LG Electronics was founded in 1958 in Seoul, Korea as Goldstar and was later renamed Lucky-Goldstar and then LG Corp. It produces a wide range of consumer electronics and home appliances including TVs, computers, mobile phones, refrigerators, washing machines, and air conditioners. LG follows a centralized purchasing model where decisions must be approved by headquarters in Korea. It uses a mix of internal and external suppliers and focuses on quality and low costs in supplier selection. LG aims for zero inventory and distributes its products through retailers rather than direct sales to consumers.

1. LG Electronics
Life’s Good

2. What “L.G” stands for?
1958 Founded in Seoul, Korea as
“Goldstar”
1995 Renamed “Lucky-Goldstar” after
merging with “Lucky Chemical”, then L.G
Corp.

3. L.G Products
Entertainment
TV
Audio
Video
IT
Computer
Mobile
Home Appliances
Refrigerator
Washing Machine
Air Conditioning
Microwave Oven
Air Purifier
Vacuum Cleaner
Water Purifier
Commercial
Ref Compressor

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.

9. Production Process
PackagingCheckingAssembly

14. 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

15. 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

16. Outsourcing
L.G only uses outsourcing for issues that are not related
directly to the production, such as:
1. Security.
2. Wuzzuf “website”.

17. 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.

18. 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.

19. Supply Chain Time
Shipping Materials – 23 – 25 Days
Customs tariffs – 5 Days
Inspection before entering production process – one Day

20. 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

21. 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

22. Thank You