A RESEARCH REPORT ON “SUPPLY CHAIN MANAGEMENT OF LG ELECTRONICS” A report submitted to UP Technical University for the partial fulfillment the degree of Master of Business Administration Submitted to: Submitted by: Mrs. Shweta Singh SUNNY KHAIRA Director of C-MAT MBA 4th semester Roll no. 0714970051 CENTER FOR MANAGEMENT TECHNOLOGY Pot No. 25,27,28,Phase 1, Knowledge Park-1 Greater Noida(U. P. ) ¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬¬CERTIFICATE
This is to certify that this project entitled to “SUPPLY CHAIN MANAGEMENT OF LG ELECTRONICS” submitted by SUNNY KHAIRA, for the fulfillment of the degree of M. B. A. assigned project report is a independent work done by his under my guidance and supervision.. Signature Mr. Kirti Sinha HOD (M. B. A. ) C-MAT DECLARATION I, SUNNY KHAIRA ,do declare that the Research Project Report entitled “SUPPLY CHAIN MANAGEMENT OF LG ELECTRONICS” being submitted to the U. P.
Technical University for the partial fulfillment of the requirement for the degree of Master of Business Administration is my own endeavors and it has not been submitted earlier to any institute for any degree Place: Greater Noida SUNNY KHAIRA Date: MBA,C-MAT P R E F A C E Management education talks of synchronizing the theoretical studies with practical application in the most effective way. The training figure prominently in the course curriculum as it imparts practical knowledge to the student aspiring to accomplish professional insight.
It actually gives a feel about what is happening in life and industry around. It grooms an individual to find himself fit in the corporate world. Students eventually come out with much confidence, knowledge and matured attitude and outlook. In today’s competitive world, Marketing Research forms a key player. To me, it is an orderly and insightful process of thinking about and planning for the market. This process is applicable to more than just goods and services. I think that anything can be researched – ideas, events, organization, place, personalities etc. nd that motivated me to choose this as a specialized subject. This particular process starts with entering deep inside the relevant market place to understand its dynamics and to identify opportunities to meet the felt or infelt needs. SUNNY KHAIRA M. B. A. 4TH SEMESTER ACKNOWLEDGMENT Any work of this magnitude requires input, effort and encouragement of people from all sides. I am quite fortunate to have had active co-operation of many people at different stages of the project.
Without their invaluable cooperation, I would have not been able to do justice to this report. Although it would be difficult to thank all those who contributed towards successful completion of report yet, it would be unfair on my part if I don’t thank a selected few. First of all I am thankful to God, for all the blessings he has bestowed upon me, without which it would have been impossible to complete this project. The Faculty members at C-MAT continue to have an impact on my thinking, which helped me to complete this project.
I would like to extend my thanks to all my friends for their co -operation airing data collection. Respondents equally deserve thanks as their sincere co-operation led to worthy results. Lastly, I would like to thank my parents for being the guiding force through all the phases of my life. Doing my project on this topic was a wonderful opportunity for me, for it instilled in me a great deal of confidence and ability to work hard and thereby face challenges. SUNNY KHAIRA M.
B. A. 4TH SEMESTER TABLE OF CONTENTS CHAPTER ONE INTRODUCTION …. ………… CHAPTER TWO OBJECTIVE OF THE STUDY………… CHAPTER THREE STATEMENT OF THE PROBLEM………… CHAPTER FOUR HYPOTHESIS……………. CHAPTER FIVE LIMITATION OF THE STUDY………… CHAPTER SIX……………. •Study of brand. •Information enabled supply chain management…… •Supply chain management in LG Electronics…… •Brand image, brand value. Brand equity concept. •Online brand audit. •Brand audit with reference to a specific product. •Supply chain management with other departments…. Customer focus supply chain management…… CHAPTER SEVEN RESEARCH METHODOLOGY………… CHAPTER EIGHT DATA ANALYSIS AND DICUSSION………… CHAPTER NINE GENERAL OBSERVATION………….. CHAPTER TEN CONCLUSION……………. CHAPTER ELEVEN RECOMMENDATION FOR FURTHER STUDY…….. BIBLIOGRAPHY……………. ANNEXURE……………. CHAPTER ONE INTRODUCTION INTRODUCTION Welcome to the exciting world of supply chain management. It is a buzzword probably used for the first time by the consultants in the 1980’s and later analysed by the business community.
In simple terms supply chain management link all the supply interacting organization in an integrated two way communication system to manage high quality inventory in the most effective and efficient manner. As such supply chain management is a network of facilities and distribution options that perform the function of procurement of material transformation of these materials into intermediate and finished good and finally the distribution of these goods to the end user. The supply chain exists both in the service and manufacturing sector, although the complexity of chain may vary greatly from industry to industry and from firm to firm.
As such it include internal and external function along with suppliers, involved in the identification and fulfillment of needs for material , equipment , services in an optimized fashion. It basically comprise of four principle phase: (1). Generation of requirement, (2). Sourcing, (3). Pricing, (4). Post – award activities LG supports successful execution of supply chain management through the exchange of technology and strategic alliance by incorporating strategic collaboration with professional consulting companies and core technology vendors.
LG has the capability to be a collaborative partner for the entire supply chain management. On the whole LG proposes solution that best suits the need of the customer with the past experience in executing projects in various industries. LG help to generate practical business value of supply chain management, a strategic management activity to dramatically reduce the cost and maximize the sales revenue by integrating internal a well external value chain for providing products and services to customer, and as such it focus its attention on strategic activities. CHAPTER TWO
OBJECTIVE OF THE STUDY In this project report of mine I would be focusing my attention on some of the important objective that would also be the part of my study. The following are the objectives: ?To understand the concept of brand. ?To understand the concept of brand image, brand value, brand equity. ?To study the emerging concept of online brand audit. ?To study the brand audit with reference to a specific product. ?To study inventory Turnover Ratio; ?To study channel of distribution of LG Electronics; ?To study application of Information Technology in Supply Chain Management; To find out satisfaction level of supply chain management planning; ? To find out the coordination among different departments through supply chain management; ?To know the factors effecting the decision regarding supply chain management. CHAPTER THREE STATEMENT OF THE PROBLEM ?To know the application of supply chain management in LG Electronics; ?To find out the purchasing procedure of LG electronics; ?To find out the inventory turnover ratio; ?To find out the channels of distribution or the complexity involved in the supply chain management; ?To know the present trend of information technology in the supply chain management.
