Integrating Launch, Logistics, and Inventory Control for Sustained Profitability

Background:

A Mexico-based Tier 1 automotive supplier was experiencing operational and financial performance challenges driven by fragmented processes across inventory management, warehouse operations, new product launches, production scheduling, and customer logistics.

Excess and obsolete inventory constrained cash flow, New Product Launch (NPL) activities operated independently from plant operations, and unstable material pipelines limited production effectiveness. At the same time, inconsistent customer logistics requirements created unnecessary packaging, labor, and storage costs, reducing profitability and limiting the operation's ability to support future growth.

Crossover Solutions was engaged to evaluate the operation, identify the primary performance constraints, and implement targeted actions to improve efficiency, cash flow, and profitability.

Critical Issues:

• $448K in excess and obsolete inventory driven by weak inventory controls and unmanaged purchasing practices
• NPL organization operating independently from plant operations, creating duplication, inefficiency, and launch instability
• Production scheduling constrained by material shortages, credit holds, and inconsistent planning disciplines
• Underutilized manufacturing assets reducing operational efficiency and return on investment
• Unpredictable Tier 1 customer logistics requirements driving excess packaging, labor, and warehousing costs
• Growing pressure on profitability and EBITDA performance

Our Approach:

XO conducted a comprehensive operational assessment focused on the interaction between functions that collectively constrained operational performance, spanning inventory management, warehouse operations, production scheduling, manufacturing performance, launch management, and customer logistics.

The engagement emphasized restoring operational discipline, improving material flow, integrating launch activities into the core business, and reducing waste throughout the supply chain.

Key Actions:

• Conducted end-to-end operational diagnostics across warehouse, manufacturing, NPL, and supply chain functions
• Implemented disciplined excess and obsolete inventory management processes, including tracking, classification, and recovery actions
• Eliminated dependence on third-party warehousing through Tier 1 Kanban controls and reusable packaging systems
• Integrated NPL activities into core plant operations, centralizing tooling, automation, and launch accountability
• Stabilized production scheduling by rebuilding material pipelines and aligning capacity with customer demand (from 5 to 6-day production weeks)
• Developed a returnable container strategy that reduced packaging costs while improving logistics efficiency
• Optimized manufacturing resource utilization and aligned operations to support future growth opportunities

Results:

• Released significant working capital through aggressive inventory reduction and improved inventory controls
• Eliminated third-party warehouse dependency, reducing operating costs and improving material visibility
• Improved launch execution by integrating NPL activities into day-to-day plant operations
• Stabilized production scheduling and increased manufacturing throughput through improved material availability
• Reduced customer logistics costs through reusable packaging and closed-loop material management
• Improved overall profitability while creating capacity for future customer growth
• Positioned the operation as a more efficient, scalable, and financially disciplined enterprise

The resulting transformation improved both operational execution and financial performance while creating capacity to support future business growth.