LG Sees Business Integration Important for Growth

"Our widespread network posed a big challenge for IT in its bid to enable tight business integration of various key functions. We needed to track demand, supply, manufacturing status, logistics and distribution at an ever increasing rate," says Daya Prakash, head-IT, LG Electronics India.

What it needed was a system that would allow the company to better synchronize sales forecasts, production and procurement. That need could be met by GSCP (global supply chain process), a tool for supply chain optimization. It works off weekly sales forecasts inputted by branch personnel who collect sales requirements from their area. It then uses inventory and production data from the ERP, adds production and dispatch constraints, and generates a weekly production and dispatch plan.

It also has an integrated inventory management tool that links production, logistics and commercials which give LGEIL greater inventory and dispatch control. More importantly, "it better equips us to respond to the needs of multiple, increasingly customer-driven markets," says Prakash.

Finally, it reaches all the way down to the customer and lets LGEIL know when a delivery was made. The system has a Web interface that allows transporters to submit the details of a delivery, closing the loop from procurement to delivery.

The entire implementation cost was Rs 2.4 crore. And once Prakash got past training and change management issues, and the lack of basic infrastructure to implement the solution across the country, the benefits poured in. The project improved the productivity of SCM staff, reduced inventory scrap and transportation costs, and improved logistics.

Using the tool also allowed Prakash to help reduce LGEIL's defect ratio by 50 percent and the logistic cost ratio by 2.5 percent. Outstanding inventory fell from 29 days to 22 days.

The Person Behind It

Daya Prakash, Head-IT

LG Electronics India

Increasing agility and financial visibility was always going to be worth the effort