Launched in Australia in 1997, LG Electronics utilised 3PL until 2003 when it totally revamped their supply chain strategy. The move to in-house distribution has certainly paid off for LG, with the business enjoying strong retail sales growth.
During the past couple of years, LG Electronics have established their own logistics network including major distribution centres in Sydney, Melbourne, Adelaide, Perth, Brisbane and Townsville. A key partner for LG during this period of rapid growth have been Colby Storage Solutions , which has designed and equipped all of the company’s distribution facilities.
LG’s National Supply Chain Manager, Tony Harris, explained why the consumer electronics specialist made the switch. Harris stated that they carried out a fairly extensive analysis of the impact that bringing distribution in-house could have on the business, and the results indicated benefits ranging from significant cost reductions to substantial improvements in customer service levels.
The consumer electronic goods market is fiercely competitive and the effectiveness of the supply chain has a huge affect on sales in Australia. The improvements they have made to customer service levels since bringing distribution in-house have been instrumental in the business achieving better than expected sales growth.
LG Electronics had used 3PL services and they had very few people in the business who understood logistics. According to Harris, they not only had to develop a plan for building the distribution centres around the country, but also had to build the team of people who would run the facilities on a day to day basis.
LG Electronics have recently completed their sixth distribution centre design and fit-out with Colby Storage Solutions. Right from the start, Colby Storage Solutions took the time to get to know the business and to understand what the imperatives were for LG Electronics from a logistics perspective.
Colby Storage Solutions have worked closely with LG Electronics to deliver solution, and also have constantly modified the approach as the business grew over the past couple of years. Colby Storage solutions for LG Electronics are tailored to meet the needs. Colby Storage facilities incorporated different types of storage systems to provide the most efficient way of storing and handling different types of products.
For instance, Colby Storage Solutions have drive-in racking for LG Electronics fastest moving browngoods, double deep racking for other high volume products, selective racking for slower moving goods, raised storage areas that maximise the use of overhead space, and also utilise block stacking where appropriate.
Colby Storage Solutions have provided LG with a suitable combination of storage solutions, which provide the flexibility required to meet their distribution requirements along with on-going support.