

Industries driven by rapidly evolving consumer needs, such as the electronics sector, often find their fortunes hinging on the success of a “hit product.” While striving for a hit product can unify company resources, it may also trigger overinvestment, placing the company at risk. When technological differentiation is limited, hit products quickly commoditize, intensifying competition and requiring costly differentiation efforts. If these efforts fail to drive sufficient sales, the combination of rising costs, cannibalization of existing products, and escalating inventory can push a company into crisis.
A multimedia device manufacturer experienced rapid growth fueled by a hit product but faced a significant market share loss to global competitors. This shift led to soaring inventory levels, including distribution, finished goods, and component inventories, while product differentiation strategies further eroded profitability. To address these challenges, the company partnered with Looxent to initiate a project targeting inventory management and profitability improvement.
Reducing Inventory Starts with Legacy Models
In industries where declining prices erode profitability over time and competition from upcoming products intensifies, minimizing legacy inventory is crucial. The client’s high proportion of legacy inventory demanded immediate action. Looxent first conducted a comprehensive assessment of inventory across components, finished goods, and distribution channels, developing tailored strategies for each category. Components were repurposed for other products or resold, while finished goods were cleared through promotions, corporate sales, and model transitions. Within three months, the company reduced its slow-moving inventory by approximately 50%.
Strengthening Sales and Production Planning for Sustained Inventory Management
An analysis of inventory growth drivers revealed two primary causes: 1) forecasting errors for new products and 2) procurement team over-ordering long-lead materials. To address these issues, Looxent enhanced the sales and production planning process. The team established clear demand forecasting procedures and accuracy metrics, requiring procurement to act only on quantities approved during sales and production meetings.
In parallel, inventory health metrics were introduced to identify at-risk items early, and a predictive tool was developed to estimate the remaining life of after-sales (AS) parts. This ensured minimal surplus inventory after AS periods ended.
Driving Profitability Accountability Across Departments
Trendy products often necessitate differentiated packaging and design, driven by both sales demands and the aesthetic goals of design teams. This can lead to excessively costly designs. To mitigate this, Looxent assigned cost-reduction targets to the design team, tasking them with finding ways to lower costs while preserving core design concepts.
An inclusive process was adopted, requiring final approval from both sales and management after thorough cross-departmental discussions. This approach not only streamlined decision-making but also unlocked aggressive cost-saving measures, such as part standardization, reduced safety margins, and elimination of non-essential features. These efforts exceeded initial expectations and delivered significant results.
Results and Long-Term Impact
The client’s management expressed satisfaction with the collaborative project, noting the substantial operational improvements achieved within a short time frame and the actionable ideas developed for ongoing implementation. Despite the challenges posed by strong competitors, the client remains focused on leveraging its strong brand recognition and accumulated experience. The company continues to pursue sustainable growth through strategies such as diversifying its product lineup and expanding its OEM business.
Industries driven by rapidly evolving consumer needs, such as the electronics sector, often find their fortunes hinging on the success of a “hit product.” While striving for a hit product can unify company resources, it may also trigger overinvestment, placing the company at risk. When technological differentiation is limited, hit products quickly commoditize, intensifying competition and requiring costly differentiation efforts. If these efforts fail to drive sufficient sales, the combination of rising costs, cannibalization of existing products, and escalating inventory can push a company into crisis.
A multimedia device manufacturer experienced rapid growth fueled by a hit product but faced a significant market share loss to global competitors. This shift led to soaring inventory levels, including distribution, finished goods, and component inventories, while product differentiation strategies further eroded profitability. To address these challenges, the company partnered with Looxent to initiate a project targeting inventory management and profitability improvement.
Reducing Inventory Starts with Legacy Models
In industries where declining prices erode profitability over time and competition from upcoming products intensifies, minimizing legacy inventory is crucial. The client’s high proportion of legacy inventory demanded immediate action. Looxent first conducted a comprehensive assessment of inventory across components, finished goods, and distribution channels, developing tailored strategies for each category. Components were repurposed for other products or resold, while finished goods were cleared through promotions, corporate sales, and model transitions. Within three months, the company reduced its slow-moving inventory by approximately 50%.
Strengthening Sales and Production Planning for Sustained Inventory Management
An analysis of inventory growth drivers revealed two primary causes: 1) forecasting errors for new products and 2) procurement team over-ordering long-lead materials. To address these issues, Looxent enhanced the sales and production planning process. The team established clear demand forecasting procedures and accuracy metrics, requiring procurement to act only on quantities approved during sales and production meetings.
In parallel, inventory health metrics were introduced to identify at-risk items early, and a predictive tool was developed to estimate the remaining life of after-sales (AS) parts. This ensured minimal surplus inventory after AS periods ended.
Driving Profitability Accountability Across Departments
Trendy products often necessitate differentiated packaging and design, driven by both sales demands and the aesthetic goals of design teams. This can lead to excessively costly designs. To mitigate this, Looxent assigned cost-reduction targets to the design team, tasking them with finding ways to lower costs while preserving core design concepts.
An inclusive process was adopted, requiring final approval from both sales and management after thorough cross-departmental discussions. This approach not only streamlined decision-making but also unlocked aggressive cost-saving measures, such as part standardization, reduced safety margins, and elimination of non-essential features. These efforts exceeded initial expectations and delivered significant results.
Results and Long-Term Impact
The client’s management expressed satisfaction with the collaborative project, noting the substantial operational improvements achieved within a short time frame and the actionable ideas developed for ongoing implementation. Despite the challenges posed by strong competitors, the client remains focused on leveraging its strong brand recognition and accumulated experience. The company continues to pursue sustainable growth through strategies such as diversifying its product lineup and expanding its OEM business.