LG Electronics (LG) has saved up to $350 million from January to September from its revamped supply chain management (SCM) system.

The company projects the year to close with a savings of $400 million and expects cash flow to increase by more than $800 million.

As of the end of the third quarter, LG’s inventory turnover period is down more than 10 days from the previous year and has resulted in a cost reduction of approximately $150 million.

Cost of logistics improved by 15 per cent year-to-year which represents a total reduction of $200 million. Sales Forecast Accuracy (SFA) improved by 40 per cent over the last 12 months, doubling from the first quarter of 2008. On-Time Delivery (OTD) also improved by 10 per cent over the same period.

“Efficient supply chain operation is the key to gaining a competitive advantage in a global business,” said Kevin Cha, managing director of LG Electronics.

“We have also been working to minimize carbon emissions at every stage of the supply chain. Sustainable management is a top priority at LG,” he added.

The company is finalising a system to standardise and optimise inventory turnover indicators, which will be applied to every product companywide during the first half of 2010. Europe and Asia in particular are seeing visible performance gains as a result of regional optimization by reducing the total number of storage facilities.

LG is investing heavily in SCM innovation over three years with the aim of establishing a best practice SCM system in both process and execution by 2012, said a statement. – TradeArabia News Service