Reactive after sales service or proactive after sales service the case of kobelco construction machinery vietnam CO , LTD

Four major factors that affect after-sales services machinery industry are reactive after-sales service, field technical assistance, spare parts distribution and customer care.. In After

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Tran Thi Minh Quyen

REACTIVE AFTER-SALES SERVICE

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Tran Thi Minh Quyen

REACTIVE AFTER-SALES SERVICE

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – 2016

EXECUTIVE SUMMARY

After completing the transaction of purchase, the relationship between a seller and a buyer usually still continue because of complex growing in business to business Customers purchase products and they hope that products will bring benefit to them as much as possible Hence, after-sales service is indicated as a tool which providing a valuable merit to the customer and bringing opportunity to the company

After-sales services have proven to be an important element that contributes to business situation of a company Thus, whether post sales service is appropriate or not, actually it is a big issue should be concerned Four major factors that affect after-sales services machinery industry are reactive after-sales service, field technical assistance, spare parts distribution and customer care The purpose of this thesis is to identify the issue of after-sales service in Kobelco Vietnam, then to indicate the root cause led to main problem after analyzing all causes; finally it supposes the potential solutions that can be applied to resolve the problem

ACKNOWLEDGEMENT

This study was conducted as my master of thesis at the Master Business Administration Program in 2016.This study gave me a deeper knowledge in after-sales and the qualitative research has provided me the opportunity to approach and gain an insight into organizations

in real life I would like to greatly thank a number of people who instructed and supported me during my thesis

Firstly, I would like to show my gratitude by specifically thanking my supervisor Prof Nguyen Thi Mai Trang and Prof Nguyen Dinh Tho for guidance and qualitative feedback devoted to me Lastly, I would like to thank the time and support of my friends and colleagues who participated in this research

TABLE OF CONTENTS

1 INTRODUCTION 1

1.1 C OMPANY I NTRODUCTION 1

1.2 C OMPANY STRUCTURE 3

2 PROBLEM CONTEXT 5

2.1 B USINESS SITUATION OF K OBELCO V IETNAM 5

2.2 C URRENT STATUS OF A FTER - S ALES S ERVICE AT K OBELCO V IETNAM 7

3 PROBLEM IDENTIFICATION 11

3.1 R EACTIVE A FTER -S ALES S ERVICE 12

3.1.1 Corrective maintenance 13

3.1.2 Emergency maintenance 14

3.2 C USTOMER CARE 15

3.2.1 Information provision 16

3.2.2 Warranty extension 16

3.3 F IELD T ECHNICAL A SSISTANCE 17

3.3.1 During and after warranty assistant 18

3.3.2 Product disposal 18

3.4 S PARE PARTS DISTRIBUTION 19

3.4.1 Inventory management 20

3.4.2 Delivery of spares parts 20

4 CAUSES AND EFFECT 21

5 CAUSE VALIDATION 22

6 ALTERNATIVE SOLUTIONS 24

6.1 A LTERNATIVE S OLUTION 1: A SSEMBLING GPS (KOMEXS – KOBELCO MONITORING EXCAVATOR SYSTEM) 25

Benefits 27

Cost: 29

6.2 A LTERNATION S OLUTION 2: E STABLISH MORE S ERVICE C ENTERS 30

Benefits 30

Cost 31

7 ORGANIZATION OF ACTIONS 34

8 CONCLUSION 37

9 SUPPORTING INFORMATION 37

REFERENCE LIST 58

LIST OF TABLES

Table 1 Ranking position of Construction Machinery brands in Vietnam (2009-2015) 7

Table 2 Inspection schedule of machine 14

Table 3 Warranty time of spare parts 17

Table 4 Sources of spare parts 19

Table 5 The significance of different factors in making decision in using the 23

Table 6 Cost of one KOMEXS system per year 29

Table 7 Service Area Controlled 31

Table 8 Service Center Expense 31

Table 9 Actions Plan 36

LIST OF FIGURES Figure 1 KCMV Organization Chart 3

Figure 2 Kobelco’s Market Share 2009-2015 5

Figure 3 Market share of Construction Machinery Brands in 2015 6

Figure 4 Level of customer’s satisfaction about after-sales service of Kobelco 10

