Manager Kim, who has been promoted to the head of the production support Department (purchasing Department), asked me. "I will make sure to purchase raw and sub-materials, so I would like you to excuse the quality of the materials." Looking at him in amazement, I said "Then who is responsible for the purchase of defective raw and sub-materials and who is responsible for the improvement? Quality Assurance department without ordering rights? When you purchase the furniture and electrical appliances at home, who checks the performance and quality? Isn't it common sense for families who pay to check?"

Many employees of the purchasing Department believe that QA(Quality Assurance Department) should be responsible for the quality of materials. They think supply the materials is their main task, and that quality and defect improvement isn't. Of course, the key of the improvement of the quality of subsidiary materials may be whether the partner company and the company's top manager's willing to improve the defects. However, the purchasing Department has the right to __select the manufacturer and volume allocation based on quality, but QA or production Department wouldn't have right of decision of quality improvement.

We often have the wrong idea that the quality of material is determined by the partner companies of manufacturers, but it seems that we can prove that the quality of material depends on the client through my senior's experienced story.

My senior, who retired from LG and worked as vice president of Box Manufacturer, told me the story. "We deliver large quantities to Samsung, LG, and Daewoo Electronics. When we produce Samsung and LG boxes, all employees pledge not to make defective products with consciousness. They do their best not to cause a single defect in each process. On the other hand, Daewoo Electronics do their work quite crude. Samsung and LG manage printing, packaging, even though clean the dust themselves and completely meet the deadlines allocated by the minute.

As you can see, LG and Samsung grew into global company with strict quality control. But Daewoo Electronics closed their business. Therefore, the right conclusion is that the quality of materials is determined according to the quality policy of the client rather than the ability of the manufacturing partner company to manage them.

In Article 1 and 2 of LCC Mission Statement, Quality is the first and foremost priority in order to realize customer satisfaction through quality, price competitiveness, and appropriate supply and grow into a global company with speed and quality management. We will increase exports based on quality management, and through exports, our company's constitution, system, and employee consciousness will be globalize, making it a long-lived company lasting 100 to 200 years.

As the first phrase in the department mission of the production support Department states, "Raw materials and sub-materials without defects...", supply of high quality raw materials and sub-materials must be recognized as the main mission. In order to receive a supply of high-quality subsidiary materials free of defects, we must fully communicate to our partner companies that 'There is no compromise on quality in order to continue doing business with LCC.' If there is no effort to improve the quality, the transaction volume will be reduced, and the transaction will eventually be suspended.

To this end, we must regularly provide the collect data through quality sharing meetings and provide improvement measures to partner companies and urge act with it. Claim & Quality Issue will lead to loss of trust from customer. Cost of damage from Claim must give Penalty to partner company.

The supply of raw materials and subsidiary materials are carried out at the proper amount and time, planned orders are placed and warehoused, and there must be no cases of couldn't production. The source of LCC's 'Price competitiveness' comes from the 'system management' in which all sales, purchasing, management, and QA departments, such as monthly production plans on the 15th of month and weekly production plans on Thursday before last according to Annual Sales Plan.

In production, there is no labor loss, operation rate increases, productivity increases, and employees of each department work according to the production plan with a small number of people, so that the overhead cost becomes lower, so it becomes price competitive.

Domestic subsidiary materials are ordered only weekly according to the weekly production plan and warehoused according to the production schedule, so the remaining inventory is minimized, so the problem of long-term excess idle inventory can be solved naturally. With the exception of long lead time such as tube and pump type, warehouse management issues can be easily dealt with only when orders are placed in proper quantities, arrivals are sequentially made, and sub-material warehouses are simplified as 'empty'.

Automobile and electronic companies operate on a JIT (just in time) basis for zeroize materials inventory, but it can be said that the supply of LCC materials with weekly system basis will be easier if the person in charge is initiative. Shortage complement the ERP functionality, and if the production plan is changed at the request of the customer and if it is acted well, the Shortage problem will not recur.

Import raw materials and sub-materials need to be purchased thoroughly through plan and strategy. Domestic subsidiary materials must be 'equivalent order," while imported raw materials and subsidiary materials which take about 3-4 months or more are 'cover order' and should be 'strategic purchase' to minimize import incidental costs and simplify operations.

Since the source of our LCC's securing the price competitiveness for export is also bulk purchases and container base purchases, it is best to proceed with 'Interharz company' integration and price Nego as much as possible. Domestic raw materials are mostly imported and sold in stock so it is desirable that large quantities of raw materials are integrated into the import.

Since imported fragrances are for BDF and Unilever products, it is necessary to purchase them integrated and strategically while maintaining proper inventory, and purchasing 3 to 6 months of raw materials at the same time may be a one-sided way to simplify operations.

Due to long delivery and the nature of overseas purchases, force majeure variables can occur, so surplus inventory must be maintained appropriately. In the case of air transportation due to fluctuations in Forecast and emergency orders from the client, we must promptly provide feedback so that the client will bear the responsibility.

In order to secure the price competitive, We should buy the sub-materials from domestic with best price in parallel. Buying raw materials with container base would be lowest price, so that sub-materials such as bottle, cap, pump, tube need to be consolidated and purchased along with the selection of price competitive partner company. Also, if we use large subsidiary production facility and increase Cavity as much as possible, for Mass order of Bottle and Cap we could purchase it with a low outsourcing unit price. TheraBreath Oral Rinse Bottle may be a good example for this.

When we have to set a new price for new product or package change, If we solve this with a Logic such as subdivided into direct labor, cost of material, management cost, we could reduce friction with partner companies and reduce the workload on employees.

