Supply chain efficiencies save LG millions

25 November 2009

25 November 2009 | Allie Anderson

LG Electronics made US$350 million (£211 million) savings this year by improving the management of its supply chain.

Cutting back on logistics spend by 15 per cent accounted for cost savings of US$200 million (£120.6 million). The remaining US$150 million (£90.5 million) was achieved through improvements to its inventory turnover.

A company statement said: "One of the biggest issues facing consumer electronics companies has always been inventory turnover.

As of the end of the third quarter, LG's inventory turnover period is down more than 10 days from the previous year and has resulted in a cost reduction of approximately US$150 million."

Announcing its third-quarter results, the Korean firm projected total savings to reach US$400 million (£241 million) by the end of the year and anticipates an increase in cash flow of more than US$800 million (£482 million).

Didier Chenneveau, LG Electronics' chief supply chain officer, said: "Efficient supply chain operation is the key to gaining a competitive advantage in a global business. We have also been working to minimize carbon emissions at every stage of the supply chain.

Sustainable management is a top priority at LG." The company is investing heavily in supply chain management innovation over the next few years and intends to establish and implement a best practice SCM process by 2012.

Savings yielded from improved supply chain management have contributed to LG's aims, outlined in February, to save £1.5 billion this year to help tackle difficulties resulting from the economic downturn (Web news, 10 February 2009).

 

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