LG : Using IT to minimise loss

LG : Using IT to minimise loss

LG is banking on IT to maximise its profit and productivity

Thursday, April 05, 2007

Stuti Das

LG India, a leading provider of eloctronics and home appliances, intensively deployed information technology solutions to keep ahead of competition. But the company management only seriously started thinking of implementing IT solutions in India in 1999, two years after it set foot in the country. Realizing the growth potential, it launched India's first B2C portal in the consumer durable industry-lgezbuy, which targeted the overseas segment. "The portal enabled the NRI populace to gift someone back home through this online channel," says Arindam Bose, IT head, LG India. Underlining the importance of IT in manufacturing, Bose says that IT certainly helps in cost innovation, productivity increase as well as process innovation.

	'Lack of quality manpower is an area of concern even though we follow an outsourced model in the IT department'
	- IT Head, LG IndiaArindam Bose,

Need for Solutions

The company has been using IT solutions in its manufacturing processes to maximize profits and productivity. Some of the key initiatives include RTY (rolled throughput yield) which assists in analysing stage wise losses and highlights the exact step which is a bottleneck and thus reduces loss and increased productivity; factory communication highway (FCH) which enables real time monitoring resulting in fast escalation of problems and hence fast solution.

Key Projects Implemented

Outsourced manufacturing (known as OEM) project for reducing dependency on its Noida plant, save tax and cost, reduce investment and faster time to market. All this was impossible without an effective IT system in place.

Wireless computing (WLAN) within and outside LG premises, thus enabling managers with Wi-Fi laptops and G-Tran to stay connected to LGEIL intranet resulting in faster decisions.

Remote office connectivity for linking the remote sales and service offices resulting in faster collection realization and increased sales due to local market focus.

The company follows a highly outsourced model with most of the functional areas been outsourced including ERP maintenance and development, data base administration, LAN and WAN administration, email and workflow administration, website maintenance and Citrix administration, etc.

Pain Areas

Predicting the future trends, Bose says, "ERP would be pushed backwards and instead would be provided on the mobile." For LG however the focus is to make information available on the move even as security continues to be a major focus area for the company.

Source: DataquestLike any other manufacturing company, LG India too faces a real challenge in terms of capacity planning, ie LG is aware of the market demand presently but faces a dilemma when it comes to planning for future since it is difficult to predict future demands. Bose adds that the lack of quality manpower is another area of concern even though LG follows an outsourced model in its IT department.Keeping this in mind, LG India initially adopted the M System ERP, to automate the workflow. The ERP however was bandwidth hungry and this proved to be a hurdle in the company's online operations. And with the growth of its Indian operations, the company felt a need to enhance the response time of its ERP as well as improving the scalability, security and flexibility of the existing IT systems. As a result, it adopted the Oracle E-Biz suite in 2005, which replaced the company's homegrown ERP package and saved approximately $3 mn per year. All departments including financials, purchasing, manufacturing, sales and inventory management adopted the new ERP. The high-profile migration took seven months across 200 locations and two factories.

©CIOL Bureau