IntroductionLG Company was originally established in the year 1958 as Goldstar, producing TVs, air conditioners, radios and refrigerators. LG was a merger of two Korean companies, this are; Goldstar and lucky, from which they derived the abbreviation LG (James and Roetteis 16). Before the name changed to LG, household items were sold under the name of Lucky, while electronics were sold under the name of Goldstar. LG has intensified its supply chain management in order to save on the cost thus increase efficiency in its production line. Supply chain management has been a boost to the company coordinating activities (Mentzer 243).
Parties to a supply chainThe major role of supply chain is to satisfy customers need and wants according to their taste, fashion and preferences. There are four main parties involved in a supply chain in all companies if not all. This includes; the producer or the manufacturer, wholesalers, retailers and finally the consumer. Each one of these parties plays a vital and distinct role from the other. The LG producer’s role is mainly to manufacture items such as phones, TVs radios and so on.
They are solely responsible for ensuring that the goods have reached into the market. At this stage, the wholesaler will then be introduced. A wholesaler is a person who buys commodities in large quantity and enjoys benefits thereafter (Shah 268). The wholesaler will then pick the goods from the producer’s warehouse and take then into the market. On the other hand, the retailer will break the bulk into smaller quantities for consumer to be able to buy with regard to their real income. This means that the LG items will be sold as a unit of production but not as wholesale production.
The LG retailer is also responsible in ensuring that the goods are all over the country. The consumer is the final user of the LG items. The main aim of this supply chain is to enhance consumer utility. Utility refers to the satisfaction derived from using a commodity (Bidgoli 28). LG Company has chosen on external supply chain. An external supply chain involves other companies. On the other hand, supply chain management engrosses the relationship between the customer and the sales as well as the suppliers through procurement roles.
The LG Company chose on this type of supply because (1) it enables its members to reduce the costs with redundancy as well as duplication, (2) it allows the chain to serve the selected customers with the company very well, and last but not least (3) it helps to motivate workers through comparing their activities with those of its competitors. The supply chain fits the overall strategy of the LG Company. It fits the company through consistency between customer’s priorities of competitive strategy and supply chain capabilities specified by the supply chain strategy.
This is evident or argued out that competitive and supply chain have the same goal or objective within the LG Company. Most of the companies have failed since they lack strategic fit or as a result of its processes and resources which does not provide enough or adequate capabilities to implement the desired strategy. LG has been able to strategically fit its supply chain in the following steps; through understanding the customers as well as the supply chain uncertainty ( this is through, identifying the customer’s needs and segment being served, quantity of material needed at each stage of production, different variety of product needed and so on), understanding the companies supply chain (this is the company’s ability to respond to wide variety of quantities demanded, handle a wide range of products, serve customers best and meet short deadline), and achieving a strategic fit.
The companies supply chain is highly certain or efficient since it allows customers and staff to make suggestion on the supply chain management.