Operating System Improvement

Client: The Mexico operations of an automotive component supplier

A large automotive component supplier had manufacturing operations in central Mexico. A replacement for the IT software for the financial and material systems was in process. The company’s initial approach was to make a one-for-one replacement of the old system with new software, but it was realized that better definition of their financial, materials, and operating business processes was needed, followed by tailoring the software to fit those processes. DAI was engaged to clearly define the business processes, how they linked, and to facilitate implementation.

DAI worked with senior management to define the overall process flow for how business was conducted in Mexico with a focus on the physical flow of material and the financial transactions associated with the material flow. A core team of 20 people representing all business functions was assembled in Mexico to validate the overall process flow, identify all business processes, and create process flow maps for each. Each current state map was improved to reduce non-value added activities and eliminate redundant procedures. Linkages among all maps were identified, and the improved process was approved. Software was customized to fit the codified processes and standard work descriptions and procedures (in Spanish and English) were completed for each of the 64 business processes.

After two months, there was a 17% reduction in processes due to the elimination of overlapping, competing, and redundant procedures. Team understanding and alignment was greatly improved. There was a “can-do” attitude of cooperation to simplify and solve process and procedural inconsistencies that previously did not exist. After the successful implementation in Mexico, the same approach was extended to Korean operations.