CHAPTER FOUR HYPOTHESIS A hypothesis may be defined as a proposition or a setoff propositions set forth as an explanation for the occurrence of some specified group of phenomena either asserted merely as a provisional conjecture to guide some investigation or accepted as highly probable in the light of established facts. Quite often a research hypothesis is a predictive statement, capable of being tested by scientific methods, that relates an independent variable to some dependent variable. A hypothesis is a statement capable of being objectively verified and tested with the help of statistical tools.
The hypothesis which I have set is “To study the trend of Supply Chain Management in the light of Information Technology of LG Electronics”. Further this not the end of the study and as such some more hypothesis will be developed during the research work. CHAPTER FIVE LIMITATION OF THE STUDY A study is usually done with the intention to explore something new or to add a few new things to the already exiting study or research. As such when the study is done various difficulties are to be faced in collecting information and other things which ultimately leads to its own advantages and drawbacks.
My research work was a great exposure to me because I have to undergo stress and at the same time experience the actual hardship that it needs to collect information. Some of the hardship which I faced is as follows: ?Owing to the limitation of time factor research was not been done extensively as required; ?Respondents at times were hesitant in giving information as they feel it is leakage of companies information; ?The sample size was taken small, because of time and cost factor involved in it; ?Most of the information collected is from the secondary data; ?
The primary data is collected only through the middle management without the contribution of the lower management due to their hectic schedule. ?The respondents may be biased on influenced by some other factors. ?Time and money were the greatest limitation in carrying out the survey. Study Of Brand INTRODUCTION 1. Established in 1997, LG Electronics India Pvt. Ltd. (LGEIL), is a wholly owned subsidiary of LG Electronics, South Korea. It is South Korea’s second largest electronics maker and the world’s third largest appliance maker.
With headquarters in the LG Twin Towers on Yeouido, Seoul, LG Electronics is the flagship company of LG Group, one of the largest chaebols. The company has 75 subsidiaries worldwide that design and manufacture televisions, home appliances, and telecommunications devices. LG Electronics owns Zenith Electronics and controls LG Displays, a joint venture with Philips Electronics. In India for a decade now, LG is the market leader in consumer durables and recognised as a leading technology innovator in the information technology and mobile communications business . LG is the acknowledged trendsetter for he consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation. LG Electronics was originally established in 1958 as GoldStar, producing radios, TVs, refrigerators,washing machines, and air conditioners. The LG Group was a merger of two Korean companies, Lucky and GoldStar, from which the abbreviation of LG was derived. The current “Life’s Good” slogan is a backronym. Before the corporate name change to LG, household products were sold under the brand name of Lucky, while electronic products were sold under the brand name of GoldStar.
The GoldStar brand is still perceived as a discount brand. One of the most formidable brands, LGEIL has an impressive portfolio of Consumer Electronics, Home Appliances, GSM mobile phones and IT products. LG Electronics India Pvt. Ltd. , a wholly owned subsidiary of LG Electronics, South Korea was established in January, 1997 after clearance from the Foreign Investment Promotion Board (FIPB). The trend of beating industry norms started with the fastest ever-nationwide launch by LG in a period of 4 and 1/2 months with the commencement of operations in May 1997.
LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facility manufactured Colour Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. In the year 2000, LG Information & Communications merged the world’s first Internet-enabled refrigerator resulting in Global sales of refrigerators reaching the number one position. During the year 2001, LG also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit.
The beginning of 2003 saw the roll out of the first locally manufactured Direct Cool Refrigerator from the plant at Greater Noida. In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashtra that commences operations in October 2004. Covering over 50 acres, the facility manufactures LCD TV, GSM Phones, Color Televisions, Air Conditioners, Refrigerators, Microwave Ovens Color Monitors. Information Enabled Supply Chain Management in LG Electronics INFORMATION ENABLED SUPPLY CHAIN MANAGEMENT IN LG ELECTRONICS 2. INTRODUCTION The focus of management has changed over the time. The business thinking of 70’s and 80’s related to strategic planning and portfolio approach has dramatically changed. Flexibility and responsiveness has become key business drivers for the 21st century, forcing business to orient themselves along process instead of functions. Managing complex situation effectively on a real time basis for business information has become critical. Information technology has helped in making the supply chain faster, flexible and responsive.
As such LG needs to invest in information technology to make its supply chain more result oriented and challenging. Various flows in supply chain such as material, information and money can be effectively managed through information technology. It is this aspect of management that the use of information technology has assumed greater significance. Further in LG supply chain management enabled by advance technology aims at developing a technical infrastructure, linking technology and people in an effort to align advantageous information technology with the capability of organizing and facilitating customer satisfaction.
LG also aim at leveraging information tool to address the business concern relating to flexibility, quality, responsiveness and edging towards agility. Typical model of supply chain management 2. 2 ELECTRONIC COMMERCE (E – COMMERCE) The internet era has revolutionized commerce, making e- commerce a reality. The factors that have contributed to the success of e – commerce, are lower purchasing cost, reduction of inventories, effective customer service, marketing and sales etc. know time has come for the paper based business to give away to electronic business when supplier and customer will transact electronically.
This would help in reducing cost, price, and increasing savings. LG has tried to make an effective use of e – commerce. With the help of it, it is able to display variety of its product produced on the internet for the convience of the customer. This would be advantageous in two ways – ?Firstly the customer would be able to know about the product; ? Secondly it can transact purchase without actually going to the market place for its purchasing; As such LG has tried to use three important dimension of e – commerce in his day to day activities. These are as follows: ? Reach is about access and connection.
