Thai Marujun Co., Ltd. manufactures automobile pressed parts and metal molds. The company was severely hit by the Covid pandemic, and difficult decisions had to be made in order to reduce expenses and improve profitability. To facilitate the cost-optimisation project, Thai Marujun Co., Ltd. engaged LiB Consulting.
What was the situation like at Thai Marujun before the company started working with LiB Consulting?
K. Chaichana Jarakorn, Parts Division Manager, said: “During the pandemic, the company was dealing with declining revenue and significant financial losses – the sales dropped by 50%, so we had to reduce the headcount of our production team, and cut the remaining employees compensation packages. However, these measures reduced the total costs by only 2%, which was not nearly enough to improve the situation. We realised that we did not have enough experience in cost-reduction and needed professional consultants to help us.”
Why did Thai Marujun decide to work with an external consulting firm?
2020 was a difficult year for Marujun and the automotive industry as a whole. When sales were falling short of the plan due to the shortage of semiconductors, we realised that what we were doing internally was not sufficient. Under these circumstances, the company decided to turn to LiB Consulting for help.
“Following the falling revenue and ongoing cost management problems, Thai Marujun continued to suffer from losses. However, we could not identify the reason why the measures which we were implementing were not working. We had been analyzing the strengths and weaknesses of our company before, but only in terms of Quality Management and not cost saving. That's why we started looking for a business consulting company to help us, and came across LiB Consulting,” said K. Chaichana Jarakorn.
K. Nannaphat Atkinson, Business Planning and Management Secretary Department Manager, added: “In the past, many processes in Thai Marujun used more people than necessary. Multiple problems were related to quality control, leading to unnecessary expenses and higher production costs. There were also several issues that we could not see from the inside. It became evident that we needed a professional outside perspective. We started looking for a reliable company with a clear record of success and at a reasonable cost. The decision to work with LiB Consulting was made by the parent company in Japan. And after studying LiB Consulting’s track record, we were confident that they have the expertise to help us cut costs and finally get us back on track to generate profit.”
What were the results of the project implementation and how satisfied are you with them?
Cost-optimisation and reducing manpower are not fun things to do, but sometimes it is necessary in order to survive, and it must be stressed that these efforts are effective. In our case we can say that the hard work paid off, and thanks to our cost reduction efforts, Thai Marujun achieved results that were far better in comparison to those of other company’s branches in China and Japan. And while the main office in Japan continued to deal with financial losses, our company in Thailand benefitted from cost-optimisation and got back on track, exceeding the sales plan in the first three months of 2022.
K. Chaichana Jarakorn said: “I admit that there were some doubts at first – I saw that the consultants were younger than me, and was not sure if they were experienced enough. But these concerns disappeared very quickly when LiB Consulting demonstrated their potential. After the LiB team started the cost-optimisation project, they encouraged everyone in the company to contribute to cost-cutting. My team of 11 departments was working together as one unit. It was a fun and creative competition. I've never seen this version of Thai Marujun before. LiB Consulting can simplify all operations and make our organisation a more efficient working system. Each department competes with all others to reduce costs in a positive working atmosphere, which has enabled Thai Marujun to achieve the necessary cost-optimisation and generate good profits from 10 to 100 digits. The company continues to be sustainable, these results make me very impressed with LiB Consulting.”
What do you think was the most crucial element of the project’s success?
The results which we got were achieved not only through implementing the steps recommended by LiB Consulting, but also because of the changes which the consultants made to the organisational culture and business practices. The project heightened the awareness of the need to reduce costs and increase productivity — we had to realise that without succeeding in making improvements, inevitable problems with performance-based evaluations will follow. But once the reality was accepted, significant progress in cost reduction was made, and that positively affected several areas of the business.
How do you plan to proceed with the plan and what are you doing currently to manage costs?
Thai Marujun has continued to implement the cost-optimisation approach developed in partnership with LiB Consulting. A newly formed department, called Business Planning, is now responsible for following up on the project. The measures we are currently implementing include not only reducing the headcount, minimizing overtime and forklift, but also some less obvious decisions. For example, monthly bus fare costs were reduced by 75%. All these actions in combination produced the desired effect — in January 2022 the company registered a profit which exceeded expectations by over 300%, avoiding losses which would have incurred if no measures had been taken.
So, can you say that you are satisfied with the results?
We would prefer to invest rather than cut down, but as I mentioned before, if you have to cut costs, you better do it effectively. With the help of LiB Consulting, we managed to achieve the results we needed. Our profitability not only exceeded the plans, but also went beyond the main office’s expectations — the Japanese management is impressed by the Thailand branch's performance and is satisfied with the shape that Thai Marujun is in. So, we are pleased with the results.
“After we worked with LiB Consulting, we were really impressed by the team’s professionalism. They operate in a fast, efficient and systematic manner – something we want to emulate in our organisation in the future. The consultants brought in not only their expertise, but also the outside perspective which we so much needed. This helped us see things which we ourselves had overlooked.”
“Like with any other organisational change, there were some difficulties at first, because we had to coordinate our initiatives on several fronts. However, everyone made an effort to overcome the problems together. We managed to optimise our costs and increase our efficiency. We reduced resource consumption, and reduced redundancies in work processes to save time. But besides these direct immediate results, LiB Consulting made the team understand the long-term importance of cost-optimisation. This directed us towards better understanding of the principles of cost management, resource management, and time management. Understanding of these management principles will pave the way to a steady growth for our organisation,” K. Nannaphat Atkinson added.