LG Electronics 1

LG ElectronicsLife’s Good

What “L.G” stands for?

1958 Founded in Seoul, Korea as “Goldstar”

1995 Renamed “Lucky-Goldstar” after merging with “Lucky Chemical”, then L.G Corp.

L.G ProductsEntertainment

TV

Audio

Video

IT

Computer

Mobile

Home Appliances

Refrigerator

Washing Machine

Air Conditioning

Microwave Oven

Air Purifier

Vacuum Cleaner

Water Purifier

Commercial

Ref Compressor

Types of materialsRaw Materials

Metal - Plastic Work-In-Process

Modules - Motherboards - Back covers

Finished Goods Cables - Accessories

SuppliersL.G’s strategy for selecting an appropriate supplier is “High Quality – Low Cost”, so L.G may spend up to 4 months in negotiations, which include (Quality-Quantity-Price)

L.G does not depend on one supplier only but it deals with maximum 2 suppliers to avoid being under the control of one supplier.

Resigns the contract before the term ended by 2 months.

SuppliersThere are two types of suppliers:

A. Internal Suppliers (In house)

L.G Electronics deals with some suppliers working for LG group only•Heesung•Ilhai •Shin Shin

B. External Suppliers•Sharp•Al-Shorouk•Al-Arabia

Centralized or Decentralized

L.G follows the centralized way of purchasing.It does not make a step about purchasing materials or dealing with suppliers or decision making without permission of head quarter in Korea except any decision not related to the production or have a direct effect on the final product.

Production Process

Packaging

Checking

Assembly

InventoryL.G follows “Zero Inventory” strategy, where the average production per month ranges from 110 K and may up to 130 K and distributed immediately. The management Focus mainly on Export

Distributors & Retailers L.G does not contact with the final customers directly, so L.G hasn’t any store because it may increase the costs.

L.G distributes its products to:1. Maradona in Ismailia2. Carrefour3. Hyper One

OutsourcingL.G only uses outsourcing for issues that are not related directly to the production, such as:

1. Security.2. Wuzzuf “website”.

Value AddedL.G mainly focus on “High Quality” that differentiate it from others, where quality standards represent 35% of the procedures.If there are any defects in units of production volume, even there are things don't relate to the production L.G stops the whole production line until the defected units is maintained.

Bullwhip EffectThere is no Bullwhip Effect in L.G in the real meaning but L.G recently has been affected by “Dollar Crisis”, where L.G had to decrease its production volume from 110 to 80 per month, and that led to deficit.

Supply Chain Time

Shipping Materials – 23 – 25 DaysCustoms tariffs – 5 DaysInspection before entering production process – one Day

Forecasting DemandThere are two plans that L.G follows to determine how many units to produce

1. Basic Plan It’s around 6 months, L.G produces depending on 6 months sales plan of the previous period and distribute between 110k – 130k per month.

2. Moving Plan

It’s around 3 months for any modification of the basic plan, such as priority and order postponement

Customers Requirements

• Name of Models Series

Some customers complained because of names of some TVs models series such as (LG-f631 – LG-f630 , LG-f57) that led to “Customers’ Confusion”

L.G supplied every model with a “Detailed Labels” show specifications, functions, differences from other models, and differences from other medals of competitors

Thank You