Figure 5 Causes and effect tree 21

1 INTRODUCTION

KOBELCO Construction Machinery Co., Ltd manufactures, sells, service construction and transport machinery Its products include hydraulic excavators, mini excavators, and recycling machines The company also offers machinery parts; and various services ranging from regular after-sales machine check-ups to inspections and advice In addition, it resells used equipment The company serves customers worldwide KOBELCO Construction Machinery Co.,Ltd was founded in 1999 and is based in Tokyo, Japan with manufacturing centers in Japan, China, Thailand, and India; and parts centers in Japan and Singapore It has operations in Southeast Asia, Australia, New Zealand, China, India, Mongolia, Europe, Turkey, Africa, the Middle East, the Russian Federation-CIS, North America, and South America KOBELCO Construction Machinery Co.,Ltd operates as a subsidiary of Kobe Steel Ltd

Kobelco Vietnam (KCMV) is a company with 100% foreign invested by Kobelco Construction Machinery Japan, a members of Kobe Steel, one of the biggest manufacturers

of construction machinery in Japan KCMV was founded in 2004 with the head office in Bien Hoa 2 industrial zone, Dong Nai Province, in 2005 one branch was established in Tien Son Industrial Zone, BacNinh province

From 2004 to 2008, the business was restricted only in service and supply of spare parts for Kobelco machine After Vietnam joined the WTO, in 2008, Kobelco got the licensed

for directly import, and since 2009 we was granted the license for selling product to the users In order to quickly respond to customer demand and better doing service and supply spare parts, Kobelco opened the representative offices and customer service centers in Lao Cai, Dien Bien, Nghe An, Da Nang, and Gia Lai

end-With the policy to better satisfy the requirements from customers, Kobelco Vietnam commits:

 To work and support customers’ business activity by offering Kobelco’s best quality products and services

 To provide machines, service and spare parts in accordance with Japanese and international standards

 To contribute to the environment protection, saving operating costs through advanced techniques of Kobelco

1.2 Company structure

Figure 1 KCMV Organization Chart

(Source: KCMV Administration Department) Kobelco Vietnam established head office in Dong Nai province and head office controls all operations of Bac Ninh branch and five representative offices in Vietnam Above organizational structure is applied for Dong Nai head office managed by Member’s Council and Managing Director There are four departments in structure like: Administration, Accounting, Sales &Marketing and Customer Support Each department is in charge of different task but cooperate together toward missions and strategies of company Although Sales & Marketing brings the revenue directly to company, this department could not operate

AFTER-SALES SERVICE SECTION TRAINING SECTION

ADMINISTRATION

DEPT.

ACCOUNTING DEPT.

SALES& MARKETING DEPT.

KCMV MEMBER'S COUNCIL

MANAGING DIRECTOR

CUSTOMER SUPPORT DEPT.

PARTS SECTION SERVICE SECTION

independently without support of other departments, especially Customer Support department

This thesis focuses on the research of Customer Support department which plays an important role in the growth of Kobelco’s business This department includes some sections such as

After-Sales Service section and Training section In After-Sales section, there are two sections: Parts section providing spare parts for machine and Service section offering technical assist and repairing machine

Why do activities of Customer Support department like supplying spare parts, providing technical assistant, doing services after sales contribute to Kobelco business? Kobelco Vietnam is considered as a trading company that imports machine from Japan factory and Thailand factory, then sells to customers in Vietnam Thus, the transaction between the seller and buyer can not finish with delivery, but it also includes the post sales service The after-sales service is more professional, the customers are more interested in Kobelco’s products and highly appreciated its brand name Moreover, while marketing programs like promotion, customer gathering or launching new product aim to increase customer’s awareness of Kobelco’s products, after- sales services maintain customer’s loyalty and increase buying

