10 February 2009 | Jake Kanter
LG Electronics aims to save 3 trillion won (£1.5 billion) this year to tackle the economic downturn.
The South Korean firm wants to improve purchasing procedures across the entire group by cutting out unnecessary costs in manufacturing and indirect spend. This includes categories such as raw materials and recruitment.
LG said efforts to improve its cash flow had already resulted in lower stock levels and a more consolidated, efficient purchasing processes. In addition, the company has recruited around 200 new staff in supply chain, purchasing and marketing to help deliver the cost savings target.
Procurement also collaborated in the establishment of LG's "crisis war room". This group brought together the company's five business units and eight regional headquarters to implement and manage the improvement plans. Each of the business units has set up a task force to help drive cost savings.
Yong Nam, chief executive of LG, said in a statement: "The poor performance of many global companies in the last quarter of 2008 was a wake up call for drastic action."
Last year LG appointed Thomas Linton as its first chief procurement officer. He was given the task of creating a company-wide purchasing strategy and redesigning the company's processes (Web news, 9 January 2008).