Case Study:  Lean Design - Automotive Portfolio Rationalization

Provided data driven recommendations on how to rationalize an inefficient product portfolio for a South Korean engine manufacturer

Situation and Objective

  • A South Korean heavy duty engine manufacturer had a complex and inefficient product portfolio and needed help assessing their options on how to rationalize the portfolio and strengthen their engine development capabilities

  • The CEO asked the team to develop a revised engine portfolio based on the long term economic viability of each engine family

Approach

  • Collect Data
    • Gather volume, revenue, cost, and R&D spend by product line
  • Build Financial Model
    • Identify key outputs, structure data, build and test model
  • Validate Input Data
    • Conduct management interviews and review core assumptions
  • Analyze Results:
    • Look for trends and identify exceptions, review financial metrics
  • Draw Conclusions
    • Compare conclusions with qualitative findings, socialize results

Results and benefits

  • Provided data driven recommendations on how and when to phase out 4 unsustainable engine lines
  • Developed approach on where to focus R&D spending in order to maximize return on investment
  • Provided clear direction on where to focus cost reduction initiatives in order to improve profitability of portfolio
  • Delivered actionable roadmap for engaging strategic partners to facilitate volume growth and R&D cost reductions