Supply Chain Brain - December 2009

Study Reveals Five Drivers of
a Sustainable Supply Chain
In Appliances, Customers
Know What They Want

Mary Holcomb, associate professor at the

University of Tennessee, reveals some key conclu-

sions of the school’s annual study on trends in

transportation and logistics, conducted in tan-

dem with Georgia Southern University.

Just what constitutes a sustainable supply chain? The 18th edition of an annual study on trends and issues in transportation and logistics, conducted by the University of Tennessee and Georgia

Southern University, aims for a broader definition of that term than is commonly used.

Holcomb doesn’t just view sustainability in its trendy sense of environmental responsibility. To her, the word encompasses a wide range of supply chain management practices that enable a company to thrive in all economic climates. And that doesn’t mean focusing exclusively on cost reduction when times are bad. Firms adopting such an approach “are making decisions that will not position them well to move forward.” By failing to make meaningful investments in technology, infrastructure and process improvement, Holcomb says, companies jeopardize their ability to compete in the long run.

Many businesses had become so accustomed to realizing dou-ble-digit cost savings that they suffered “a sudden shock” when the economy took a dive, she says. The ripple effect of the crisis reached multiple tiers of the supplier base.

Cost control is important, but it’s not the only cornerstone of an effective supply chain strategy. Holcomb identifies five drivers of real sustainability: optimization, synchronization, profitability, adaptability and velocity.

The authors of the annual study intend to conduct additional research, to determine which of those drivers merits top priority in a long-term strategy. “We do not know absolutely which driver will be first,” says Holcomb, while offering the personal view that companies “are always going to be interested” in profitability. But others might choose optimization as a starting point.

To view this video interview in its entirety, visit www.SupplyChainBrain.com.

Forget that old white washing machine and dryer.

Buyers of major appliances today want quality, aes-

thetics and value—and branded manufacturers

had better be ready to deliver, says Brian Hancock,

vice president of supply chain with Whirlpool.

The world’s largest seller of appliances,

Whirlpool is an old-line company with a well-established brand in the marketplace. But that doesn’t mean the company is standing still, when it comes to product innovation. “The customer is looking for us to be cutting-edge and

[devoted to] absolute best quality,” says Hancock. In particular, the company is focusing on green technologies with respect to cutting water and energy usage.

Whirlpool doesn’t have much time to attract a given customer. Most go shopping for large appliances about once every 10 years, says Hancock, and they’re in the market for just seven days. Within that narrow window of decision-making, they have to be brought up to speed on the current technology and benefits of each model.

To stay responsive to the consumer, Whirlpool has adopted a formal product lifecycle management (PLM) approach. The process helps the company to keep tabs on all aspects of its supply chain, including the suppliers that furnish key components. Wherever possible, Hancock says, it strives to design parts that can be used in multiple models. Differentiation occurs at the level of aesthetics and machine capacity.

What the customer seeks in terms of design is changing. “It used to be that everybody wanted the same white machine,” Hancock says. “Now they’re looking for designer-type opportunities.”

They might also be purchasing more frequently than before. In the last five years, Whirlpool has seen a shortening of the buying cycle. Some consumers are changing out models every five years. Reasons include a greater emphasis on fashion, and a growing awareness of the environmental benefits of the latest models.