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How the Thai Manufacturing Industry Can Unlock Cost Reduction and Profit Maximization through Agile Operational Excellence (Agile OpX)

Amidst the era of inflation, manufacturing industry businesses face increasing costs, and higher domestic and international competition forces firms to adapt to the new landscape. Businesses have been cutting internal costs; however, the outcome is not appealing. Many companies have verified Agile OpX (Agile Operational Excellence) as a service that can help reduce costs and maximize profits for manufacturers, providing quick and tangible results.

LiB Consulting, a leading consulting firm from Japan, has a series of tips on how to get the most out of Agile OpX.

Increasing profits is possible for manufacturing businesses, but how?

Managing manufacturing businesses is a highly complex process involving technologies, workforce, and market demand. Cost reduction and profit maximization plans often fail to show tangible results and changes for the organization. The main reasons for failures are as follows:

Lack of consideration for strategic changes, e.g., adjusting workflow without analyzing the high-impact expenses of the business.
Lack of systematic recording and storage for progress monitoring, thus resulting in insufficient data for evaluation, analysis, and decision for changes. Sometimes, businesses may have sufficient data but fail to analyze it for benefits.
Lack of new know-how and perspectives that can contribute to the success of cost reduction attempts, such as international benchmarking standards.
Lack of suitable models and guidelines for human resource management.

Every organization knows that cost reduction is a must; however, the four factors mentioned above limit their vision of an appropriate cost reduction area for the desired development. Organizations often rely on innovative technologies, such as implementing IT programs in hopes that IT technologies would be able to replace the human workforce, thus reducing costs and maximizing profits simultaneously. However, many failed to achieve the desired results.

Bird’s eye view perspective and insights analyzing

It is difficult for business owners to analyze every aspect of business issues. Business consultants can provide a bird’s eye view from an outsider’s perspective that can identify obscured issues in the entire workflow. LiB Consulting is experienced in providing consulting and strategic adaptation services to businesses in the manufacturing industry via the Agile OpX process. It has been proven that Agile OpX can help reduce business costs with tangible and assessable results. The program also offers suitable guidelines to enhance a business’s profit capability.

Agile OpX is a process that evaluates the overall picture and insights of every organization’s workflow, revealing hidden issues. Agile OpX consists of four steps, including:

Visualization: Evaluating and analyzing the entire business workflow. It is critical to visualize the overall picture first and then make a detailed analysis, especially in a process requiring many workforces.
Direction Setting: Designing and setting the direction of workflow improvement. The key point is to evaluate the possible added value from the results and the impact of output reduction in each area on the entire business.
Implementation: Analyzing the possibility and evaluating the impact on the business. E.g., analyzing possible revenue or customer satisfaction and designing a management roadmap with clear goals.
Manpower management: Improving workflow based on decided direction by focusing on suitable workforce balance for the new workflow of the organization.

The four steps can help businesses reduce costs while maintaining qualities and profit opportunities to achieve goals. Moreover, those steps do not require extra investments.

LiB unlocks efficiency for Thai manufacturing industry

LiB Consulting implemented Agile OpX to help enhance the workflow and management system of businesses in the manufacturing industry. Every business is satisfied with the tangible cost reduction results, achieving its profit growth target. Interesting cases are as follows:

Case study 1: Automotive parts and electrotype mold manufacturer

An automotive parts and electrotype mold manufacturer faced continuous losses due to the impact of the COVID-19 pandemic. They tried to manage business costs via many actions, including laying off 40% of the manufacturing workforce and cutting bonuses and welfare.

However, those measures only reduced costs by 2% of total sales. Their executives contacted LiB Consulting for an urgent expense reduction. LiB Consulting implemented the Agile OpX process to evaluate the overall picture and analyze insights into the business. LiB Consulting used strategic restructuring approaches to create new business value that led to cost-reduction competition among departments and reduced costs with a ‘Quick Win’ strategy with a team from LiB Consulting. LiB Consulting also enhanced skill sets and incubated challenging minds in the workforce.

After the project, the manufacturer reduced costs by 10% of total sales. Two years after the project, they continue reducing costs with the help of the Cost Management department established specifically for business cost reduction. The department helps prevent cost increments and allows the manufacturer to recover and generate higher profit than competitors overseas and the mother company in Japan. The project also helped minimize overtime work and resource usage.

Case study 2: Food manufacturer

A Thailand-based food manufacturer achieved constant growth with around 2 billion baht in annual revenues. Despite having high business revenues, they also faced high business costs compared to competitors. Their executives sought a way to simultaneously reduce business costs and increase competitiveness in the export market. They consulted LiB Consulting to reduce business costs and increase competitiveness to expand to overseas markets. LiB Consulting implemented the Agile OpX process to evaluate and analyze the manufacturer’s workflow and found that many parts were too complicated than necessary; however, cost reduction was possible through Quick Win strategy. The strategy was immediately implemented and the manufacturer achieved a 37.5% workforce cost reduction without having to make any extra investments. LiB Consulting then designed mid and long-term plans to reduce workflow complexity and increase efficiency. LiB Consulting also improved workforce management, enabling the manufacturer to manage the workforce to suit its production line. The ultimate result of the project is a plan to reduce all costs. If successful, the plan will reduce business costs by 20 million baht annually.

Cost reduction and profit maximization attempts conducted by manufacturing businesses may show results but could be more satisfactory. Almost every business can reduce costs and increase profits, but some haven’t found guidelines and methods to achieve better results. This means many manufacturing businesses are missing an opportunity to enhance their potential and increase competitiveness.

If you want to unlock cost reduction and profit maximization guidelines, Agile OpX by LiB Consulting can help to lead your business towards an efficient path for the future and ensure sustainable growth in any eventuality.

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