“IT has played a major role in integrating our OEMs”

Pragati Simlote

Arindam Bose, GM-IT at LG Electronics India Pvt Ltd (LGEIL)
spearheads the IT initiatives with an aim to further develop and expand the
company's business and presence in India. In an interview with Pragati Simlote
of CyberMedia News, Bose throws light on the company's successful integration
of its OEMs, based out at backward areas, through IT implementation, the
current IT implementation processes and future plans.



Please share some details on the OEMs

With our Noida manufacturing facility working at full
capacity and the Pune unit at 70 percent of its capacity, LG felt the need for
setting up more manufacturing facilities. In 2003, LG took a decision to set up
manufacturing units in one of the special economic zones (SEZ). However,
instead of setting up our own facility, we explored the OEM (Original equipment
manufacturing) system, which is also known as EMS (Electronic manufacturing
system). These OEMs are based out at economically backward areas and IT has
played a major role in integrating these OEMs with LG.



What were the challenges faced while integrating the OEMs?

We faced two challenges - the lack of
infrastructure in the backward areas and the OEM resistance to adoption of IT.
It has been a real task integrating the OEMs, keeping in view the logistics
required. 



How have you IT enabled these OEMs?

We have trained the OEMs on our IT systems and invested in their IT system also
by providing them with desktops, servers, LANs, etc. We have also made a
production package for them. With the help of Citrix middleware, LG personnel
can access the OEMs' systems and see the daily production data — availability of
raw material, requirements, etc. This also helps us in keeping a quality check
on the products supplied by the OEMs.



For connectivity, we used VSATs initially, and now we are converting them into
VPNs. Out of 20 OEMs, 12-13 of them are already on VPN and soon the rest would
also follow.



What is the direct benefit to LGEIL from the OEM system?

We had invested approximately Rs one crore initially and for
maintenance and bandwidth, an additional investment of Rs 80 lakh is pumped in
annually.

The direct benefit for the company is to the tune of Rs 20 crore per annum. It
gives LG $ 25 million in tax benefit and additional profitability of 1.5
percent - two percent per product. It also helps the company in saving
investment in infrastructure to the tune of $ 15 million.



What is the roadmap for IT implementation in the company?

Currently, we are focusing on our ERP roll out. Our current ERP, we feel, is
weak in scalability and data analysis. So we have selected Oracle E-Business
Suite. It is expected to go live on August 1, 2005. After that we plan to focus
on areas like security and field force automation.



Our future plans include connecting our OEMs and raw material suppliers so as
to facilitate direct interaction between the two. An e-learning platform for
our dealers is already up. We are also planning to set up an e-learning
platform for our OEMs so as to educate them and make them more receptive to
adoption of new technologies.