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Didier Chenneveau | By Kim Yoo-chul
Staff Reporter
LG Electronics aims to save $320 million next year from better supply chain management systems.
``Our inventory is arranged to last 40 days, down from 50 days thanks to more accurate sales forecasts and on-time deliveries,'' said Didier Chenneveau, LG Electronics chief supply chain officer.
``Open bidding systems targeting global logistics companies and the efforts to cut costs in shipments have paid off,'' he said.
According to its public relations office, the world's No. 3 producer of mobile phones has saved some $85 million on a smoother supply chain in the first quarter year-on-year.
LG's supply structure management comes at a time when vulnerability to supply chain hiccups is a key factor negatively affecting the bottom lines of Korean firms that are becoming bigger with more sophisticated products.
Thus, how to minimize risks in their supply chains is everybody's concern, according to experts, with tasks coming down to handling wide-ranging issues from assessing the right sizes of inventory to fraud.
For LG, its supply line management carries added importance because it has been expanding its global presence in mobile phones and flat-screen TVs. Its relatively weaker supply chain management has been posing the biggest threat and is a chronic headache in saving costs on overseas markets.
``By steadily investing in supply chain management systems for strengthened optimization, LG plans to reach the world's top level in supply chains by 2011,'' the executive vice president said.
He declined to comment when asked about the amount LG is planning to invest to improve the systems.
Chenneveau had previously hinted at forming a joint venture with other companies to set up a ``supply chain management belt,'' though no official decision has been made.
``Still, we are in the process of optimizing and sharpening our supply chain management systems. More time will be needed for a joint venture,'' the company spokesman added.
As for its risk management strategy, LG created a team in March composed of 15 experts to work on its 80 overseas affiliates.
Its CEO Nam Yong has been consistently asking key staff members to gain an understanding of risks to make a better supply chain by emphasizing the mapping of key supplier dependencies as the first step in taking control.
Chenneveau, who spent over 15 years at U.S.-based Hewlett-Packard, joined LG in 2008 as part of Nam's globalization efforts.
yckim@koreatimes.co.kr |
