Communication Cost Reduction By 50% 18th.May.2001 Presented by : Khosla, Dy Manager (Super A Team) LG Electronics / LGEIL 1

Great People Great Company LGEIL 6  2/20 Theme Selection KUS$ 20% Total Communication Cost Branches Factory ‘00 Comm. Cost Division 6  Pjt. “Reduce Factory Communication Expense by 50%” M AIC D

Great People Great Company LGEIL 6  3/20 Target Statement 50% Monthly Factory Comm. BillKU$ M AIC D

Great People Great Company LGEIL 6  4/20 Present Process Capability M AIC D The Cpk is very less.This means that All departments are heavily overspending. Cp = 0.37 Cpk= Capa for Expense Capa for Satisfaction Cp = 0.60 Cpk= 0.03

Great People Great Company LGEIL 6  5/20 User Interview M A IC D 1. Please rate LGEIL factory Communication Expense 2. Please list in order of decreasing importance the factors that you think contribute to this cost. Low Medium High Medium High The Top Problem List

Great People Great Company LGEIL 6  6/20 Relationship Diagram M A IC D High Followup with Branches STD is necessary Mobiles are necessary Wide Network Mobile Misuse Easy Unauthorised Access to STDs Low Internet Connectivity Mobile to Mobile Tracking Fast Growth requires Quick Connectivity Lack of Monitoring Land Lines are Inefficient Low Land Line Use Useless STD Calls Lengthy Talking Faxes Lack Of Monitoring turns out to be the cause of Issues stated by 61% of persons in the Top 5 causes of High Communication Cost. Presence of Mobiles is required due to Infra-structure constraints.

Great People Great Company LGEIL 6  7/20 Logic Tree Of Communication Cost M A IC D Computer Comm. Expense Duration Destination No. Of Comm Cost per Comm No. Of Users Type of Work Comm Sys used ISD STD Land Line Mobile Service Provider Mindset EPABX Fax Direct

Great People Great Company LGEIL 6  8/20 Types Of Communication M A IC D Mobile, EPABX & Direct Lines contribute to 91.5% of all Communication Expense

Great People Great Company LGEIL 6  9/20 M AI C D 9 Departments out of 36 contribute to more than 75% of all Calls S&M e-ccounts e-source Comm& Logistic C.S HR Matls Prodn QA Yahoo! Messenger Campaign Land Line Cost / Direct + EPABX Measurement of Individual Extension Expense was not possible. Introduced new software for the same.

Great People Great Company LGEIL 6  10/20 Paired T-Test and CI: Before, After Paired T for Before - After N Mean StDev SE Mean Before After Difference % lower bound for mean difference: 303 T-Test of mean difference = 300 (vs > 300): T-Value = 1.89 P-Value = M AI C D After Implementation of Internet Chat Software the Top nine departments have shown a call rate reduction of more than 300 at 95% confidence. Land Line Cost / Direct + EPABX No. Of Calls

Great People Great Company LGEIL 6  11/20 M AI C D Only 14 Persons out of 54 with Direct lines contribute to 82% of Total Cost of Direct Lines 4 Heavy Users Direct Target Signing with HRD 4 Monthly Budget for every deptt. For Mobiles Direct + Mobile / Mindset

Great People Great Company LGEIL 6  12/20 M AI C D Fax To Desired Party Send fax from LG Receive Fax at Outside party Telephone Exchange Transmit through Telephone Network Fax from LG Telephone Exchange LG Server Immediate Delayed (Late Night STD calls) PC Fax scheduled In India the STD call rates are lesser during night time, hence CTI has advantage over conventional fax system because it can store and schedule faxes. Land Line Cost / Fax

Great People Great Company LGEIL 6  13/20 M AI C D CTI Implementation 79% Land Line Cost / Fax KU$

Great People Great Company LGEIL 6  14/20 M A I C D Improvement Summary Prob. HeadCauseImprovement Mobile Ownership Direct Signing with HR Monitoring System Budget System Installed High Users report to H.O.D Land Lines Accountability Developed & Installed Extn wise call metering software Daily Control of Most Expensive User Controlled Unauthorised Intnl. Calls No Other Alternative Spread Yahoo Messenger Awareness & Usage Fax STD Faxes Developed new CTI system Per Call Cost is High Source Cheaper and Better Service Provider Service Connectivity Increased Internet Connectivity at all Warehouses & Branches through TDR

Great People Great Company LGEIL 6  15/20 M A I C D Results % KU$

Great People Great Company LGEIL 6  16/20 M A I C D Results Before After Cp = 0.37 Cpk= Cp = 0.56 Cpk= 0.39 US$ 400,000

Great People Great Company LGEIL 6  17/20 M A I C D Results / User Satisfaction Before After Cp = 0.60 Cpk= 0.03 Cp = 0.76 Cpk= 0.41

Great People Great Company LGEIL 6  18/20 M A I C D Landline / Total Daily Cost Report Besides Budgetary Rules which are monitored on quarterly basis, we developed a mechanism by which entire factory’s Comm. Cost can be controlled.

Great People Great Company LGEIL 6  19/20 M A I C D Landline / Individual Call Length & Expense Report On Longest Duration Calls Report On Most Expensive Calls

Great People Great Company LGEIL 6  20/20 The Next Step Nov’00 ~ Mar ‘00 Apr ‘01 ~ Aug ‘01 Factory Comm Expense Reduction By 50% Branch Comm Expense Reduction By 50% Thank You