It simply means as to how many customer a business can access or how many products it can offer; 2. 3 Application of E – Commerce in supply chain management in LG Electronics Marketing and Sales Procurement/Logistics On line product information Electronic bidding Electronic selling Low cost transportation Product offerings/e-supermarkets Point to point selling Point to point warehousing Customer service Inventory Management
Repair/return/replacement High visibility On site fixing Removal of obsolete items Technical support Online status information on inventory 2. 4 ELECTRONIC DATA INTERCHANGE (EDI) EDI is interring organizational exchange of business documentation in a structured machine process able form. It consists of standardized electronic message formats for common business documents such as request for quotation, purchase orders etc.
These electronic transactions set the computer in one company /organization to communicate with the computer in the other organization without actually producing paper documents. Use of EDI in LG Electronics’ helps in providing various functions. The basic function is to provide compatibility between different systems that is easy and direct exchange of information. The second function is of store and forward. This means that orders will be sent but it will be received by the supplier as per the agreement which can be weekly or monthly.
The third and the final function performed by EDI in LG id that of Application support As such we can say if LG Electronics implement EDI properly and utilized it efficiently it can add speed and efficiency to business process enabling the organization to maximize resources and minimize waste and increase customer satisfaction. 2. 5 Benefits of various Information Technology Elements IT ElementOperationsResults in EDI (Exchange Data Interchange)•Inter organizational exchange of business documentation •Reduced transaction cost and time •Optimized Inventory •Improved decision making Increased accuracy •Improved customer service Intranet•Distribution of information within an organization•Common process for multiple functions •Two way communication between different parts of the plant Extranet•Information transaction among the clients, partners and customer•Eliminate user interface proliferation •Enhance overall performance •Real time feedback E – Commerce•Create new revenue streams and grow •Trim both transactional and overhead costs •Improve customer service 2. 6 INTRANET/EXTRANET Competitive pressures are ever increasing in global manufacturing environment.
Intranet is a means of distributing information. It allows real time feedback to flow from the manufacturing area to design and engineering groups. An intranet allows internal users to access data from external sources, while restricting access to it from those outside. The benefits that intranet provide to LG Electronics are as follows: ?It facilitates two way communication between the manufacturing floor and the areas of the plant; ? It allows distribution of many categories of information. These can be presented with a common look and feel , eliminating user friendly proliferation; ?
It ensures a common process for multiple function and enhance overall performance. 2. 7 CONCLUSION Information technology has played an important role in making the supply chain faster, reliable and responsive. At the same time it is also important to make effective investment in the field of information technology, otherwise it may not bear fruitful results. Thus on the whole it can be said that: ?Strategic decision on the supply chain design can increase customer satisfaction and save money through information technology; ?
By sharing information, supply chain partners are able to respond more rapidly to know demands at a lower cost; ? Information technology helps in reducing the operating cost by proper coordination of planning of various stages of supply chain; ? Rapid introduction of a new or modified product is possible through information technology; ? Effective inventory management, product customization, is possible through information technology; ? Detailed analysis of performance level, reporting and handling can facilitate with the help of information technology. Supply Chain Management in LG Electronics
SUPPLY CHAIN MANAGEMENT IN LG ELECTRONICS 3. 1 OVERVIEW OF LG ELECTRONICS The Foundation of LG LG was established in 1947 as Korea’s first chemical company, and also becoming the nation’s first electronics company with its expansion into home appliances in 1958. The new Corporate Identity was launched including the change of the group name from Lucky-Gold star to LG in 1995. Business Fields The wide arrays of activities that LG conducts are coordinated within three highly focused business sectors: Chemicals & Energy, Electronics and Telecommunications & Services.
Each sector has undergone systematic changes, with improved financial compositions, restructured business portfolios and realigned equity investment structures. 3. 2 LG – AN INTRODUCTION HISTORY OF LG ELECTRONICS The internationally famed company LG started off as Lucky Goldstar, a small company manufacturing cosmetics. In 1947 businessman Ku-in Hwe in Pusan in South Korea launched the company. LG entered in to the electronic business under the Gold star brand name in 1958. In the same year LG manufactured Korea’s first telephone, refrigerator and black & white television.
In the succeeding years it diversified into oil refining, construction, semiconductor and finance. LG adopted the new name and corporate identity in 1995 from the company’s two foremost brands Lucky and Gold star. Various Stages in LG’s Growth Path LG –THE COMPANY LG Electronics India Ltd. is a subsidiary of LG Group, which is a 53-year-old business group of South Korea. LG is a US $80 billion business group with 1, 30,000 employees. It is the third largest Korean Company and it started its operation in India just six years back.
LG has established its corporate office at Noida along with the production facilities there. It has a network of 17 branches in major cities spread all over India. LG is a company where they believe that people are the most important resource. It was rated as the 6th best employer to work for in India by Business Today in a survey conducted across a range of corporate all over India. “At LG we always put people first. ” this is the slogan with which the company is running its HR policy. LG believes itself to be global company with presence over 175 countries across the globe with a champion spirit.
LG LAYOUT LG Electronics, Greater Noida is located on the outskirts of the city having very little habitation. It has two main buildings- Building A and B. Building A has the corporate office, R&D Center, Washing Machine, A/C Assembly line, ELT room, Ware house, Stores etc. Building B has the CTV, Monitor line, PCB Line. On the first floor, an office with Production, Production Engineering, Materials, Quality Assurance and E-Source Department is situated. LG –PHILOSOPHY The management philosophy is ‘To create value for customers through management based on esteem of human dignity ’.
LG’s vision is to bring a smiling face to every home across the globe. The logo of LG is in harmony with their vision. The smiling face logo symbolizes five key concepts – World, Future, Youth, and Human and Technology. LG believes that an effective combination of these elements would make better future a reality for the organization. LG has been exploring ways to develop, combine and apply technologies that would customize products and services to meet customer needs and exceed their expectations. LG aims at creating a healthy and better life for every family. LG – PRODUCT IDENTITY
PI (Product Identity) means to embody and to sustain the brand image through product design. CIPD is the process to make products identity & uniqueness gradually for customers’ recognition of brand and its value. LG – CORPORATE IMAGE AND PI As an essential factor in connection between customers and company, product conveys the image of company to its customers. CIPD, Corporate Identity through Product Design, aims at propagation of sustaining LG’s identity as well as its establishment through consistent design activities, which will help us to gain the trust from customers.
