LG Electronics celebrates 10 years in Australia with exclusive feature in the popular series of magazines, 'Australia's Best'

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Tony Harris, General Manager of Supply Chain Management was selected by Australia's Best Manufacturing for an exclusive editorial feature on LG Electronics. This was released late July 2008.

Australia's Best Magazine Interviews LG on Supply Chain Management.

As LG Electronics (LG) celebrates 10 years in Australia in 2008, the company has reported a staggering growth in sales in a short period of time. Being a leader in home electronics technology and innovation has required the company to have an approach that allows for expansion as sales grow, while still maintaining control - which is particularly important when it comes to supply chain strategies. Australia's Best talks to Tony Harris, General Manager of Supply Chain Management about the key elements in LG's success.

About five years ago LG distributed its products through a number of third party arrangements, involving up to 25 different third party logistics storage facilities and multiple arrangements with transport providers, however the development of this resulted in some difficulties. LG needed more direct control so the company could provide the excellence in customer service required to continue growing sales at the projected rate, and to give LG the competitive edge in distribution.
Due to this, LG changed its philosophy on its Supply Chain structure. "It consolidated its operations into state based distribution centers that were custom designed for the range of products being handled. These centers were constructed with the latest innovations in space utilisation for improved density of storage, the best in materials handling equipment, computer controlled order picking and shipping and the right staffing to bring these elements together in harmony," explains Tony.

One of the strengths of LG and a key factor to its continued growth has been its ability to pick suppliers with shared and common goals. This is particularly true of the suppliers of goods and services to the LG Supply Chain department in Australia.

"From the LG factories overseas (using global partners to handle inbound shipments) through to the final delivery of product into a consumer's house by our local Home Delivery team, every link in the Supply Chain is as important as every other," states Tony. "It has been critically important to make the selection of partners as rigorous a process as possible, ensuring only the suppliers with the highest standards are considered as partners. Then once an agreement is reached, working with our partners towards delivering exceptional service becomes a commitment from both parties. Only by having an ongoing dialogue of an open and frank nature, can both parties benefit. If issues arise, as they sometimes do even in the best of partnerships, the environment has been created where these issues can be brought to the table in a non threatening way so that they can be resolved. The important aspect of these partnerships is that both parties agree on the direction of continued improvement, this being the only way to stay ahead of the competition."
Supply Chain Alliances

LG has steadily built its reputation as the number one supplier by taking direct control over the warehousing and distribution of its products. "We have partnered with two of the biggest and best names in the transport industry in Australia to deliver on our promise of on time delivery in perfect condition to our customers," says Tony.

For deliveries to the local metropolitan areas surrounding the state distribution centres, Allied Express have specific resources dedicated to the LG business. Each day customers are serviced by this direct "door to door" service where what they order is delivered to their warehouse or showroom in perfect condition. Outside of the local metropolitan delivery area, LG have partnered with TNT Specialised Transport whose network of transport hubs and depots can quickly and effectively deliver product to the farthest and most remote regions of Australia.

Closer to home in the warehousing environment, LG has partnered with Crown (Forklifts) for the supply and maintenance of the equipment needed to handle the internal movement of product throughout the DC. The varied size of products necessitated a variety of vehicles and Crown were able to meet the requirements - high reach, counterbalance, clamp and tyne forklift trucks are utilized to accommodate the various storage methods employed in both bulk and palletized formats. Working with Crown to design a fleet that could handle this range required close involvement in selecting just the right equipment, as well as instituting a care and maintenance program that ensured maximum up time and minimum disruptions during peak periods.

Also in the warehousing environment is the relationship with Dematic Pty Ltd. As a key supplier of storage solutions, Dematic has worked with LG to deliver leading edge solutions for storage. The use of pallet racking is widespread in warehousing, but together LG and Dematic have gone well beyond the normal single racking systems seen in so many regular installations. "To maximize the density of storage has necessitated the use of single, double deep and multi deep drive through storage bays with differing height bays to accommodate pallets of differing needs," says Tony.

"These are all relatively standard configurations available, but we have also worked together to engineer solutions outside the norm. For high density storage of refrigerators for example, we have developed extra wide pallets and storage bays that can return 50% greater storage density than conventional bulk storage by utilizing the height of the racking to extend the vertical stacking capabilities. These are Australian 'firsts' in storage density innovations now being marketed in areas where storage density is important and space availability is critically lacking. The transport needs to always be a high quality, materials handling needs to be considerate of the product and packaging, the return on every dollar spent needs to be maximized at every opportunity. By working with our suppliers to set up the right environment creates the framework to base the business on."

This on-going relationship is now as important as ever. Regular meetings and correspondence are necessary to ensure the goals and objectives set for each aspect are met. Whether it is transport KPIs for on-time delivery or a review of maintenance for forklift performance, each aspect has to be regularly reviewed. Only by this continued dialogue can both parties be sure of the direction and if necessary a resetting of goals. "What may have been industry best practice last year may not be appropriate this year and we need to change to keep pace. Innovation is key to progress and success," states Tony.

LG has benefited greatly from the establishment of its in-house distribution centers, efficiently run by totally committed, experienced DC Managers and their staff. Their dedication to the distribution of LG products, together with that of their business partners, has provided the platform for LG to achieve excellence in the electronics supply chain.

A number of key suppliers to LG Electronics were selected to participate within the LG feature - Crown Equipment, Allied Express Transport and Patrick Logistics all were included.

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CHRIS DUTTON
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