5. Types of materials
Raw Materials
Metal - Plastic
Work-In-Process
Modules - Motherboards - Back covers
Finished Goods
Cables - Accessories
6. Suppliers
L.G’s strategy for selecting an appropriate supplier is “High
Quality – Low Cost”, so L.G may spend up to 4 months in
negotiations, which include (Quality-Quantity-Price)
L.G does not depend on one supplier only but it deals with
maximum 2 suppliers to avoid being under the control of one
supplier.
Resigns the contract before the term ended by 2 months.
7. Suppliers
There are two types of suppliers:
A. Internal Suppliers (In house)
L.G Electronics deals with some suppliers working for LG group only
• Heesung
• Ilhai
• Shin Shin
B. External Suppliers
• Sharp
• Al-Shorouk
• Al-Arabia
8. Centralized or Decentralized
L.G follows the centralized way of purchasing.
It does not make a step about purchasing materials or
dealing with suppliers or decision making without permission
of head quarter in Korea except any decision not related to
the production or have a direct effect on the final
product.
10. Inventory
L.G follows “Zero Inventory” strategy, where the average
production per month ranges from 110 K and may up to 130 K
and distributed immediately.
The management Focus mainly on Export
11. Distributors & Retailers
L.G does not contact with the final customers directly, so L.G
hasn’t any store because it may increase the costs.
L.G distributes its products to:
1. Maradona in Ismailia
2. Carrefour
3. Hyper One
12. Outsourcing
L.G only uses outsourcing for issues that are not related
directly to the production, such as:
1. Security.
2. Wuzzuf “website”.
13. Value Added
L.G mainly focus on “High Quality” that differentiate it from
others, where quality standards represent 35% of the
procedures.
If there are any defects in units of production volume, even
there are things don't relate to the production L.G stops the
whole production line until the defected units is maintained.
14. Bullwhip Effect
There is no Bullwhip Effect in L.G in the real meaning but L.G
recently has been affected by “Dollar Crisis”, where L.G had
to decrease its production volume from 110 to 80 per month,
and that led to deficit.
15. Supply Chain Time
Shipping Materials – 23 – 25 Days
Customs tariffs – 5 Days
Inspection before entering production process – one Day
16. Forecasting Demand
There are two plans that L.G follows to determine how
many units to produce
1. Basic Plan
It’s around 6 months, L.G produces depending on 6
months sales plan of the previous period and
distribute between 110k – 130k per month.
2. Moving Plan
It’s around 3 months for any modification of the
basic plan, such as priority and order postponement
17. Customers Requirements
• Name of Models Series
Some customers complained because of names of some TVs models
series such as (LG-f631 – LG-f630 , LG-f57) that led to “Customers’
Confusion”
L.G supplied every model with a “Detailed Labels” show specifications,
functions, differences from other models, and differences from other
medals of competitors