LG – THE STRATEGY AND POLICY LG group has laid its foundation on three core values, which are central to the company in each and every respect of its business and working. The three core values are Innovation, Openness and Partnership. Innovation: Creating new and unique values. Openness: Responding to changing environment with an open mind and flexible behavior. Partnership: Establishing cooperative relationships to ensure the best performance as we enter fully. LG believes its core competencies to be Design, Technology, Marketing and Networking.
Marketing: The ability to clearly understand and analyze customer needs and then link them to business, continuously controlling the brand image Technology: The ability to develop unique product concepts with new proprietary technology ahead of others and then commercialize them. Design: The ability to plan projects and business effectively to maximize results. Networking: The ability to create win-win relationship opportunities based on one’s strengths in specific sectors and make them into assets. It is the integration of its value with its competencies that LG has been able to achieve the success at such a fast rate.
The company claims itself to be the most e-mail friendly company and service with a smile is the motto of the company. 3. 3 VISION OF LG ELECTRONICS 3. 4 STRATEGIC SUPPLY CHAIN MANAGEMENT IN LG ELECTRONICS The term strategy has been derived from the word ‘strategos’ which means “generalship”. In olden days it was more used in wars but with passage of time it know been implemented in all spheres whether it is management, planning etc. Without a well thought strategy an organization can not think of making big because of the growing competition and improved and better ways of production.
As such the strategy used by LG is Shorter product life cycle, improved quality, faster delivery lower price, which have define its success. It is based on the formula: Competitiveness = competitive assets x competitive process Beside this some of the important imperatives for the supply chain strategy are as follows: ? Emergence of global sourcing as a viable strategy; ?Global network of manufacturing and marketing; ?Global business process revolution and global process transfer; ? Shifting patterns of competitive advantage; ?Emergence of integrated enterprise of management system architecture; ? General trend towards integrated solutions. . 5 MAJOR TRENDS IN SUPPLY CHAIN MANAGEMENT CO- MAKERSHIP It is defined as the development of a long term relationship with limited number of suppliers on the basis of mutual confidence. The main benefits of co makership is shorter delivery lead times, reliable delivery promises, faster implementation of deign changes etc. The basic philosophy underline co makership is that the suppliers are treated as an extension of the customer’s factory with emphasis on continuity and end to end pipeline. USE OF THIRD PARTY LOGISTICS A decision to use third party logistic should be based on the organization needs, service provider capabilities etc.
Outsourcing operations like storage, transportation, improve service levels, enhance flexibility and reduce cost. It also helps in reducing investment in assets and enables organization to access to newer technology. PRINCIPLE OF PROCUREMENT Activities that are done up to the last moment like packaging, labeling, etc is known as principle of procurement. The main aim of this principle is to minimize the risk of carrying finished product inventory at various points in the supply chain by delaying product differentiations to the latest possible moment before customer purchase.
However it should be noted that postponement should not lead to compromise on the desired service level. 3. 6 APPLICATION IN LG ELECTRONICS Supply chain management has in recent years has played an important role in all the industries concerned. It has not only paved way for the induction of information technology but has also helped the manufactures in easy procurement of material and transferring the same to the ultimate consumer. Without going further in detail we try to see the application of supply chain in the following areas: RETAILERS
Retailers are the second last chain in the distribution of the product to the ultimate consumer. Since they are at constant touch with the customer they are in a better position to understand their needs and wants. As such they send request to the distributors and to the manufactures for goods which are in demand. The manufactures through a well defined supply chain are able to send goods to the retailers. In the absence of this chain the manufactures can lose the customer. Thus supply chain at as an important tool in maintaining customer satisfaction and loyalty. SUPPLIERS
In today’s scenario companies are not required to stock commodities in bulk owing to fluctuation in the market related to product preference. As such manufactures do not store raw material but place orders as and when the need arise. Here the role of supply chain comes into picture as it helps the supplier in providing material to the manufacture at an appropriate time. MARKET SEGMENTATION Supply chain helps in the segmentation of customers based on the service needs of distinct groups and adaptation to serve these segments profitability. This kind of segmentation can result in better prediction of the demand from the individual customers.
Further segmentation also leads to know the demand of the products among the customer and also to know the future customer preference. 3. 7 CONCLUSION It has been seen from the past that when ever something innovative is been introduced in the business arena it has created a platform for something to happen. The introduction of supply chain has immensely benefited the manufactures as know they have a well defined line of procurement of material and transferring the finished product to the ultimate customer. Further it creates an essence which focuses on the creation of value.
It is a network of business process used to deliver products and service. Supply chain also sees the organizational relationship in order to get the information necessary to run the business and to generate profits. This concept not only includes relationship with the internal business function but also those with all trading partners outside the firm. Brand image Brand value Brand equity 4. 1 Brand image The importance of brand differentiation based on quality, design and technological innovation was a key topic at the sixth LG Electronics PR Forum held in Beirut.
Titled ‘Shaping the Future of Excellence’, the two-day meet discussed strategy and best practice and explored the importance of PR to brand building. More than 45 delegates from LG’s regional headquarters, Seoul head office, and Middle East and Africa PR agencies attended the forum. Markets represented included the UAE, Saudi Arabia, Egypt, Jordan, Lebanon, Morocco, Tunisia, Algeria, Turkey, Kenya, Nigeria, South Africa, Iran and Pakistan. LG’s new global management strategy, Blue Ocean, aims to establish LG as a top-three consumer electronics company by 2010, doubling sales volumes, profits and shareholder benefits.
Flagship or ‘Blue Ocean’ products that demonstrate market leadership, high sales and profit performance will accelerate brand growth, and LG hopes that 30 per cent of sales and 50 per cent of profits will come from Blue Ocean products by 2010. ‘Well planned communication and PR campaigns play a critical role in achieving ambitious business goals and establishing LG as a premium brand,’ said K. W Kim, President, LG Electronics Middle East and Africa. ‘As we move away from conventional business practices, Blue Ocean demands that we deliver a genuine point of difference for LG products.
