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With the
increase in competition world-wide, LG''s vision in the new millenium
is to be the best global company by year 2005. It intends to
compete in the international market with a global mindset and
provide ultimate satisfaction to consumers, employees, and shareholders.
The company''s philosophy is to create value for the customers
through management based on regard for human dignity.
To achieve
its global vision, the Indian arm of LG in India, LG Electronics
India Pvt Ltd (LGEIPL) is striving hard to make LG a well known
brand in the Indian market. The company is envisioning a total
investment of Rs 1,040 crore. This will give it a major manufacturing
presence in India in white and brown goods as well as in electronic
goods. In the first phase of investment spread till 2001, the
company has decided to invest Rs 500 crore in manufacturing
facilities in Greater Noida. This facility will be capable of
bringing out 700,000 colour televisions (CTVs), 400,000 refrigerators,
200,000 washing machines, 100,000 air conditioners, and 500,000
microwave ovens per annum.
Launched
in May 1997 in India, LGEIPL has grown tremendously in terms
of product range. The demand for LG products in the Indian market
has increased in all product segments. In a short span of 30
months, the company has started manufacturing twenty six models
of colour television ranging from 14 inches to 60 inches, 14
models of large capacity refrigerators ranging from 175 litres
to 890 litres, seven models of washing machine ranging from
5.5 to 10 kilograms, nine models of air conditioners, three
models of microwave ovens, and two VCDs. To give customers a
wide range of choice, LGEIPL has announced the launch of a new
range of digital products for the new millenium. In TV, the
range includes interactive, 100 Hz flatron, digital projection,
and LCD TVs. Refrigerators include digital focus refrigerator
and inverter refrigerator. Others consumer items include digital
self diagnostic washing machine, digital plasma AC, digital
laser sensor air conditioner, LG portable MP free, DVD player,
LG Internet station, LCD projector, digital PC video camera,
17" flatron monitor, and CD rewritable drive.
Issue
Involved
With multiple brands in each product segment and new launches
coming up every month it becomes very difficult for the company
to maintain the logistics. LGEIPL has three main warehouses
located in Mumbai, Chennai, and Delhi, which is fed by the plant
at Noida. Three warehouses in turn feed the 18 sub warehouses
situated in different states. These sub warehouses then supply
to the dealers in smaller cities. A delay in the flow of information
to the plant, or the main warehouse or to the sub warehouses
adversely affects the operation, as correct information is not
passed. A customer residing in a small town may be interested
in buying a particular brand of LG, which may not be available
at that point of time. This used to be the case in earlier times
when the information was passed through dial-up lines or through
floppies. Such a delay can result in the loss of a customer
and revenue to LG. The dealers are not in a position to give
the correct information to the customer on the basis of information
available. This results in loss of revenue for the company.
Built at a cost of Rs 4 crore, the VSAT network provides connectivity
to LG''s factory at Greater Noida with 17 branch offices and
with three main warehouses. The branch office LAN is connected
to the factory LAN. Telstra V-Comm has implemented a Single
Channel Per Carrier (SCPC) network where permanent connectivity
is provided between factory and branch offices through DAMA
VSATs but for connecting main warehouses TDM/TDMA VSAT have
been used.
The network
implemented is a star network with Greater Noida being the centre
of the star. All the links from the branch offices are connected
to Greater Noida over VSAT media. The LANs at branch offices
are integrated to the LAN at Greater Noida by a router. The
routers are connected to the data channel unit. Cisco routers
are used at all locations for LAN to WAN connectivity. For branch
offices Cisco''s 2610 routers and for head office Cisco 3640
are used. These routers are connected to the VSAT equipment
using RS 232/RS 530 interfaces. The branch office router is
capable of supporting four dial-in port for dealers and one
port for connecting warehouse through leased line. The central
office router is also capable of supporting 17 branch office
links and three main warehouses.
With the network in place, the state warehouses and the branch
offices can have an on-line information about the products available
in the main warehouses or in the factory. If a particular brand
is not available, one can also know the time frame by which
it would come out of the manufacturing plant and reach them.
This is possible as the production schedules are displayed along
with the shipment time. This way a commitment can be passed
to the dealer which can in turn be passed on to the consumer
who can wait for a definite period of time rather than going
in for a hasty buying decision.
It will
also help in better management of stock level as data can be
collated instantaneously rather than the longer procedure of
waiting for the data to come from all the warehouses, combining
them, and coming out with a report. An on-line information can
be fed to the production unit keeping a proper balance between
demand and supply.
One can keep a least amount of stock and keep on rolling the
money rather than confining the product to the warehouse. One
can keep track of the components that are imported, thereby,
reducing on the inventory front.
becoming mobile these days the company can offer after sales
service to any customer who would have moved in any part of
the country. Thus, providing value addition, which their competitors
cannot think of providing. The centralized database across all
branches gives them the information about the product and one
can use them for efficient handling.
Initially,
LGEIPL had a distributed package, which would stall work as
the branches worked in isolation. The shift to centralized database
helped in reducing the delay as it brought an integrated package
that incorporated modules of sales and distribution, finance,
customer service, and product management. The integrated package
resides in the central database located in the factory and 18
branches are on-line with it. Recently, a new version of the
package has been installed and employees are undergoing training.
To start with the integrated package is running e-mails and,
in future, will also run group Ware and workflow applications.
One can also post product launches on the network so that everybody
can have an access to it. Even competitive information can be
passed on to the employees and dealers and they can update themselves.
Keeping product information in the electronic format will also
help in migrating the company to a paperless office.