Raw material (imported and domestic) and imported subsidiary parts should be 'weekly warehousing' in advance in accordance with the weekly manufacture plan. Pump, cap, tube, etc. for Nivea should be moved by pallet to the secondary subsidiary material warehouse on the second floor, and Lip care cap and container of Nivea and Vaseline should be loaded on supply racks by pallet according to the daytime and daily production plan so as not to interfere with lip care charging.

Warehousing of raw materials which are hundreds of different kind, should be kept 'tidy' in raw material warehouse. It must be taken in at the appointed time with the employ who is in charge of weighing the raw material according to the weekly warehousing plan. To reduce the inventory of the weighing room and the raw material stand-by station, We have to move separately of each raw material. Also act the first-in, first-out method for raw-material to comply validity, and stop production or return long-term unused raw materials to the raw material warehouse.

Raw materials must be QA-certified when stored or taken out of the raw material warehouse, and must always be checked to see if they are valid.

Long-term and unused inventory that is not used for a long time must be separately loaded after consultation with the person in charge of purchasing, and the list must be pasted on the bulletin board for quick disposal (disposal, sale, reuse).

On-site supply of Domestic subsidiary materials shall be carried out in real time at the supply silo and conveyor in accordance with daily production plan, and boxes shall be prepared in advance at the supply rack. After production, the remaining of subsidiary materials will be collected and stored at Conveyor, and the boxes will be moved to the remaining rack.

Defective parts checked during the production process must be classified, aggregated, and returned to the partner company for improve the quality of the sub-materials. The subsidiary materials warehouse on the second floor and the box warehouse on the first floor should follow the warehouse rule and should organized daily. 'Visual management' should be carried out, such as separate storage of unused and long-term inventory.

Two years ago, We integrated our sales activities such as BDF and Unilever into Seoul Sales Department to improve customer satisfaction. Therefore, shipment work in production support department should be shipped the finished goods at proper time to customer. For this, transportation vehicle and export container should be arrived in warehouse at planned time for load the finish goods early. OEM, Distributor, ODM, Daiso, E-Mart's transport vehicle must be pre-allocated to arrive at the designated time, and 'planned shipping' must be carried out in advance from the warehouse. For quick load, we could take out the products from warehouse and put on hold at the shipping rack according to shipment plan. Planned shipping is based on the 'date and time' requested by the client and distributor, and needs to be devised to level shipping operations to avoid congestion due to the concentration at a specific time.

The inventory product's cost is managed by sales Department, but the inventory management of the product itself must be as transparent. Always match the computer and real inventory quantity, and do not store single-item inventory to avoid a single external outflow. In order to manage inventory of product warehouses and establish 5S and warehouse rules, it is expected that designated executives will continue to inspect the inventory of product warehouses for a long time every month.

Oriox Products and Daiso Products are our own brand, which are produced in stock. So we must lay out the fifth warehouse as planned to ensure prompt delivery and first-in and first-out.

Various Pallet (KPP, Rental Pallet, Wood Pallet, disposable Pallet etc.) for store the product and transport the product should be warehoused in advance. This Various Pallets must be stored in designated outdoor 'Pallet rack' and brought into the 'pallet supply racks' or production site in advance according to weekly and daily production plan.

In addition, long-term inventory of the products must be listed on the bulletin board, and it is necessary notice to sales Department for handle this, and continue to provide feedback so that it does not recur.

The department mission of the production support Department start with 'Purchase the Raw, Subsidiary Material according to ERP and standards...' Each Employee should work proactive and make the standard continuously. Also Improve the computerize system and ERP system parallel for secure the safety inventory and for operate auto ordering system.

We must also strive to establish a new 'Part Leader System' for make the synergy between employees. The employees which are in charge of bottle, label, box is similar in most of the tasks, such as placing corresponding orders based on weekly production plans, managing and improving quality of partner companies, warehousing and inventory management, make the standard, develop the new product or package renewal.

Also, imported raw materials and subsidiary materials are strategically purchased according to the annual plan, and the ordering, transportation, customs clearance, and arrival procedures are the same. Therefore, if the Part Leader separates the production support Department into 'subsidiary part' and 'imported part' and places orders with the person in charge, improve quality, and revise standard, more efficient and effective work progress and results can be expected. Furthermore Empowerment, which is the essence of leadership, can increase the capacity of the person in charge and provide early stabilization effect for new employee.

The subsidiary part holds a weekly meeting regarding quality with partner companies to solve the quality problems of subsidiary materials. The 'imported part' can be purchased strategically at the best price without shortage through the annual and monthly plan.

The work processes are almost similar, standard establishment and revision work can be carried out easily, and unit price logic determination with partner companies, as well as shortage/defective issues can be easily.

Imported parts can also reduce costs by converting domestic raw materials into imports, and can be globalize through cooperation with customs clearance agents and communication with overseas suppliers. Through the weekly meeting with employees who are in charge of Warehousing management of raw materials and subsidiary materials could realize the 'on-site management'.

LCC's price competitiveness comes from__ automated production site and input of raw & subsidiary materials with best price through mass purchase. But basically this superiority is based on reduce the overhead cost through the system management such as weekly production.

If the 'operation of Part', 'improvement of warehouse management', 'manage the partner company' through transformation and innovation of Production support Department, We can secure the global price & quality competitiveness with low general management cost and firmed system management.

As emphasized in Articles 1 and 2 of company mission statement, we pledge that securing quality and price competitiveness is the only way to realize our vision of becoming a one-hundred year company through exports.

CEO BAIK, SUNGCHUN