PR will bring the new strategy to life in multiple cultures and markets. ‘ ‘The sixth LG PR Forum in the Middle East and Africa has helped strengthen systems and share valuable new thinking. ‘ The forum received presentations on word of mouth marketing, e-PR, and photography. LG also invited representatives of leading print and TV media to share important industry perspectives. An issues and crisis management workshop was held on the last day of the forum. 4. 2 Brand value LG Electronics India Pvt. Ltd has 0 positive reviews and 0 negative reviews.
Established in 1997, LG Electronics India Pvt. Ltd. (LGEIL), is a wholly owned subsidiary of LG Electronics, South Korea. It is South Korea’s second largest electronics maker and the world’s third largest appliance maker. With headquarters in the LG Twin Towers on Yeouido, Seoul, LG Electronics is the flagship company of LG Group, one of the largest chaebols. The company has 75 subsidiaries worldwide that design and manufacture televisions, home appliances, and telecommunications devices. LG Electronics owns Zenith Electronics and controls LG Displays, a joint venture with Philips Electronics.
In India for a decade now, LG is the market leader in consumer durables and recognised as a leading technology innovator in the information technology and mobile communications business . LG is the acknowledged trendsetter for the consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation. LG Electronics was originally established in 1958 as GoldStar, producing radios, TVs, refrigerators,washing machines, and air conditioners. The LG Group was a merger of two Korean companies, Lucky and GoldStar, from which the abbreviation of LG was derived.
The current “Life’s Good” slogan is a backronym. Before the corporate name change to LG, household products were sold under the brand name of Lucky, while electronic products were sold under the brand name of GoldStar. The GoldStar brand is still perceived as a discount brand. One of the most formidable brands, LGEIL has an impressive portfolio of Consumer Electronics, Home Appliances, GSM mobile phones and IT products. LG Electronics India Pvt. Ltd. , a wholly owned subsidiary of LG Electronics, South Korea was established in January, 1997 after clearance from the Foreign Investment Promotion Board (FIPB).
The trend of beating industry norms started with the fastest ever-nationwide launch by LG in a period of 4 and 1/2 months with the commencement of operations in May 1997. LG set up a state-of-the art manufacturing facility at Greater Noida, near Delhi, in 1998, with an investment of Rs 500 Crores. This facility manufactured Colour Televisions, Washing Machines, Air-Conditioners and Microwave Ovens. In the year 2000, LG Information & Communications merged the world’s first Internet-enabled refrigerator resulting in Global sales of refrigerators reaching the number one position.
During the year 2001, LG also commenced the home production for its eco-friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit. The beginning of 2003 saw the roll out of the first locally manufactured Direct Cool Refrigerator from the plant at Greater Noida. In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashtra that commences operations in October 2004. Covering over 50 acres, the facility manufactures LCD TV, GSM Phones, Color Televisions, Air Conditioners, Refrigerators, Microwave Ovens Color Monitors.
Both the Indian manufacturing units has been designed with the latest technologies at par with international standards at South Korea and are one of the most Eco-friendly units amongst all LG manufacturing plants in the world. LG has been able to craft out in ten years, a premium brand positioning in the Indian market and is today the most preferred brand in the segment. Business Domains of LGEIL: Mobile Communications LG is a global leader in mobile communications, specializing in UMTS, CDMA, and GSM handsets.
Thanks to its wide range of wired and wireless options, the company is becoming a force to be reckoned with on the international market. In India LG is targeting GSM handset business in premium trend setter segment, Camera & music segment & color screen segment. Digital Appliances LG changing homes in many ways, offering customers exceptional value and convenience. Innovative digital appliances range from 100% washer dryer with direct drive technology, built-in LCD TV refrigerator, Lightwave cooking oven (solardom) to artcool split air conditioner. Digital Display
LG offers a wide range of digital display products, equipped with customer-oriented designs and technologies. With its LCD TVs, Full HD Plasma TVs, Ultra-slim Color TVs, LCD monitors LG is pulling out all the stops to remain the front-runner in today’s digital display industry. Digital Media LG has a great interest in digital media and is continually developing and producing digital convergence products that promise to enrich the lives of its customers. The company produces Laptops, Personal Computers, LCD monitors, CRT monitors & Optical Storage Devices. 4. 3 Brand equity
LG Electronics India Ltd (LGEIL), consumer durables leader with 27% market share, is planning a brand new image. To attract aspirational and young consumers across India, company will roll out a new marketing strategy. The exercise will cost the company Rs 360 crore. V Ramchandran, Director – Sales and marketing, LGEIL says, “In the last ten years since the parent company launched India operation under LG Electronics India, we assumed leadership position in home appliances and consumer durable items. Company was focused on the segment as per consumer demand. However, the scenario is different now. ” Besides reliability and affordability, there’s an aspirational value attached to electronic appliances, a sea change from the past. And hence the image makeover. The first step, to communicate LG’s quality and brand equity, has been the launch of Brand Shoppes, dedicated outlets of LG products in metros. ” Ramchandran says. He explained, ”Young consumer is aware about new designs and advanced technology. Top class consumers spend more and don’t mind spending more to fulfill their aspiration. In India 50-60 % consumer are young and willing to purchase new, different, attractive and exciting items. ”
In a bid to meet the challenges of an increasingly mature retail environment in the country and redefining the standards for digital lifestyle retailing, it is necessary to focus on brand image. LG Brand Shoppe goes beyond the concept of a normal exclusive store by having a more interactive environment and additional lifestyle orientation on display so that the customer can actually experience the LG products in his or her own home settings. ”Company is setting up a chain of exclusive premium showrooms. LG plans to launch 60 premium Brand Shoppes by the end of the first quarter of this year,” he said.
At present, LG has a total of 83 LG stores across the country, of which 45 are shoppes and 38 are exclusive stores. Brand shoppes will be placed in the premium segment and the target audience will comprise buyers interested in premium and high end products. Online Brand Audit 5. 1 Online Brand Audit Every day at Friends of the Earth Scotland we receive calls asking us about environmentally friendly products: whether it is really worth recycling and how to go about greening the office. Our Online Audit is designed to answer these questions.
