Whirlpool on track to reduce $$800$m in costs via procurement tactics In an earnings call, the home appliance company said it reduced parts complexity and used dual sourcing to mitigate supplier$-$driven disruptions. Published November $9,2023-$ Alejandra Salgado Whirlpool Corp. is on track to deliver $$800$ million in cost reductions in $2023$ after reducing parts complexity and leveraging dual sourcing tactics, company executives said in a Q$3$ earnings call. The majority of Whirlpools manufacturing facilities are located in North America. The home appliance company adopted procurement$-$based strategies to mitigate the risk of supplier$-$driven disruptions in $2021,$ efforts that helped its quarterly results, CEO Marc Bitzer said in the call. Our operational priorities delivered $100$ basis point improvement in margin expansion, improved supply chain execution, market share gains in North America and $$300$ million in cost takeout actions, Bitzer said. Operational Priorities on track for Whirlpool Corp Supplier disruptions have plagued Whirlpool Corp. In response, the company has leveraged procurement strategies such as dual sourcing and reducing parts complexity to minimise interruptions to its supply chain. In $2017,$ Whirlpool and Sears split as the retailer struggled to retain suppliers and customers amid a sinking retail market. Then, in $2021,$ the home appliance maker told analysts during a Q$42021$ earnings call that the Omicron variant of COVID$-19$ was impacting suppliers as were higher steel and resin costs, at the time stating, Earlier this year, Whirlpools Q$4$ production volumes fell $5\%$ because of a one$-$off disruption at an unnamed supplier that has since been resolved.Whirlpool has been assessing risks in its supply chain before committing to a plan. For dual sourcing, the company assessed geopolitical instability, natural disasters and supplier$-$related issues. Evaluating these issues provided the company with insight on its vulnerabilities and where dual sourcing could be beneficial, Whirlpool Corp. SVP of Global Strategic Sourcing Alessandro Lombardi told Supply Chain Dive in an email. We have protocols established for compliance, quality control, supply chain management, etc., which help signal when we may need to switch to an alternative supplier, Lombardi said. We constantly monitor the performance of our suppliers to assess the effectiveness of the dual sourcing strategy and make necessary adjustments as needed. The companys risk assessment allowed it to introduce dual sourcing for electrical and structural components. In terms of parts complexity, Whirlpool also used an assessment to determine the supplier, Lombardi said. We constantly monitor the performance of our suppliers to assess the effectiveness of the dual sourcing strategy and make necessary adjustments as needed. We know that reducing parts complexity can lead to cost savings, streamlined operations and improved product quality, Lombardi said. So$,$ we started by assessing our existing parts inventory and identifying opportunities to consolidate assessing our existing parts inventory and identifying opportunities to consolidate similar parts or components. Wherever possible, we streamlined the variety of parts by standardising designs, materials or specifications. The company also collaborated with its supply partners to explore ways to reduce manufacturing complexity. As a result of the actions we have already taken, we have seen significant cost savings, streamlined production processes, and reduced supply chain disruptions, he said. We expect this forward momentum to continue into Q$4$ and $2024.$ Whirlpool manufactures the majority of its products in the USA, although some specific products and a significant variety of components are manufactured in Mexico, Germany, Italy, China and India. Adapted from: Salgado, A$.(2024).$ Whirlpool on track to reduce $$800$M in costs viaQuestion $4$ Discuss, in your understanding and by referencing the information supplied, ways in which Whirlpools strategy of dual sourcing may have influenced its costs and contributed to the significant cumulative cost savings of $$800$ million, as well as improvements in its US divisions results in its $2023$ financial year. Highlight any specific contributing impacts that likely resulted from implementing this sourcing strategy, given that a significant percentage of appliances from its competing supply chains originates from international manufacturers. $(8)$ Appropriate explanation of possible impacts of dual sourcing: $1$ mark per valid argument or conclusion on ways in which dual sourcing could have impacted Whirlpools cost basis or risk profile, or for valid arguments on impacts$/$ outcomes of this strategy on Whirlpools supply chains in general. Question $5$ Critically assess the comment, We know that reducing parts complexity can lead to cost savings, streamlined operations and improved product quality, in the context of wider supply chain management and the Whirlpool case information supplied. Expand on how reducing parts complexity likely impacted post$-$COVID$-19$ supply chain efficiency and risks for Whirlpool. $(7)$ Appropriate, critical assessment of the statement on parts complexity: $1$ mark per valid argument or conclusion on ways in which complexity reduction could have impacted Whirlpools cost basis or risk profile, or for valid arguments on positive impacts$/$ outcomes of this strategy on Whirlpools supply chains in general.