Value
chain is a powerful approach which was developed by Michael Porter under which
we analyze all activities which are being performed in a firm and then base of
these activities determines that total value which is being created for a
customer.
Outbound
Logistics, Marketing and Sales, Service and Technological Development prove to
be the core competence for LG Electronics.
Technological
Development - LG has been extremely successful
in the technical designs of their products. LG phones are generally perceived
by the customers as mobile phones that have innovative designs and consist of
latest technology. This can be proved by the fact that company has won awards such
as the ‘red dot’ design award. The major strength of LG products in the
technological development is its latest innovations. This is the case for its
pioneering touch-sensitive displays in the company’s sound grounding in 3G
technology and the overall simplicity and intuitive technology that come with
any LG device.
Marketing and Sales, Service
– LG has exclusive showrooms and services centers by the name of ‘LG Shoppe’
with branches in almost all the shopping centers across our country. LG has
always laid prime emphasis on Customer satisfaction in the development of an effective
design innovation strategy. LG’s industrial designs incorporate a balance
between concept creation and lifestyle creation, so that, the needs, desire and
dream of the customers feature prominently in the overall value innovation
process.
Outbound Logistics – For
cutting down the cost of the Outbound Logistics, LG has selected software named
JDA from JDA amalgamated which is controlling all their Logistic operation by
estimating Demand, panning the distribution and transportation. By using this
technology, the company has been able to reduce its overall cost of Outbound
Logistics by 8 percent. Over the time the company has also established a good
dealer network and also have modernized its packaging by packing as compact as
possible which appeals good to customer and is also cost effective. The company
also have strong transportation network which includes more than 7500 trucks.
Except
for the above three, which are the core competencies of LG, some of the other
activities are:-
Inbound Logistics
– LG has worked a lot in increasing the efficiency of its supply chain
management. The activities which come under inbound logistics are material
handling, warehousing and inventory control. LG has over the time made all of
this operation technologically advanced to improve their inbound logistics.
Like for example for the inventory control they are using a system known as Global
Digital Logistics System (GDLS) which maintains the complete records of their
inventory and takes care of the product lifecycle.
Operations
– The operation includes all those activities which are responsible for
converting the inbound raw material to the finished output. LG has been trying
to increase is operation efficiency by reducing the wastage and increasing the
efficiency in their current production. Their major operation advantage is that
they have their production units in India itself and what makes LG different
from its other competitors is its full commitment to add value to people in the
most efficient way by regularly upgrading is operations.
Human Resources –
The human resources are the biggest asset for any organization and LG very well
understands this fact and hence they have effectively built their HR
strategies. They have laid emphasis on making their work place safe and healthy
for their employees. Company is also using 360 degree Performance Management
system for evaluating the performance of the employees. The company is also
giving various employees reward and other benefits to motivate the work force.
All this have lead to reduction of the iteration rate of LG from 19 percent to
just 6 percent.
