WHY LG?
#7 Supply Chain Resilience
Supply chain resilience has been in the news quite a lot over the past 18 months. It has always been an important issue in technology manufacturing, but its critical importance was comprehensively illustrated at the onset of the pandemic with the slowing of supply chains and finished product from APAC, and the resulting impact on many businesses here in North America. A bad supply chain issue became a lot worse for many in the electronics industry this fall when a fire at Japanese chipmaker, AKM, resulted in significant shortages of Digital Audio Converters (DACs) and Analog/Digital Converters (ADCs) — critical components for audio equipment, home appliances, oscillators and many other products.
Earlier this year, the importance of supply chain resilience was elevated by the White House as an issue of national security, and an executive order on resilient supply chains was issued. And, as if we still needed further convincing as to the importance — and fragility — of supply chains, a strong gust of wind pushed the mega-sized container ship, Ever Given, off course in the Suez Canal in March, blocking a critical East/West supply artery causing billions of dollars in delays to the global economy with ripple effects expected well into the fall.
The resilience of LG’s supply chain impacts not just the products we provide systems integrators, agents, property managers and owners, but also the service! The ability to have the specified product available in the right place at exactly the right time determines the success or failure of our joint efforts, including the integrator’s performance and efficiency and the property’s ability to limit downtime to the absolute minimum. Logistics and supply chain resilience are also essential to maintaining warranty and support systems.
For all these reasons, LG is investing in its supply chain. We are making sure that our infrastructure supports the vision of innovative, high-performing, reliable hospitality televisions and servers and meets the needs of integrators and property operators seeking to capitalize on the demand-surge of a post-pandemic economy.
LG is making this investment because our value proposition extends beyond the technology to include service, support and other intangibles that systems integrators and customers include on their respective cost-benefit analysis. Some brands will chase the commoditization of technology and race to the bottom on the price/performance matrix but that has never been LG’s philosophy. We have been in the hospitality TV industry longer than any other vendor. We have invested in in-market application engineering teams; have a dedicated North America innovation center; and provide comprehensive warranties and support as components of the LG brand promise. Supply chain resilience is fundamental to the LG brand promise.
To make this investment comprehensive and scale it appropriately, we’re implementing our first price increase in 18 years. In Spring 2021, an increase was applied to all hospitality television and server products. We understand that price increases are never causes for celebration, but the idea of cutting costs or limiting investment in ways that may adversely affect our partners and customers is not acceptable in our organization. LG has always been more innovative than iterative and with this investment and the accompanying price increase we are being additive — not taking anything away from the quality, reliability and performance of our products and service offering.
As the hospitality industry wakes up from the pandemic era, guests will place a premium on their downtime. The very last thing that anyone wants is downtime for systems integrators waiting for product or downtime of guestrooms waiting to be fully outfitted. We have certainly learned the importance of a strong supply chain to a strong business, and at LG we want to make the resilience of our supply chain another reason systems integrators and customers choose LG!
