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What We Do
Industries
Contributing to Business Innovation and Value Enhancement for Diverse Clients

Looxent provides clients with practical and implementable solutions, driving fundamental change that leads to significant improvements in business value. Through this approach, Looxent positions itself as the most trusted partner for clients, consistently proving its reliability and commitment.

Engineering & MachinerySustained Operational Innovation in Project-Based Industries: A Feasible Reality

The machinery and equipment sector represents a classic project-based industry, producing both general-purpose and specialized equipment depending on client requirements. From an operational perspective, general-purpose machinery like CNC lathes can be pre-stocked with minor customizations made post-order. In contrast, specialized equipment, such as automated logistics systems or automotive assembly line setups, is typically manufactured to order based on specific customer requirements. Given these characteristics, sales and profitability in this sector are significantly influenced by fluctuations in capital investment cycles, resulting in greater volatility compared to other industries.

Challenges and Need for Innovation

Our client, a producer of diverse machinery and equipment—including logistics automation systems and machine tools—faced intensified competition and adverse market conditions, such as fluctuating exchange rates. Despite years of rapid revenue growth, they recognized the need to move beyond incremental process improvements to a “new operational innovation program” aimed at achieving tangible financial results and strengthening their innovation capabilities. The company launched an enterprise-wide operational transformation project covering all facets of its operations.

Establishing a Variable Baseline Cost Structure

In project-based industries, clearly distinguishing the financial impact of cost-reduction initiatives is critical to sustaining improvements. However, predicting baseline costs is challenging due to significant variability driven by project-specific specifications.

To address this, we developed a logical baseline cost structure segmented by fixed components, variable costs influenced by core specifications, and costs tied to optional features. The system allowed real-time input of project specifications, enabling the client to dynamically calculate baseline costs and evaluate the impact of improvement initiatives.

Targeting Core Functions and Identifying Repeatable Cost Savings

For most projects, variations in equipment size or optional features influence costs, but the fundamental function of the equipment remains constant. By focusing on key design parameters that define functionality, we identified cost-saving opportunities applicable across multiple projects. For instance, optimizing the placement of heating units in furnaces resulted in consistent and scalable cost reductions.

Leveraging Volume through Consolidated Procurement

Streamlining the supplier base and leveraging volumes are effective procurement strategies. The client had been sourcing identical materials with minor design differences across business units as separate items. We evaluated whether designs could be standardized and consolidated into a single sourcing group. Even when standardization wasn’t feasible, we utilized combined volumes to drive cost efficiencies through strategic supplier negotiations.

Proactive Critical Path Management for On-Time Delivery

In project-based industries, meeting delivery schedules is a critical performance indicator, and delays often result in substantial penalties. While efforts to meet deadlines are common, late-stage tasks like installation and commissioning frequently incur unplanned costs due to rushed execution.

To mitigate this, we implemented a schedule management framework that tracked critical paths from design and procurement through assembly, installation, and commissioning. This approach prioritized transparency and accountability at each project stage, ensuring downstream schedules were not disrupted by delays upstream.

Tangible Outcomes and Organizational Impact

The operational innovation initiative uncovered over 250 actionable improvement opportunities, enabling the client to address long-standing operational inefficiencies. Improvements in operational efficiency also translated into enhanced competitiveness during the bidding process, helping the client secure additional orders.

The project sponsor noted, “We successfully reconciled differences across business units, leveraging collaboration to achieve breakthrough results.” Following the initiative, the client established an internal operational innovation team to sustain the momentum, ensuring that improvements were effectively implemented across their facilities.

Reimagining Operational Innovation in Project-Based Industries

Every organization’s operational framework is unique, making it challenging to replicate standardized innovation models. This challenge is even more pronounced in project-based industries, where the variability of operations adds complexity. However, our experience demonstrates that continuous operational innovation is not only possible but also sustainable when supported by structured processes and strategic alignment. Building a framework for “sustainable operational innovation” is achievable, regardless of industry or business model.



LOOXENT

A  21F. Parc.1 Tower2, 108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea 07335

T  02-546-8222      F  02-546-8226      E  service@looxent.com 

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© 2024 LOOXENT. ALL RIGHTS RESERVED.


LOOXENT

A  21F. Parc.1 Tower2, 108, Yeoui-daero, Yeongdeungpo-gu, Seoul, Korea 07335

T  02-546-8222      F  02-546-8226

E  service@looxent.com 

© 2024 LOOXENT. ALL RIGHTS RESERVED.