LG Electronics' Global Supply Chain Management System Goes Live.

Business Editors/High-Tech Writers

SEOUL, Korea--(BUSINESS WIRE)--Sept. 5, 2001

LG Electronics (KSE:02610).

-- Will help strengthen LGE's competitive edge with operation integration with
overseas subsidiaries

-- To maximize operation efficiency with introduction of advanced management
system

-- Expected to save about US$54 million per business location for the next 3
years

On September 6, 2000, LG Electronics formally launched its GSCM system with a launch event at its Twin Towers Headquarters in Yoido, Seoul, Korea. The new GSCM (Global Supply Chain Management) system is expected to drastically cut down on inventory through integrated control of entire business processes from receiving orders, production to sales with an online link of LGE companies around the world.

After building the company-wide ERP system in late 1999, LGE engaged in its GEM (Global Enterprise Management) project to establish an integrated system for overseas subsidiaries. The new GSCM system is a part of that project. Another part of the GEM project will be the establishment of GFCM (Global Financial and Cost Management) system for financial management, which will also be completed soon. Both GSCM and GFCM systems will improve LGE's corporate competitive edge in the global business environment by giving the company cutting-edge business management tools.

In line with the rising importance for integrated information management, LGE built the new system to respond quickly to the rapidly changing global market demand. The system has been built with supply chain management solution and consulting service from i2 Technologies Korea. System development and implementation were done jointly by LGE and LG-EDS.

LGE's new GSCM system is differentiated from simple IT systems by combining design, parts supply, procurement, inventory, production, and cost management into an integrated process to enable strategic flow of information and gathering of standardized production data.

In other words, if existing production systems were department-level IT systems for operation automation, integrated GSCM establishes the neuron network like flexible information flow covering all company processes from outsourcing partners to customers, offering proactive and forward-looking information system that can read future changes in the business environment before determining operating direction of the organization. LGE expects savings to reach to about US$54 million (about 70 billion won) per business location for the next 3 years.

All information can also be shared in the online environment between organizations in and out of Korea to support quick and accurate decision-making processes. The new system will also increase customer confidence as buyers will be able to track their order status from production, shipment to goods receipt into inventory in real-time.

"To ensure survival in the era of e-business, companies need process innovation rather than continuous improvement of its operations. With the introduction of the GSCM system, LGE will be able to minimize the adjustment period to change," explained Senior Vice-President Young-min Yoo of Business Innovation Team of LGE.

LGE selected i2 Technologies as its partner for GSCM implementation in recognition of the company's experience and expertise gained from building supply chain systems of world leading companies like Texas Instrument, Dell, and IBM. With the new GSCM system, LGE will be able to further fine-tune quality of its operations.