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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.

Automotive & MobilityEliminating Internal Losses: The Starting Point for Production Process Innovation

The automotive parts market is segmented into the OEM (original equipment manufacturer) market, catering to initial assembly, and the aftermarket, focused on replacement parts with periodic usage cycles.

While some products may serve both markets, OEM customers demand strict quality standards, whereas the aftermarket applies consumer-grade functional requirements. OEM markets typically provide stable volume and customer bases but lower margins, whereas aftermarket products generally offer higher profitability with greater volatility.

Project Context

Our client, a leading exporter of automotive accessories, ships over 80% of its products globally, primarily targeting the aftermarket through auto parts stores and retail outlets. However, intensifying cost competition from LCC (low-cost country) players and currency devaluation presented significant challenges. To strengthen global competitiveness and drive sustainable growth, the company partnered with Looxent to identify and address core operational inefficiencies, implementing a two-phased company-wide operational transformation.

Achieving Production Process Balance

Balancing production capacities across processes was critical. For operations with homogeneous tasks, increasing production lines or improving yield could effectively boost capacity. However, for facilities structured as job shops—handling diverse processes like molding, extrusion, painting, assembly, and packaging—isolated improvements were insufficient.

To address this, Looxent conducted a comprehensive analysis of inter-process capacity, implementing measures to align overall balance. Capacity optimization focused on bottleneck (B/N) processes, while processes with excess capacity targeted waste elimination.

  • Molding: Yield improvements through sheet input optimization.
  • Painting: Minimizing waste by fine-tuning automatic spray parameters.
  • Assembly: Establishing a dedicated rework process to mitigate workflow disruptions.

The result was enhanced overall line productivity and reduced process-specific losses, achieving a well-balanced capacity across operations.

Addressing Internal Loss: A Hidden Opportunity for Cost Reduction

Consider a scenario where 100 components, costing $1 each, are used in production with a 90% yield rate. Cost-reduction strategies may include reducing component costs, increasing production yields, or redesigning components for lower-cost alternatives without compromising performance.

However, internal losses—often overlooked—can significantly impact costs. Our client faced challenges in managing inventory at subcontractors and work-in-progress (WIP) stocks, leading to unaccounted losses. Looxent began by identifying actual process losses, analyzing inventory flow across warehouse and production nodes, and establishing controls to minimize unnecessary component losses.

Results and Impact

This internal loss-reduction initiative delivered measurable improvements:

  • Cost Savings: Achieved cost reductions equivalent to approximately 7% of total COGS.
  • Sustainable Improvement Framework: Established an internal organization and processes for continuous operational enhancement.

The client’s leadership acknowledged the pragmatic approach, stating, “While not revolutionary, this initiative addressed persistent inefficiencies through employee-led efforts. We now foresee sustained improvement activities.” Operational staff echoed this sentiment, expressing newfound motivation and engagement: “Seeing tangible improvements makes our work fulfilling and enjoyable.”

A Foundation for Future Innovation

Building on these successes, the client has since introduced process automation in packaging and continues to advance operational innovation. Transformative improvement in production processes requires a phased approach, beginning with eliminating existing inefficiencies. By tackling internal losses, the client has taken the essential first step toward operational excellence.



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.