LG LCD TV: Supply Chain Management in Europe Introduction Korean consumer electronics and home appliances manufacturer LG, requires no introduction in international market. With their superior abilities in meeting the customer requirements in consumer electronics segment, LG is currently operating in most of the continents and regions and causing immense challenges to the competitors. Europe is one of the prominent markets of LG because of the huge business potentials there even though Chinese products are raising stiff challenges to LG in Europe. Europeans have a soft corner towards LG products compared to the competing Chinese products because of the political factors; China is ruled by communist regime whereas South Korea is ruled by democratic regime.
The superior supply chain management including transportation, suppliers, production, purchasing etc helped LG to handle their European market operations more effectively than the competitors especially in the LCD TV market in Europe. This paper briefly analyses the supply chain management; transportation, suppliers, production, purchasing of LG LCD TV in European market. Transportation According to chief supply chain officer for LG Electronics Didier Chenneveau, the i2 tool has helped LG in the transportation management piece, which implemented in a certain region of the world.
It helped LG in optimizing the routing, optimizing the network and trying to optimize the loading of the truck and currently LG is working with i2 in Europe to achieve better results (Thomas). i2 solutions for transportation and distribution is designed to create quantifiable value by synchronizing those critical transportation and distribution processes across multiple modes, enterprises, and borders, while driving optimal operating efficiencies and greater service performance (Transportation and Logistics). LG is aiming to achieve the number one consumer electronic and home appliance brand in the world and for that purpose they have realized that their supply chain management in general and the transportation in particular needs to be improved across the world and in Europe.
They are not keeping excessive inventory of any of their products especially the LCD TV in the European market. They know very well that with their superior abilities in supply chain management, they can reach any of the European market within no time if the inventory falls below the required levels.
Thomas (2010) has mentioned that LG has a supply chain council, which is made up of leaders from the various businesses and some of their key regions (Thomas). LG supply chain managers organize the transportation of LG goods across the European market after the meetings with these regional leaders. Thus LG was able to avoid unnecessary problems in the transportation of LG goods in Europe. Supply In order to ensure adequate supply of LG goods especially LCD TV across Europe, LG Electronics has established integrated call centers in fourteen subsidiaries in Europe into a single call center (TDM: Time Division Multiplexing).
The integration of different call centers into one helped LG to achieve centralized control over the supply of LG LCD TV across Europe. It is possible for LG to supply LG LVD TV’s based on the demand in different markets in Europe. It is not necessary that LG goods move equally well in all parts of the Europe. For example, in Eastern Europe, LG is currently facing stiff challenges from the competitors and the demand for LG LCD TV in Eastern Europe is less.
Because of the centralized control of the call centers LG was able to adjust their supply strategies even at the last moment. LG also focuses more on Web-based IPCC (Internet Protocol Contact Center) method to its integrated call centers. Compared to the ordinary telephone methods, IPCC is more effective as it enables LG to receive and transmit voice and data simultaneously via the Internet in managing data at the central server, thus boosting service treatment rates drastically and enabling an accurate and speedy response (LG Electronics Begins Full Operation of Global Service System) Production According to the article LG Electronics to Build a Second DTV Plant in Poland, LG Electronics will invest USD 110 million in digital TVs by 2010 to increase its annual production capacity for plasma and LCD TVs from current 1.5 million units to 3 million by 2006, 4 million by 2007, and 6 million by 2010, thereby seizing No.
1 spot in DTVs by 2007 in the European market which accounts for over 40% of the worldwide DTV market (LG Electronics to Build a Second DTV Plant in Poland).
Conventional analogue Televisions were given way for the advanced digital TV’s like plasma TV, HDTV, LCD TV, LED TV etc. We are living in a digital world currently and LG has realized the business potential of digital TV’s in Europe. In fact Europe is a region where all the new products using advanced technologies tested initially to evaluate the feasibility of it in the global market. Digital broadcasting has captured the world of communication and analogue equipments were disappeared slowly from the market.
Even though the recent economic recession has caused some setbacks to LG’s ambition to become the top brand in the world, LG was succeeded in achieving its ambitious goals and objectives in its LCD and PDP businesses. Compared to the first half of 2007, LG’s LCD TVs marked a 100 percent growth in sales volume, while its PDP TVs grew 45 percent compared to the same period last year (LG Plans to Triple Productivity by 2010) LG is a socially responsible organization which values their responsibilities to the society and the environment in which it operates.
It is a fact that the LG supply chain management involves lot of vehicles across the world. These vehicles are liberating toxic gases to the environment and LG is currently conducting a study to determine their carbon footprint and carbon emissions based on their transportation and supply chain activity (Thomas). This study will help LG to recognize the volume of environmental damages contributed by LG and they can take necessary actions to reduce it. “Under the standards established by the Green Program, LG Electronics and its partner firms are assessed on their environmental management systems and hazardous substance management methods for a given product” (Supply chain environmental management).
Digital TVs like the LCD’s always causes damage to the environment when they disposed injudiciously because of the electronic components and batteries contained in it. Purchasing Darren (2009) has mentioned that LG’s 32 inch LCD TVs sales already crossed the one million mark. It is sold in 26 European countries at present and the sales across Europe already crossed 100,000 per month mark (Darren). LG was successful in reading the heart of the Europeans well and they were succeeded in incorporating ample features to the LG LCD TV’s which the competitors failed to accomplish.
Moreover, LG LCD TV s are cheaper compared to some of the major competing products like the Sony, Samsung, Philips etc. According to Reuters, LG the second biggest TV brand in the world expects LCD TV sales to jump nearly 50 percent next year as demand from emerging countries continues to grow robustly. LG accounted for 11.8 percent of worldwide LCD TV shipments in April-June, just behind Samsung with a 18.8 percent market share and ahead of No.
3 Sony with 10.7 percent (Reuters) Conclusions LG electronics is currently the second largest consumer electronics brands in the world. They are aiming to achieve the number one spot by improving their supply chain management strategies. They are already incorporated some of the modern SCM management strategies like i2 solutions in their logistics operations in order to improve the efficiency. Moreover, internet related communication methods like IPCC were also used extensively by LG to improve their supply chain performances.
LG concentrate heavily in the European market to improve the movement of their LCD TVs as they have better knowledge about the tastes of the Europeans than anybody else. References 1. Darren, Murph. 2009. “LG Sells One Million 32-inch LCD TVs in Europe, Celebrates Wildly. 23 May 2010. 2. “LG Plans to Triple Productivity by 2010”. 2008. 23 May 2010. 3. “LG Electronics Begins Full Operation of Global Service System”. 2005. 23 May 2010. 4. “LG Electronics to Build a Second DTV Plant in Poland”.
2005. 23 May 2010. 5. Reuters. 2010. “LG Predicts Near 50 Percent Jump in 2010 LCD TV Sales”. 23 May 2010. 6. “Supply Chain Environmental Management”. 2009. 23 May 2010. http: //www. lg. com/za/about-lg/sustainability/environment/supply-chain-environment-management. jsp 7. Thomas, Kelly. 2010. “LG Sets Its Sights on Number One”. 23 May 2010. 8. “Transportation and Logistics”. 2010. 23 May 2010.