexibility, and ability to focus on the main competencies. Though China offered many advantages to the global sourcing strategy for Whirlpool, it had some cons. These Cons this Global sourcing strategy include lack of reliability, inadequacy in IT infrastructure and transportation, inadequately capable service providers, and inconsistencies in quality and reliability. Such cons existed despite the fact that China offered cost advantages to raw materials.
Criterion for identifying, evaluating and selecting suppliers by Whirlpool
Whirlpool used a criterion with high standards in choosing and considering a Whirlpool supplier. A potential supplier had to meet the quality requirements set to be considered Whirlpool’s supplier. Such requirements posed challenges for most suppliers as it made it difficult to attain the 60 percent score during the initial round of audits. The company utilized the "Sourcing Strategy Development Process" that comprises of four steps consider adequate suppliers of DC they would choose. The four SSD steps are internal, external, strategy development, and Implementation analysis. The internal analysis entailed defining the commodity and allocating the resources and resources. This step also prioritized and identified process-partner requirements followed by an evaluation and review of the performance of the current supply base. The internal analysis step also identified the switching costs.
The external analysis involved analysis of the competitors and the supplier industry while evaluating competitor strategies and performance. This evaluation step involved the use of Best-in-Class-Performance analysis and the SWOT analysis. Based on the results from the first and second steps, the third step involved the development of the sourcing strategies. This step made use of Porter’s Five Forces Model to evaluate the competitiveness. The fourth step was the implementation stage that saw the execution of the planned strategy. The selected process suppliers and partners received feedback communication followed by a final negotiation. The strategy required revision in situations where the goals had not been achieved by the fourth step.
Pros and cons of a company’s multiple or single sourcing
Single sourcing is the strategy where a customer or company chooses a sole provider as a supplier of the entire set of goods or services ...