LG - Successful-ERP

LG As A Case Study Of A
Successful Enterprise
Resource Planning System
By Shobhit Seth | November 11, 2014
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ERP solutions are great, but successful implementation requires careful

thought, consideration and engagement from all stakeholders. This article
discusses two examples for ERP solution of different scenarios, scales and
requirements. Covered examples include existing challenges, selection criteria
of implemented solutions and benefits achieved thereof.
LG implementation of HRMS
When the global giant - LG Electronics (LG) - having 114 subsidiaries, more
than 82,000 employees across 40 countries - tried to harmonize its HR
functions, the challenges were of a similarly giant scale. High maintenance
costs, local controls lacking transparency, inefficient decision making, under-
utilization of resources, manual processes, etc. made it difficult for LG to
operate as a global company, which then decided to take the ERP route.
The challenges for LG:
 Location specific multiple systems leading to unclear top-level reporting,

lack of optimum resource utilization
 Location specific processes lacking transparency and automation needs
for a global reporting
 Disengaged employees, limited outlook, no room for information or best
practices sharing
 Limited localized resources for employee learning & training
 Challenges with decision making, with significant business impact
Selection criteria for ERP solutions:
LG’s familiarity with Oracle technology due to earlier Oracle usage made it
easier to finalize a solution. It offered large data hosting, seamless migration
of old data, easy scalability, multiple modules addition as needed and
centralized access and control. LG hired Oracle Consulting to build a single
centralized system which integrates available Oracle HR modules for uniform
use at global level, thereby replacing location specific system dependency.
Achieved benefits:
The ERP solution, which included a data mart, performance management

system, staff portal, and e-learning application, enabled the following benefits
for LG:
 Centrally managed a single system with minimal maintenance costs

 Transparency in the recruitment and employee appraisal processes
which enabled hiring, engaging and rewarding performance based on
the right competencies and proven performance
 Real time reporting for higher management and tracking of set goals
and objectives
 Informed decision making due to readily available real time reports
 Centralized control over HR processes, with region level flexibility to
implement localized changes
 Efficiency improvement for HR functions and processes
 Cost savings due to not having to maintain multiple systems
 Easy sharing of best practices across the various centers
 Easy access self-service function made available for employee self-help
 Easy learning facilitated for common tasks through document sharing
and online tutorials, resulting in time and cost savings
 Increased employee morale, productivity and engagement
Timeframe:
Benefits surely look attractive, but it was not a cakewalk, given the large and
distributed scale of ERP system implementation. Spanned over 5 years (2002-
2006) in five planned phases with clearly set objective, the ERP solution
enabled LG to mitigate the challenges posed by vastly spread global centers,
for its Human Resource Management System requirements. Today, LG
continues to benefit with the automated ERP solution, and continues to
enhance it further as needed.
Webhosted ERP solution for Fuze Energy Drinks:
Challenges: Fuze Energy Drinks, going through a rapid growth path, found its
existing systems obsolete to meet the growing business needs. Primary
challenge areas identified were:
 Management of rapidly growing stocks and inventory

 Planning and managing production matched to demand and supply
 Reporting needs for financial decision making
ERP solution selection criteria:
Fuze were looking for a cost effective, easy to maintain solution, without
getting into the hassles of computer maintenance. Their ERP vendor (Pyramid
Consulting) offered Sage Accpac ERP solution, which was completely web-
hosted and was a proven system for the manufacturing industry, with specific
modules matching their needs. It offered automation for inventory
management, production lines and real-time financial reporting with no on-site
maintenance, allowing Fuze to concentrate on its core business instead of
adding overhead for computer system maintenance.
Achieved Benefits:
 Automation modules for inventory ensured timely controls on products

going out of stock; combined with order management automation, this
allowed full control on production as per the demand
 Being in the beverages space, automation ensured timely reporting and
action planning for stock that was “past the expiry date” or “about to
expire”.
 Reporting based on accounting entries ensured timely decision making
based on real time data
 Production reporting resulted in full control on production lines, as per
the demand and supply status
 Web hosted solution ensured no in-house computer hardware
purchase, resulting in low cost solution within expected budget
 Web hosting also ensured easy and timely access to the system from
variety of devices
 Off site computer hosting ensured significantly low costs limited to
annual maintenance charges
 Quick and easy setup without a lengthy setup period and no installation
costs
 Contract ensures vendor engagement and availability for any ad hoc
training, as needed
The Bottom Line
ERP systems are usually big ticket projects with high costs and varying
timeframes. Case studies of successful ERP implementations allow for the
careful selection of vendors, systems and solutions; a clear understanding of
existing gaps and objectives to be met; sufficient and continuous engagement
from the client with the vendor, as requirements keep changing dynamically
over the implementation phase. Simply leaving implementation to the vendor
may not be the best idea. Working with the vendor in a partnering role
produces the best results.
Read more: LG As A Case Study Of A Successful Enterprise Resource Planning System

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LG As A Case Study Of A

ERP solutions are great, but successful implementation requires careful

The challenges for LG:

 Location specific multiple systems leading to unclear top-level reporting,

The ERP solution, which included a data mart, performance management

 Centrally managed a single system with minimal maintenance costs

Webhosted ERP solution for Fuze Energy Drinks:

 Management of rapidly growing stocks and inventory

ERP solution selection criteria:

 Automation modules for inventory ensured timely controls on products

The Bottom Line

Read more: LG As A Case Study Of A Successful Enterprise Resource Planning System

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