It is aimed at those putting green office policy into practice and those who want to protect the environment but may not have the time or the money to immediately overhaul the workplace. To work towards a greener office environment we all have to look at the resources we use and reduce the waste and pollution that is created each working day. We hope that this audit will provide solutions and guidance in creating that greener office. Greening the Office Online Audit The audit includes basic information on identifying environmental impacts and finding solutions.
The majority of the questions will apply to all offices. Supporting Information The fact sheets provide practical information on the main topics. There are also directories of web based links to sources of further information, green office suppliers, environmental calculators. Green Office Action Plan For even more information on Greening the Office, we have produced a comprehensive easy-to-use guide, the Green Office Action Plan (GOAP). It has additional background information on all the topics (and more) included in our Online Audit.
The GOAP includes practical “blow-up” pages, audit templates, facts and figures, green suppliers and additional sources of information. All information contained in the Green Office Online Audit, including details of companies, organisations, their products and services is believed to be correct at the time of initial launch in June 2003. Friends of the Earth Scotland cannot be held responsible for any services or goods offered by the companies contained in the Directory, nor do we endorse any environmental claims made by the said companies.
Supply Chain Management with other Departments SUPPLY CHAIN MANAGEMENT WITH OTHER DEPARTMENTS 7. 1 INTRODUCTION A supply chain management is the hub of a large part of a company’s business activity. By its very nature, it has tried to maintain cordial relationship with all other departments in the firm, as well with the supplier’s. The reason been as it has to operate in accordance and in line with all other departments. I have tried to learn the role of supply chain with some of the departments in LG Electronics, to which a brief description I am giving below: . 2 SUPPLY CHAIN AND MANUFACTURING Supply chain plays an important role in the manufacturing, because it aims at procurement of material at the right time and through the right channels. Maintaining coordination between the two pays off in many ways. It assists in the efforts by obtaining faster responses from the supplier, working with suppliers to improve their capabilities etc, which is generally not seen in the common scenario. Other important issue noticed is that of the information technology which have greatly simplified the relationship between the two.
Use of computers and other sophisticated software allow the firm material resources planning system to communicate seamlessly with the counterpart system at the firm suppliers. All these factors contribute a lot in reducing the direct cost and offsetting the increase in the material coast, besides adding added benefits like of skilled machinists and expensive machine tools and other high priority work. 7. 3 SUPPLY CHAIN AND MARKETING Supply chain should be marketing best friend as it directly or indirectly affects the sales process of LG Electronics.
Further in case the product is not demanded or the sale is less than in that case the supply management department can be intimated and they can further reduce the procurement of the material from the supplier. Beside this supply chain also provides immediate information regarding increase in the material price. This helps the marketing department to evaluate the effects of rises in price estimates given for the future sales quotations, on current selling price and on plans for the future product lines.
As such LG Electronics emphasis that the supply chain and marketing department must wisely blend their interest in the area of customer. There should be a correlation between the two so that what ever has been advertised by the marketing department is been produced and delivered to the customer. This is only possible when the supply chain of the organization is efficient and effective in the procurement and maintaining a regular flow of material in the organization. 7. 4 SUPPLY CHAIN MANAGEMENT AND FINANCE
The finance department of LG Electronics is charged with two principle responsibility – obtaining funds and overseeing their use. Supply chain of LG is responsible for as much as 80 percentage of firm’s financial resources. As such the chief financial officer has a vested interest in cost efficient supply chain management. This department has some very important role to play in supply chain as it determines the amount of resources that the firm needs to procure, when to procure, what to procure etc.
If this department of LG is not efficient it will not be able to make an impact on the supply chain as everything is depended upon the financial resources. Further it helps in effective investment so that the company does not have to pay higher price for the same material at the later stages. Further it make prompt reimbursement to supplier which ultimately helps in maintaining goodwill in the minds of the supplier and also obtaining good quality of material at lower cost. As such supply chain and the finance department should coordinate on expenditure that has significant impact on the firm’s cash position. . 5 SUPPLY CHAIN MANAGEMENT AND QUALITY In LG Electronics major emphasis is been given to quality both in terms of raw material procurement and finished goods. As such quality professionals are involved not only in maintaining quality but also undertaking the development of new products, sourcing and minimizing quality problem throughout the supply chain. 7. 6 FOUR PHASES OF SUPPLY CHAIN MANAGEMENT IN LG ELECTRONICS The four phases of supply management require many perspective and inputs best obtained through a cross – functional approach.
The four phases of supply management are as follows: 1. GENERATION OF REQUIREMENT – the generation of requirement is a critical activity that results in the identification of material to be purchased, along with the development of specification and statement of work describing the requirements. This is an important phase since most of the designing is done relating to purchasing material, service and equipment. It also takes into account the commercial issues like cost, availability, substitute and alike. 2.
SOURCING- the main aim is relating to the identification and selection of the supplier whose cost, quality, technology, dependability and service best suits the need’s of the firm. Thus it not only aims at identification but also in maintaining cordial relationship with them. 3. POST- AWARD ACTIVITIES- this activity ensures that the firm receives what was ordered on time and at the price and quality specified. The activities that are been included are supplier development, technical assistance, troubleshooting, and the management of contract and the resultant relationship. 4.
SUPPLY MANAGEMENT SYSTEMS- it is very important for a firm to have a management system. A cross functional approach to supply management allows each functional area affected by the procurement of material, equipment, and service to be involved at a point where it may contribute to the lowest total cost. For instance we take the case of ‘operation has it in the productivity implication of different material’. Although such activities do not participate early enough to voice their concern and needs. Customer Focus in Supply Chain Management CUSTOMER FOCUS IN SUPPLY CHAIN MANAGEMENT . 1 INRODUCTION Supply chain management has in recent years has acquired immense attention in the industry circle. The growing interest can be attributed to he rapid changes in the global business scenario. It has know been looked upon as an expanded responsibility to attain value optimization, and to compete on a variety of dimension such as cost, quality, and flexibility. As such when we focus our study towards customer we basically try to identify: ? The significance of customer in the supply chain; ?The importance of customer-driven strategies; The various strategies of customer satisfaction; ?The imperatives for supply chain management; ?The rationale of supply chain management towards customer. 8. 2 FOCUS ON CUSTOMER SERVICE Effective customer service has become a competitive requirement and a way to attract and retain customer. A focus logistics and customer service strategy is still a dream of various companies, to which LG is responding positively. The reason been the company articulated and consistent customer service goals and the logistic function within the supply chain management has dominantly remained focused.
