Project CIS casts a golden eye on LGEIL

LGEIL's online B2B system has helped it reduce time-to-market and meet its cost innovation targets

According to Arindam Bose, LG has been able to solve the problem of model mix as per regional requirements, which directly contributes to increased sales and contributes immensely to the annual sales turnover, and all this is thanks to CIS

LG Electronics has a structured IT set-up in the 73 countries where it operates. ERP and supply chain software solutions are often pre-determined. LG Electronics prefers to use in-house solutions such as the LG-EDS-C ERP system. The evaluation process to select an appropriate package for its Indian arm started in September 2000 and lasted for a month. Bose says, “We evaluated Oracle because we have a very strong relationship with it as our in-house ERP system runs on the Oracle database.” After the evaluation exercise, LGEIL finally decided to
go in for the its own CIS (Customer Information Services) package.

Standardised systems were too generic

LGEIL found that off-the-shelf SCM packages were too generic and customising them to suit the company's unique requirements would be a considerable challenge. The CIS package, on the other hand, was already tailor-made. It has two modules-lgesource.com, which addresses suppliers, and lgdealernet.com, which caters to distributors. As the modules are linked to the ERP system, suppliers can access production plans and find out about the amount of physical stock at LGEIL's Noida manufacturing plant through lgesource.com. The module also helps keep track of quality of goods that arrive at the plant and is updated regarding rejected material. Suppliers are intimated about rejections when they log in. This helps suppliers maintain quality and replenish rejected material at short notice. Bose says, “The supplier is automatically able to know the gap between the production plan and the physical stock of the raw material through lgesource.com. It lets him plan his own production accordingly to meet demand as and when it arises.”
The implementation exercise began towards the end of 2000 and the demand-side module (lgdealernet.com) was rolled out in two months-by Jan 31, 2001. The final roll-out, which included the supply-side module (lgesource.com) was rolled out by April 2001. The implementation programme also involved pilots where the company assessed the real-time feasibility of the system. The CIS package, which was developed in South Korea, was customised to Indian conditions by the LG Soft India team. A total of 15 people were involved in the exercise. Bose says, “The main challenge for us was to convince suppliers and distributors that they were going to benefit from the package. A lot of training programmes, lasting for a day each, were conducted to motivate them.”
The company spent around Rs 40 lakh to customise the CIS solution to Indian conditions and it incurs Rs 15 lakh towards maintaining and hosting the CIS package. The solution uses an Oracle database that runs on a Sun E420 server, which sits at VSNL Mumbai.

LGEIL reaps CIS's benefits

Almost all the issues that LGEIL was facing before the CIS implementation have been solved now. Bose says, “We have been able to solve the model mix problem and have delivered appropriate models as per regional requirements ever since the Implementation. This directly contributes to increased sales for the company and contributes immensely to the annual sales turnover.” It is estimated by LGEIL that the consolidated savings as a
result of implementing lgdealernet.com in terms of manpower, transportation, communications and stationary are as
high as Rs 1 crore on an annual basis.