Interview Questions

Full Interview with K.R. Kim

K.R. Kim:

In our first year, we didn't have any centralized IT architecture, though we touched Rs 90 crore in sales. At that time we operated only 10 branches. Today, we're spread over 47 branch offices. If you count some of the remote offices, we are present at 220 locations across the country. It's simply impossible to run a company of this size without IT; that much is evident. But IT also drives my own philosophy: The most important element for a corporation's success is how much it can empower its employees. In the 21st century, empowerment translates into information which requires IT. When we rolled out the Millennium (M) System (LG's global ERP), it was our first enterprise-wide application and it was partially meant to network and empower our employees.

 

IT's more noteworthy contribution to LG is replacing our offline learning model with e-learning. With e-learning, every relevant person knows the features of a product before it's even launched. We're now making this available to LG dealers on a pilot basis.

 

K.R. Kim:

My only concern is to make LG the most efficient and service-oriented company in the sector. IT already has the ability to update us on the status of sales, dispatches, inventory, returns, damages, etc. We would like IT to be able to make demand forecasts so that we can synchronize production accordingly.

 

What I expect from IT boils down to just one need: Information should be available instantly to those who want it. I believe in IT so much that without the IT department's approval we don't open a remote office, since we need to clear issues like connectivity and communications infrastructure.

I also discourage physical documentation and the IT team has been asked to solve this. Efficient companies are not known for cumbersome documentation, they are known for swift IT-empowered decision making.

 

K.R. Kim:

LG thrives on its dealer distributor channel. We have a strong supply chain that connects to our dealers and distributors across the country. This benefits us as well. In business a sale is not closed until money is in the kitty. Constant and IT-powered accounts reconciliation helps us ensure that we only have Rs 1 crore of bad debt in the market. For a corporation of our size, this is good.

 

In the initial days, when we had only 100 dealers, reconciliation was possible without IT. Now, we have 3,500 dealers and physical reconciliation is impossible. That's why we created www.lgdealernet.com. We square our accounts with 70 percent of our dealers through this interface.

 

K.R. Kim:

LG sells over one crore of products a year. To keep inventory at a minimum it's necessary to keep in touch with our vendors and suppliers. LG's IT team created www.lgesource.com to make this possible and for us to find out what's selling, what's not, and why.

 

At LG, sourcing is done through an electronic bidding system. This allows us to get not only the best price, but also a wide choice of vendors. Once a vendor, is selected they are provided a unique user ID and password and they merge into LG's system. The portal informs them of weekly, monthly and yearly production and when they can expect their next consignment.

Until the system was put into place, the purchase department was skeptical of dispatch schedules and was often clueless of stock status. It led to improper planning. Now we've shortened the production cycle and smoothened the process of sourcing from vendors.

When LG India started its operations, we had inventory worth a month. Now we're at half of that. The IT team has a mandate to shrink this even further. We are also trying to create a knowledge management system that's going to be connected directly with the product development system and R&D.

 

K.R. Kim:

LG India has set a target of Rs 45,000 crore ($ 10 billion) by 2010, of which exports will contribute 30 percent. Given this goal, it is necessary to adopt the fast track approach, which we can only sustain if we empower our people and business with equally fast information systems.

 

Oracle 11i allows us to do just this. It will empower our people to integrate seamlessly with other LG subsidiaries worldwide. Secondly, managing four manufacturing plants (including contract manufacturing units) is only possible using a robust ERP. MSystem was great, but a time came when it was no longer possible to make additional amendments to the system.

 

K.R. Kim:

LGezbuy.com is our answer to our B2C requirements. The portal targets Non Resident Indians who want to purchase goods for their families in India. It helps us push slow moving items, which are not always in demand. The site allows someone living in the United States to buy a product at the best price and we promise to have it delivered. If eBay can do it, why can't LG?

 

I have a dream of seeing at least 10 percent of our business coming through lgezbuy.com by 2010. At the moment it makes about Rs 20 crore.

LG is viewed as customer-centric company and we require strong customer feedback mechanisms to keep this reputation intact. That said, we are only in the initial stages of a large CRM initiative.

 

K.R. Kim:

One, I want LG to be the number one consumer goods corporation. Two, I want it to be a premier marketing organization. Three, I want to see LG as a first-rate operations company. These three goals have a lot to do with IT's contribution. The CIO's Key Performance Index (KPI) clearly mentions these three objectives. He is evaluated by how much he has empowered LG, how IT has pitched in to shrink decision-making processes and how much operational excellence he brings in. I think this is only fair. We judge the sales head on sales figures, and we should be able to judge the CIO on his KPIs. Even I'm held responsible if the region under me does not perform.

K.R. Kim:

To create an intelligent enterprise, we have to depend on business intelligence powered by IT. When we say that LG India wants to be a Rs 45,000 crore corporation, I see IT providing the platform to achieve that vision.

Remaining a leader is tougher than getting to the top. You become everyone's target when you are a leader. Staying a leader in the years to come will call for an innovative use of our IT infrastructure.