[The Jolt] LG to save US$320m by 2010 on SC efficiencies

Korea - LG saved US$85 million on-year in Q109 due largely to their supply chain optimisation legacy, and aims to up this number to US$320 million by 2010. Companies looking to cut cost can follow their footsteps and build an effective supply chain management system.

Highlighting LG supply structure management is timely as vulnerability to supply chains is a key factor negatively affecting the bottom lines of companies in Korea.

According to the Korea Times, Nam Yong, CEO of LG has ordered key staff members to gain an understanding of risks to make a better supply chain by emphasising the mapping of key supplier dependencies as the first step in taking control.

"Our inventory is arranged to last 40 days, down from 50 days thanks to more accurate sales forecasts and on-time deliveries,'' said Didier Chenneveau, chief supply chain officer of LG Electronics.

Chenneveau continued, "Open bidding systems targeting global logistics companies and the efforts to cut costs in shipments have paid off.''

According to the company's spokesperson, LG has saved approximately US$85 million on a smoother supply chain in the first quarter year-on-year.

Previously, Chenneveau hinted at forming a joint venture with other companies to set up a "supply chain management belt,'' the newspaper reported.

"Still, we are in the process of optimising and sharpening our supply chain management systems. More time will be needed for a joint venture,'' said an LG spokesperson.

LG Electronics plans to save US$320 million with the help of better supply chain management systems by 2010.