LG ELECTRONICS SEES SAVINGS OF USD 400 MILLION THROUGH SCM INNOVATION
Seoul, Korea - LG Electronics (LG) is reaping the benefits of its revamped supply chain management (SCM) system, with savings amounting to USD 350 million from January to September year-to-date. The company projects the year to close with a savings of USD 400 million and expects cash flow to increase by more than USD 800 million.
One of the biggest issues facing consumer electronics companies has always been inventory turnover. As of the end of the third quarter, LG’s inventory turnover period is down more than 10 days from the previous year and has resulted in a cost reduction of approximately USD 150 million. Cost of logistics improved by 15 percent year-to-year which represents a total reduction of USD 200 million.
Sales Forecast Accuracy (SFA) improved by 40 percent over last year doubling from the first quarter of 2008. On-Time Delivery (OTD) also improved by 10 percent over last year.
“Efficient supply chain operation is the key to gaining a competitive advantage in a global business,” said Didier Chenneveau, LG Electronic’s Chief Supply Chain Officer. “We have also been working to minimize carbon emissions at every stage of the supply chain. Sustainable management is a top priority at LG.”
Chenneveau, a 20-year HP veteran, spends more than one-third of his time visiting LG’s local operations figuring out new ways to improve their supply chain operations and eliminating inefficiencies. Chenneveau cites close cooperation between headquarters, business units, regional operations and subsidiaries as well as strong support from senior management to be the key drivers of his success.
The company is finalizing a system to standardize and optimize inventory turnover indicators, which will be applied to every product companywide during the first half of 2010. Europe and Asia in particular are seeing visible performance gains as a result of regional optimization by reducing the total number of storage facilities.
LG is investing heavily in SCM innovation over three years with the aim of establishing a best practice SCM system in both process and execution by 2012.
One of the biggest issues facing consumer electronics companies has always been inventory turnover. As of the end of the third quarter, LG’s inventory turnover period is down more than 10 days from the previous year and has resulted in a cost reduction of approximately USD 150 million. Cost of logistics improved by 15 percent year-to-year which represents a total reduction of USD 200 million.
Sales Forecast Accuracy (SFA) improved by 40 percent over last year doubling from the first quarter of 2008. On-Time Delivery (OTD) also improved by 10 percent over last year.
“Efficient supply chain operation is the key to gaining a competitive advantage in a global business,” said Didier Chenneveau, LG Electronic’s Chief Supply Chain Officer. “We have also been working to minimize carbon emissions at every stage of the supply chain. Sustainable management is a top priority at LG.”
Chenneveau, a 20-year HP veteran, spends more than one-third of his time visiting LG’s local operations figuring out new ways to improve their supply chain operations and eliminating inefficiencies. Chenneveau cites close cooperation between headquarters, business units, regional operations and subsidiaries as well as strong support from senior management to be the key drivers of his success.
The company is finalizing a system to standardize and optimize inventory turnover indicators, which will be applied to every product companywide during the first half of 2010. Europe and Asia in particular are seeing visible performance gains as a result of regional optimization by reducing the total number of storage facilities.
LG is investing heavily in SCM innovation over three years with the aim of establishing a best practice SCM system in both process and execution by 2012.
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