ENTERPRISE RESOURCES PLANNING (ERP)
ASSIGNMENT
POOJA GUPTA
(BFT/17/163)
Enterprise Resources Planning (ERP)
LG Electronics Case Study
When the global giant LG Electronics – with 114 subsidiaries, and more than 82,000
employees across 40 countries – tried to harmonize its Human Resources (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. So it decided to take the ERP
route.
CHALLENGES
The challenges faced by LG includes:
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 and training
Difficulties with decision-making
With significant business impact, LG’s familiarity with Oracle technology 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 that integrates available Oracle HR
modules for uniform use at global level, thereby replacing location-specific system
dependency.
The company was looking for below factors through ERP implementation:
Product planning, purchase
Manufacturing or service delivery
Marketing and sales
Inventory management
Shipping and payment
Finance
It was not easy for LG, for the kind of large scale business it operates to have a smooth ERP
solution implementation.
But still, over a period of five years, the company managed to fulfill its objectives and minimize
the challenges professed by its widely spread centers world-wide in the department of Human
Resource management with the help of ERP solutions.
BENEFITS
The Achieved Benefits was 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
CRITICAL SUCCESS FACTORS
LG is moving to a Single Global instance. By implementing it receives information from
overall world, has enhanced HR management than before.
Now HR strategies align with their business goals.
Finally leading to increased employee satisfaction.
Top management commitment and support
Training and involvement
Change management
More personally, automatically, and systematically
Business process re-engineering and system’s customization
Change from decentralization to centralization
Training
How to use video interview, how to use the function of salary, working hour, and
fringe benefits management
ERP team composition
People who are familiar with the business process
Anticipated errors and exceptions from users’ perspectives
Consultant Selection and relationship
After-project support and service
Communication Plan
LGE Mobile Communication Business Unit for feedback and communication
SUMMARY OF THE CASE STUDY
LG Electronics Company was lacking of operating their activity, which lead to a huge process
pain, so they faced many challenges to compete with like unclear reporting data, which
directly affected making the right decisions, ambiguity of employee’s development and
training plan etc.., on the other hand the Company was familiar with Oracle technology which
helped to migrate their existing data to the new ERP solution which was an essential key to
include a data mart, performance management system, staff portal and e-learning application
which lead to spectacular benefits such as transparency in the recruitment, Cost savings and
increasing staff productivity. Eventually it was very challenging to implement the ERP solution,
but it made a solid understanding about the importance of the information systems and how
it really helps in managing all business applications from one central system to manage the
back office functions.
So the overall moral of the story is this that the LG electronics company became able to
improve its HR practices & policies by using the automated erp solution and it is still using this
software by innovating new modules and services.
From this ERP “win”, we can take away the following ERP implementation success factors:
Always express your operational needs at the start of an ERP project, however expansive they
might be.
Set clear objectives at the beginning.
Don’t rush an ERP implementation but stagger into phases if feasible.
