LG Electronics Enterprise System Case Study-Assignment Help
LG Electronics: Background
LG (Lucky Goldstar) is a globally spread company for different electronics such as home appliances, TV and other goods. It is present in 40+ countries with 114 subsidiaries currently and an employee network of more than 82,000 (Seth, 2018) and (Sikder, 2019). It is one of the most renowned companies for electronic manufacturing. This company is based in South Korea with its expertise on different fields such as transportation components and telecommunication devices as well (n.d, 2018) and (Essays, 2018). This LG group started off as a chemical company in 1947 later on diversifying themselves to be manufacturer in different areas ( Hoesel, 2013). Today LG envisioned itself to be the on the top 3 companies in the world and have strived really hard to maintain and sustain their business across the globe, this process was a 5 years process from 2006 to 2011, they achieved it with the help of Oracle. Oracle new ERP system the e-business suite R12 was the system implemented by LG in 2009 and after mapping and standardizing 440 critical business processes across global subsidiaries, the CIO of $44 billion LG Electronics is making his company the first ever to implement Oracle’s newest ERP platform (Evans, 2009).
Nature of LG’s enterprise system
According to ICT Integration in Business (2010), Companies must constantly innovate, sustain productivity and operate internationally to be competitive in the CE industry. To do so, they usually move production facilities and sales offices around the world to meet more effectively the local customers. While this form of expansion is critical to acquiring significant market share, business processes can be complicated. Connection with the parent offices between the various sales offices is also very necessary in order to function efficiently and effectively.
LG is a company dealing with multiple products all under one umbrella and for example LEGIL is one the biggest subsidiary of LG electronics set up in South Korea and they have their manufacturing factories in India set up in April 1998 with the expense of $31 million. Demand increased in the years 1998-2004, and the organization which had different tax and duty benefits used earlier third-party manufacturing base. But with increased demand Indian and foreign plants were set up in Pune in 2004. The LG setting up of their own shops to provide a good quality service to their customers, so they can teach them and give better understanding on their goods via these shops. LG business model is really complex and to monitor the entire system requires a customized ERP software. All ERP Package modules have been designed wither prior customization to a few i.e. approximately 30 percent customization (ICT Integration in Business, 2010). The few ERP features the company really need according to Yi (2016) are:
- product planning, purchase
- manufacturing or service delivery
- marketing and sales
- inventory management
- shipping and payment
- finance
Operational efficiency
According to Evans (2009), Seth (2018) and Essays (2018) to have the LG Company running smoothly the following things needed to be implemented by the enterprise system.
- 82,000 workers in 39 countries working in 110 offices operated by 83 independent companies across the world will be working together.
- It will remove a nightmare spaghetti platter of personalized ERP applications running on non-standard software systems at each of those 83 subsidiaries.
- 440 essential business processes across those 83 multinational subsidiaries need to be mapped, streamlined and standardized.
- Need to reduce the maintenance cost.
- You will ensure that the latest global one-instance business network will accommodate the 37 different currencies dealt with by the 50-year-old organization worldwide.
- Large and real time data hosting.
- One centralized system so the entire global infrastructure can be monitored while replacing the previous system used by subsidiaries.
- Distributed systems for production and marketing subsidiaries.
Before implementation of this oracle centralized system, LG company was running 8 different versions of ERP system on their subsidiaries which was making their communication difficult and often the data collected was inaccurate (Essays, 2018).
Improve customer/supplier intimacy
LG market depends on the service center’s attitude towards their customers. LG to provide a high-quality customer experience their ERP system needed to create a system that can be accessed by hundreds of these service centers and all integrated to one centralized system. The data was obtained from one module and then fed into the ERP CRM’s module. This also allowed them to gain control of the service levels of service engineers throughout the country. Also, LG released their customer delight campaign in which customers were provided with SMS services and voice of customer to take constant feedbacks. With the introduction of such service it boosts up the sales and benefitted them in long run (ICT Integration in Business, 2010).
Improve decision making
Decision making was enhanced by Single system centrally regulated, with low maintenance costs. Transparency in recruitment and employee assessment processes which recruit, engage and reward performance based on the right skills and demonstrated performance. Real-time data reporting makes it easier for better management and setting goals. HR is a key department and huge improvement is made to it by centrally controlling it of who to hire with locals having room to customize it (Seth, 2018), (Sikder, 2019) and (n.d, 2018).
With the new oracle ERP, they have eliminated other ERP system that were previously run and this reduced accounting closing and profitability analysis. The more reporting being generated on real time have made firm to make more decisive decisions. To ensure a smooth flow of information through the company, business processes and systems were integrated across four main business areas. By implementing identical processes worldwide, LG Electronics minimized uncertainty and allowed employees to collaborate on major projects such as global marketing initiatives and year-end account closures. Senior managers at the company’s headquarters in Seoul can now access all HR related information in real time from around the world. This gives them better insight into the numbers of the workforce and the details, qualifications and performance of individual employees, helping them to make informed decisions. (n.d, 2018).
Services
To provide a great service first the ERP must have complete control over its resources and projects to make sure scheduling is being done properly. There should be a billing system in the software as well as customers will have to be paid on various terms and billing rates should be carefully controlled and handled to ensure that the services provided are appropriately invoiced based on the time spent and the quality of service provided. Moreover there should be better visibility over its operations to make sure cost-effective decisions are made such as delivered a broken TV or wrong parcel, this causes extra surges hence ERP should be automated and fully controlled (A.P, 2018).
Create new product
According to Biswas (2018), these are the following features required in an ERP for seamless production of products:
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Inventory Tracking |
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Distribution requirement planning |
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ERP system fully automated can help with keeping tracks of raw materials and track of finished goods such as delivery time. This will reduce the human error and the cost and keep the plant running smoothly. |
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This part requires some analytics and intelligence to see if the available raw product is available enough to support the current production with the specific scheduling. |
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Quality Control |
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Project life-cycle management |
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Quality control requires careful monitoring hence the ERP have pre-set values of certain product to have good quality that is constantly being matched. If the certain product does not match the standard then a message is given to the manager so it can be resolve. |
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Each product produced has a life-cycle. This involves a number of processes it is moving through, from conception to development to delivery. A company can track and control all these steps, resulting in better product quality, decreased prices, quicker detection of new market opportunities, optimization of production and decreased resource waste among other benefits |
Business model
LG must have a software that provides flexibility as the scope of their business keeps increases hence it should be able to provide scalability and support further needs of the company. ERP software must bring mobility and compatibility which means the farewell to only desktop-based ERP and ERP software much be able to perform on platforms such as android, IOS and desktop as well. There must be openness in the software. System openness refers to the degree to which computer code can be viewed, used, and modified in a shared environment. It provides new opportunities to incorporate the physical world more directly into computer-based systems, resulting in improved performance, accuracy and revenues (Richter, 2018).
