LG electronics Enterprise System

LG Electronics: Background

LG (Lucky Goldstar) is a globally spread company for different electronics such as home appliances, TV and other goods. It is present in 40+ countries with 114 subsidiaries currently and an employee network of more than 82,000 (Seth, 2018) and (Sikder, 2019). It is one of the most renowned companies for electronic manufacturing. This company is based in South Korea with its expertise on different fields such as transportation components and telecommunication devices as well (n.d, 2018) and (Essays, 2018). This LG group started off as a chemical company in 1947 later on diversifying themselves to be manufacturer in different areas ( Hoesel, 2013). Today LG envisioned itself to be the on the top 3 companies in the world and have strived really hard to maintain and sustain their business across the globe, this process was a 5 years process from 2006 to 2011, they achieved it with the help of Oracle. Oracle new ERP system the e-business suite R12 was the system implemented by LG in 2009 and after mapping and standardizing 440 critical business processes across global subsidiaries, the CIO of $44 billion LG Electronics is making his company the first ever to implement Oracle's newest ERP platform (Evans, 2009).

Nature of LG’s enterprise system

According to ICT Integration in Business (2010), Companies must constantly innovate, sustain productivity and operate internationally to be competitive in the CE industry. To do so, they usually move production facilities and sales offices around the world to meet more effectively the local customers. While this form of expansion is critical to acquiring significant market share, business processes can be complicated. Connection with the parent offices between the various sales offices is also very necessary in order to function efficiently and effectively.

LG is a company dealing with multiple products all under one umbrella and for example LEGIL is one the biggest subsidiary of LG electronics set up in South Korea and they have their manufacturing factories in India set up in April 1998 with the expense of $31 million. Demand increased in the years 1998-2004, and the organization which had different tax and duty benefits used earlier third-party manufacturing base. But with increased demand Indian and foreign plants were set up in Pune in 2004. The LG setting up of their own shops to provide a good quality service to their customers, so they can teach them and give better understanding on their goods via these shops. LG business model is really complex and to monitor the entire system requires a customized ERP software. All ERP Package modules have been designed wither prior customization to a few i.e. approximately 30 percent customization (ICT Integration in Business, 2010). The few ERP features the company really need according to Yi (2016) are:

• product planning, purchase
• manufacturing or service delivery
• marketing and sales
• inventory management
• shipping and payment
• finance 

Operational efficiency

According to Evans (2009), Seth (2018) and Essays (2018) to have the LG Company running smoothly the following things needed to be implemented by the enterprise system.

• 82,000 workers in 39 countries working in 110 offices operated by 83 independent companies across the world will be working together.
• It will remove a nightmare spaghetti platter of personalized ERP applications running on non-standard software systems at each of those 83 subsidiaries.
• 440 essential business processes across those 83 multinational subsidiaries need to be mapped, streamlined and standardized.
• Need to reduce the maintenance cost.
• You will ensure that the latest global one-instance business network will accommodate the 37 different currencies dealt with by the 50-year-old organization worldwide.
• Large and real time data hosting.
• One centralized system so the entire global infrastructure can be monitored while replacing the previous system used by subsidiaries.
•  Distributed systems for production and marketing subsidiaries.

Before implementation of this oracle centralized system, LG company was running 8 different versions of ERP system on their subsidiaries which was making their communication difficult and often the data collected was inaccurate (Essays, 2018).