Despite all these efforts it is still trying to accomplish a complete customer service by taking into account the following: ? To provide a quantitative understanding of the customer requirement for each element of customer service, like delivery, reliability, availability etc; ? To measure the relative importance of each element of customer service; ? To asses the performance of the company and of its major competitors for each element of customer service; ? To provide an understanding of the relative significance of customer service issues related like price, product and quality.
These above mentioned service can be of great benefit if properly conceived and implemented. Beside this, survey can provide a clear direction to the logistic function allowing it to focus energies on creating and managing a system that most efficiently achieve the consensus. 8. 3 CUSTOMER SEGMENTATION A useful and very powerful tool for understanding the customer requirement is to segment them on the basis of some common characteristics. This helps the company to have a bird’s view about its customer. Especially in case of onsumer durable industry like LG Electronics whose focus is on understanding customer requirement and organizing activities to serve the customer. But in the era of cut throat competition LG is trying to device new ways of grouping customer. One of these approaches is account segmentation which organizes customer into common groups based upon their common attributes. Through this approach LG is trying to identify market segment that is well positioned to serve and than organize its product and service offering to serve them in a distinctively superior way.
Another way is the creative account segment which allows them to think new ways about the customer requirements. 8. 4 CUSTOMER – CENTRIC SUPPLY CHAIN In the context of present scenario ‘customer satisfaction’ is something that keeps on revolving in the minds of the competitors with reference to as how they could capture the market and have their dominance in terms of their product in the market. As such the focus has know shifted from product centered to customer centered because customer is considered as the king and unless they do not consume the products the company cannot be successful
At times we do hear that companies are not able to mark their presence in the market in terms of their product, and if we go for the reasoning we find that there are two attributes or reasons-not keeping in mind customer requirement, and because of not having a clear statement of vision and mission. When we talk in terms of LG Electronics we find that LG because of its sound policy and practical approach is able to provide the best service in the industry besides keeping lower cost than that of its competitors.
This has being possible because it has prepared a clear written statement of his mission of the supply chain which is in consistent with key corporate strategic thrust. This helps LG in attaining its target and remaining its loyalty towards its customer. These targets further acts as guidelines for designing and fine tuning the supply chain system and to track actual performance against the target that has been set. Know we take into consideration the various important aspects of customer service on which LG Electronics has emphasized and because of which it has mastered its success at the global level.
These important aspects are: ? Ability to fill the complete order ?Accurate documentation ?After- sales service ?Assistance with design changes ?Availability of spare parts ?Competence and availability of technical representatives 8. 5 ENVIRONMENTAL FACTORS Environmental factors also do have a strong bearing on the manufactures to produce goods which are acceptable to the society and are appreciated. If the factors are not taken into consideration then it would be very difficult for the company to sell its products in the market. Based upon these LG Electronics always take into consideration these factors.
As such I have tried to identify these factors, which are been divided into two parts: 1). External Economy 2). Internal Management External Economy: ?Recessionary economy ?Rising/falling prime interest rate and condition of equity markets ? Increasing international regulations involving – 1) Product Related 2) Environmental (ISO 14000/Euro II) 3) Safety ?Increasing transportation cost Internal management ?Repositioning supply chain management ?Integration and upgrading of customer order processing function using IT ? Computer modeling of large scale distribution system ?Pressure on inventory reductions from top management Better use of data processing capability using IT ?Experience gained from period of product shortage with lower customer shortage service levels specially in developing economies As such LG Electronics focus its attention on serving their customer the way their customer wants to be served for that it must address five important areas: ? Understanding customer service needs ?Value added capabilities ?Redesign the logistic network structure and operating policies ? Identifying the performance level or the level of acceptance along with a comparison with key competitors CHAPTER SEVEN
RESEARCH METHODOLOGY It is a conclusive research which is based on operational procedure of LG Electronics. The finding of this project is based on qualitative data rather than quantitative data. Therefore the major finding would be dynamic in nature. The analysis of this project is presented through graphical presentation based on data collected. Some of the quantitative and qualitative method will be used as per requirement of the research work. SOURCES OF DATA COLLECTION In this study of mine I would be collecting the data through two sources, which has been as follows: Primary Data: . Personal interview 2. Questionnaire Secondary Data: 1. Journals 2. Magazine 3. Company Bulletin 4. Search Engine – Google CHAPTER EIGHT DATA ANALYSIS AND DICUSSION An Overview This chapter focus its attention on the data analysis of the responses received as a part of the questionnaire that was been filled by them. The graphical representation would also help me in proving my hypothesis which I have set in my study. Along with that I would be focusing my attention on some others aspect but they will be correlated to supply chain in some form or the other.
The graphical representation would be self explanatory; beside this some data in form of theory would also be written to help the reader or the evaluator to understand it completely. 8. 1 Use of information technology while implementing supply chain management Information technology has always played an important role in the diversified field. When we specifically talk in terms of supply chain of LG we found that employees are willing to accept it, as responded by them in the questionnaire since it indirectly benefit them. The following diagram 1 represents the same Note N represents sample size . 2 Results delivered by supply chain This diagram 2 includes the response of basically of the middle management who are in a better position to say about the whether supply chain has delivered results to LG Electronics or not. Note N= Sample size 8. 3 Purchasing of additional software for supply chain Note: N = sample size 8. 4 Application of Information Technology in supply chain Here the main reason for asking such a question is to know the application of IT with special reference to satisfaction level. Note N = sample size 8. 5 Reason for implementing supply chain
When organizations introduce something new there is some purpose or logic behind it. In case of supply chain we have tried to figure out the context in which the concepts is implemented and the area of its greats impact. The diagram 5 represents the logic or purpose Note N= sample size 8. 6 Training to employees about supply chain In this diagram 6 we our trying to figure out the complexity involved in supply chain training or that it a simple way process. In this question I got a mixed response from the employees, because a different kind of training was provided to different employees.
