The Whirlpool Europe Case Investment on ERP

By Tracy WANG

Alexander SOLMS Oladayo OLADELE

Guillaume HOUDREMONT

Overview • Whirlpool Europe • European Market Share of 13% • Enterprise Resource Planning • Project Atlantic • Must review the costs and benefits of the

project • 4 phases

• North, East, South, West • Improve

• Marketing, operations, logistics and Finance

ERP Benefit Analysis BENEFITS • Inventory reduction (one-time, non-taxable)

• Additional sales units due to product availability. (persistent

and taxable)

• Increased margin. (persistent and taxable)

• Cost savings due to reduced size of staff (order desk, finance, warehouse space, bad debt expense, and information systems)

COMMENTS • However, the benefits are reasonable because it will enable

whirlpool cut back on unnecessary cost incurred due to lack of efficient information system platforms

ERP Cost Analysis COSTS

• Capital expenditure (equipments and software license)

• Implementation cost • On going operational COMMENTS • The costs seem unreasonable and too much in

terms of investment for a project

Cash flows & Present Value

2008 Cash flow? • No 2008 cashflows

• Equipment depreciates over 5years

• The implementation of the project ends in August, 2002

Recommendations & Concerns • If the numbers are correct,

• Because NPV is greater than 0, we accept the investment

• The benefits really outweight the costs CONCERNS • Some costs seem to be uncovered in the case

which may influence the investment decision

• After the depreciation of the equipments there will be need for replacement which will incur unforseen costs