Global Procurement & Procurement Staff
For the effective management of its vast network of suppliers, LG Electronics groups its business partners into "direct suppliers," who provide the raw materials and parts used for manufacturing products, and "indirect suppliers," who provide services and other products such as advertisement and IT services. The Procurement Center is in charge of managing direct suppliers, and HQ's General Procurement(GP) manages indirect suppliers.
In 2014, company-wide purchases from direct suppliers amounted to 33.7 trillion won, an approximately 10% increase compared to the previous year, with 25.1 trillion won or 75% of the total taking place in the Asian region including Korea. LG Electronics partners with over 1,100 companies in Korea and 1,900 companies abroad, making transactions of over 100 million won with 2,300 companies, representing 75% of the total number of partners. LG Electronics currently manages a list of approximately 5,000 eligible partner companies, including approximately 3,000 current partners, through a process that removes companies who have no dealings with LG Electronics or with a history of quality problems, and providing strong support to partners for expanding the amount of business transactions and creating a "crack team" of top suppliers. In 2014, LG Electronics began new partnerships with 59 companies, including nine in China and four in Egypt. Indirect suppliers, managed by the General Procurement (GP) department, are partner companies that provide services other than direct purchases such as advertisement and IT services. A total of 2.5 trillion won in indirect purchases were made in 2014 from these companies, including 1.4 trillion in Korea. LG Electronics works with approximately 800 indirect suppliers in Korea, with over 100 million won in transactions with 52% of these companies. Overseas subsidiaries are expanding the scope of their partnerships with indirect suppliers by boosting the purchasing capabilities of each subsidiary with close cooperation with headquarters' GP department.
LG Electronics has established a purchasing unit at each of our major production subsidiaries. As of January 2013, a total of 2,010 employees (Korea: 866/Overseas: 1,144) are tasked with procurement. Since we established sustainable management as our corporate direction, we have strived for Win-Win Growth with our suppliers, and established dedicated business units in 2011 to renew our commitment.
Philosophies and Principles for Win-Win Growth
LG Electronics established "3 Philosophies and 5 Principles for Win-win Growth," and makes diverse efforts, such as making the information available via our win-win growth website, to ensure that all our employees from procurement and related departments fully understand our philosophies and principles for win-win growth and put them into practice.
Support Programs for Win-Win Growth
LG Electronics implements differentiated support programs to help our suppliers acquire world class competitiveness in quality, production, and technology. Also it continues its efforts to strengthen suppliers' capabilities in the next generation of technologies. And LG Electronics makes continuous efforts to ensure the financial stability of our supplier's by providing direct/indirect funding support and improving payment schedule/period and provides training and HR support to 1st tier and 2nd tier suppliers. LG Electronics intensified its drive for Win-Win Growth through internal process innovation and established a wide range of programs to promote communication with suppliers.
Read more_ ‘Support Programs for Win-Win Growth
COMMUNICATION WITH SUPPLIERS
- Open dialogue with suppliers
Through various communication programs, LG Electronics provides encouragement for suppliers and listens to their opinions and challenges, while also guaranteeing transparency in all business transactions.
< Suppliers Communication Programs >
||Convenient online communication with LG Electronics (inquiries and suggestions on procurement transactions) is available with all relevant systems integrated
|New Supplier Registration System
||Companies can apply to become a new supplier for LGE using this system, at which time they will be automatically connected to LGE’s purchasing personnel after an automatic screening process.
|Supplier Suggestion System
||Every supplier’s suggestions on work process improvement will be taken into account for R&D, general management activities, and mutual growth.
|Suppliers’ Satisfaction Survey
||Surveys on LGE’s overall capabilities in such areas as purchasing, product quality, R&D, and design will reveal any potential problems.
|Evaluation & Awards for Existing Suppliers
||Incentives and penalties will be imposed by regularly evaluating each existing supplier’s business results and transactions.
|Global Suppliers Day
||LG Electronics will share its vision and achievements with its top 300 suppliers, LG affiliates, and LGE’s major executives and purchasing personnel.
|Procurement Executive Council
||As the top organization to make decisions on purchasing, the committee evaluates suppliers, reviews satisfaction surveys, and examines ways to support business partners.
- Supplier Grievance Process
LG Electronics offers a supplier grievance reporting channel on the corporate website (www.lge. com) and the Win-Win Growth website(www.lgesuppliers.com/winwin) to gather supplier complaints and grievances, and to address the issues. We commission a third party assurance agency to conduct supplier satisfaction survey on business transactions and Win-Win Growth programs to gather frank feedback, promote communication, and effectively resolve supplier grievances.