As such a standard training is not given to all the employees. Note N = sample size 8. 7 Performance response of supply chain working Note N = sample size 8. 8 Preference for the procurement of material Supply chain of LG Electronics is depended on the procurement of material. Since the material is required on a continuous basis the management of the company needs to identify the preference sources from where to procure material. Diagram 8 represents the source from where the material is taken along with percentage quantity. Note N = sample size 8. Supply chain management effect on decision making LG Electronics as researched has tried to offset a negative impact of decision on the flow of supply chain. Due emphasis is paid to see that there is no delayed action that directly or indirectly affect the supply chain. Note N = sample size CHAPTER NINE GENERAL OBSERVATION FINDING OF THE STUDY ?Supply chain management is a relatively a new subject of study, therefore should be cautiously be used in order to be effective; ? The primary data collected revealed that employees show enthusiasm towards the new concept introduced; ?
The research reveals that supply chain is most effective in the procurement and distribution of goods; ? The future prospects of supply chain are challenging and competitive; ? The research reveals that the objective of supply chain is to achieve operational excellence; ? Supply chain facilitate executives in formulating a comprehensive strategy and control framework; ? Supply chain is an effective tool for increasing profitability, market share, and responsiveness; SWOT Analysis of LG Electronics Strengths: ?Young and Dynamic management; Strong desire among the employees to improve the existing system and procedure; ? Broader frame of mind of employees reflected by their acceptance of changes in their working patterns; ? Company’s name and its goodwill in the market. Weakness: ?To much paper work is involved in the procurement of material; ? Not a healthy information storage leading to delays in passing orders; ? Too many vendors; ?No specific standard for the procurement of material. Opportunities: ?Growing market for consumer durables which makes an effective supply chain use; ?
Information technology can be effectively explored; ?A field of study with lot of growth opportunities; ?Increased market share due to quick flow of finished products. Threats: ?Not easy flow of material as desired due to increased competition; ? Technological advancement is a major threat ; ?Numbers of competitors. CHAPTER TEN CONCLUSION Managing faster supply chain has become imperative to gain and sustain competitive advantage. The challenge of the modern manufacturing company is to keep a holistic approach towards the management for remaining competitive on an international basis.
The focus is on the increasing importance of the supply chain function to corporate competitiveness As such a study of 100 random samples of LG employees in supply department was conducted in order to understand the effective use of supply chain management and its application in the light of information technology. Research was conducted accordingly and a favorable response was seen among the employees towards the adoption of supply chain management which can be seen from the graphical representation. The conclusion drawn is that most of the employees feel that use of information technology in supply chain would definitely going to enefit the organization in the long run. Thus the hypothesis set by me is accepted since LG do believe that information technology has important role to play in the supply chain management. Further they should form a strong customer and supplier database and underline some strategies in order to promote the supply chain and make employees aware about it. CHAPTER ELEVEN RECOMMENDATION FOR FURTHER STUDY Supply chain management is an integrated document useful for understanding the most essential business process of an enterprise and useful in confronting emerging challenges posed by the external environment.
In my study of supply chain management in LG Electronics, I have tried to depict, supply chain in the light of information technology. That is how information technology can be a useful tool in the implementation and successful operating of supply chain. As such following are the recommendation for further study in relation to the points that needs to be focused: ? To study the benefits of an integrated framework for a coordinated system working and its effective use relating to supply chain; ? To study the recent developments in the field of Information Technology and its use in supply chain; ?
To understand the implication of various technologies on the supply chain; ? To understand the significance of an environment friendly supply chain; ? To understand the basic trade off involved in the selection of supply chain; ? To study the benefits of being competitive through the elements of supply chain management strategy as used by. BIBLIOGRAPHY 1. Essential of supply chain management By Dr. R. P. Mohanty and Dr. S. G. Deshmukh 2. World class supply chain management By Burt. Dobler. Starling 3. Journal on Industrial technology 4. Journal on supply chain management 5. Company Bulletin, Magazine, newspaper 6. www. google. co. in . www. lg. com REVIEW OF LITERATURE The first view of purchasing was the material management concept. Undoubtedly this movement was accelerated by the Second World War – the rapid growth of aerospace firm and the influence of military logistic. But by the end of mid 1950’s, material management concept gain significance with the introduction of supply chain management. The manager of the organization felt that production control and in plant material movement was their function. As such material requirement planning was forced in the organization, to look at the entire flow of both incoming material and outgoing finished goods as a system.
In between them the purchasing was caught with constant changing delivery dates, order and quantity etc. As such a book written by “D. N. Burt” represents a major bridge from material management to supply chain management. He develops cross functional team approach which is build on synergy advantage of material management but expanded it to include suppliers. Here the major ownership is being on ownership cost. As such supply chain management is the upstream of the organization value chain and is responsible for ensuring that the right material service and echnology are purchased from the right source, at the right time and is directed towards the end or the ultimate user. Questionnaire 1. Which Supply Chain Management software/Method do you use? ?Please specify. .. .. . . 2. Did you make use of Information Technology when implementing your supply chain management software? ?Yes ?No 3. Did your supply chain software deliver the result expected or promised by the company? ?Yes ?No 4. Did your supply chain software require additional expenditure to customize the program to your company operation? ?Yes ?No 5.
How often do you need to purchase upgrades for your supply chain software? ?Often ?Sometimes ?Rarely ?Do not purchase 6. Would you like to purchase additional software for the company? ?Yes ?No 7. How satisfied were you with the application of Information Technology in supply chain management? ?Satisfied ?Somewhat Satisfied ?Undecided ?Dissatisfied 8. What was the main reason you to implement the supply chain management? ?Planning ?Map out supply chain function ?Solve conflicting objective within supply chain
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