intention of customers in the future Consequently, it could not deny that the activities of sales service greatly impact on operation and business situation of company

after-2 PROBLEM CONTEXT

According to Monthly/Yearly ERG Report, Kobelco did effectively business in early years after getting license for selling product to the End-users The data of Figure 2 showed that, the market share remained highly 19% in average during 04 years from 2009 to 2012 Unfortunately, the market share has exhibited the decline of trend since beginning of 2013 It fell dramatically to 14.9% in 2013, 16.3% in 2014 and 15.5% in 2015 The assignment of Kobelco’s Board of Director is to increase market share to 20% in following years Therefore,

it is required to find effective solutions to regain market share

Figure 2 Kobelco’s Market Share 2009-2015

(Source: ERG report in KISCO)

There are many construction machinery brands on the world However, in Vietnam, Kobelco, Komatsu, Hitachi, Huyndai, Cat, Doosan, Sumitomo, Liugong are brands what are supplying excavators to Vietnam market currently Figure 3 shows the market share of all brands in

2015 As we can see that Komatsu was the leading company with highest market share 32.3%, followed by Hitachi with 21.7% Kobelco and Huyndai accounted for 15.5% and 15.2% respectively Thus, Komatsu, Kobelco, Hitachi, Huyndai are big four companies in which total market share took over 80% while remaining brands like Cat, Sumitomo, Doosan, Liugong only took negligible share of the excavator’s market in Vietnam Based on the corresponding market share, the main competitors of Kobelco Vietnam are Komatsu, Huyndai, Hitachi

Figure 3 Market share of Construction Machinery Brands in 2015

(Source: ERG report in KISCO)

of customers Almost cases, the mission of after sales service should be indicated as the contribution of business cooperation It is suggested that the supervisor of after sales service department can rise both first time and repetition sales, because of that increase market share.(1)After-sales service is considered as factor of intangible product as stated by Asugman

et al (2)After-sales service was classified as a process of business network because it affected directly to business performance and competitive advantages as stated by Earl et al (3) Services and Sales should work together in order to understand the value that we create and

to improve programs We will provide to our targeted customers the added value they need

to maintain long-term relationships It is suggested that service should be used as a valuable tool in our sales tool box (4) Tavakoli et al (5)indicated that industrial after-sales service is including goods and services when spare parts are as tangible products combining with customer support

Boenitz (6) found that there is the strong positive relationships between customer-related levels

of customer satisfaction and ROI, economic returns and market value Customer retention has

a major impact on market share, market growth rate, market "chum" (customers entering or leaving the market, even given a stable market size), competitors retention rates, and the effectiveness of "offensive" marketing efforts (advertising, pricing, convenience) all play a role in determining market share Levitt(7)agreed that the long- term relationship between Seller and Buyer after selling a product determines the long-term profitability because after-sales service activities contribute to make competitive advantages and profits There are many types of after- sales service such as customer support, technical support, product support, etc

as stated by Goffin.(8) Saccani(9) indicated that the success of after-sales determined by several

During 04 years from 2009 to 2012, compared with main competitors, Kobelco mostly remained second level in market while Komatsu was always in first position; Hitachi ranked number four in 2009 and number three from 2010 to 2012 whereas Huyndai was grated number 5 in 2009 and number 4 in the period of 03 years 2010-2012 Nonetheless, at the beginning of year 2013, the position of Kobelco dropped down to number 4 in 2013, 2014 and 2015 that ranked after Komatsu, Hitachi, Huyndai Because Komatsu was still in first grade, Hitachi rose to second level and Huyndai also took third place (see Table 1)

Table 1 Ranking position of Construction Machinery brands in Vietnam (2009-2015)

(Source: ERG report in KISCO)

The decrease in market share and low position are the outcome of many problems Therefore, the purpose of this thesis is to clarify the main problem as well as find out the causes in order

to have effective solutions of gaining market share and recovering ranking position

After- Sales Service is a support activity after products are delivered to buyers It is a key element of product quality and successful competition which finally depends on satisfaction

major supports like field technical assistant, spare parts distribution, customer care According to the process of company, customer support department is in charge of after- sales service Before putting machine in storage, the technical staff will check carefully machine status As machine delivery, Hand over minutes and pre-delivery inspection records will be made to record clearly information of buyers or users, and good condition of machine Then, the mechanic will come to jobsite for training and operation guidance to end-users In the beginning 50 hours of operation, the Kobelco’s technical staffs continuously support for maintenance However, subsequent maintenances as well as unexpected damage, the customers must take the initiative to contact the company to inform the status of machine and breakdown of the machine Although customers can contact to customer support department for any questions or service’s information during using period, they completely unsatisfied

with the way of doing after-sales service of company what did not meet their desire Mr Nguyen Thanh Tuan – Sales Manager informed that:

Actually after-sales service plays a very important role, it is the bridge between customers and company Based on the way of doing service, almost them may decide to continue to use the product

or not After selling machine, we received a lot of complaint from customers because they did not be taked care well

Mr Nguyen Trong Hieu – Customer Support Department clearly stated that:

According to the process of service, the mechanics will contact to end-users for maintenance for the first 50 hours of operation During rest, customers must actively request service from the company Therefore, they supposed that the way of providing Kobelco service was not professional and efficient

Mr Nguyen Van Toan- Project Manager of Idico company confirmed that:

Service department lacks proactive maintenance of the machine Kobelco’s mechanic comes to check the machine only one time after machine handling Our staffs have to require service for next inspections So we would not be forewarned if fails happened

It is the reason why we felt disappointed about Kobelco’s after-sales service and will consider more

to use this service in near future

Mr Nguyen Van Hung- Director of Vinh Hung Company said that:

I often get complaints from customers after buying our machines, they do not get the taking care of service from Kobelco while other firms such as Komatsu, Hitachi, do it very well

Regarding yearly report of after-sales service from customer support department, the level of customer satisfaction was collected after performance of after sales service in period 2009-

2015 The report showed the percentage of unsatisfactory of Kobelco’s customers was low

level around 2%-6% during 03 years from 2009 to 2012 Nonetheless, from year 2013 and later, it exhibited an increasing trend of unsatisfactory of clients In 2013, the percentage rose

to 8%, nearly 4th times compared with 2012 Then, it continuously increased to 10% in 2014 and peaked 12% in 2015 Obviously, there were many reasons that make the unsatisfaction

of customers and the level of dissatisfaction increased year by year (see Figure 4)

Figure 4 Level of customer’s satisfaction about after-sales service of Kobelco

(Source: Yearly Report of After- Sales Service)

The dramatic fall of customer’s satisfaction about after-sales service is as same as a warning sign to customer support department in particular and company as a whole If this problem is not considered thoroughly and found the solution soon, Kobelco will lose more loyalty customers as well as potential customers in near future According to manager of Sales & Marketing department and Customer Support department, company considered some possible solutions in order to have an appreciate after sales and serve well to clients However, it is not easy to get the best one soon because it depends on some elements like the strategy, objective, budget, human resource of company, etc Besides that, Kobelco Vietnam is the subsidiary of Kobelco Japan, so Kobelco Vietnam has to get approval from Kobelco Japan for big amount

of investment or follow up the new technologies application for machine from Kobelco Japan The Research and Development center of Kobelco Japan researched GPS system namely KOMEXS that enables convenient remote monitoring of machines (machine condition/ working location etc.) This system brings remarkable improvement in controlling machine

in anytime at anywhere by satellite In addition, it can support and solve many problems of after –sales service activities that are existing in Kobelco Vietnam now The first launching

in Japan was from 2004 After that, KOMEXS was launched in India, EU, USA, Thailand in

2013 and Vietnam, Laos, Cambodia in 2016 Therefore, it is possible for Kobelco VietNam

to implement and apply KOMEXS from 2016

3 PROBLEM IDENTIFICATION

In order to make clear the problem, beside theories supported, the researcher of this project progressed to collect secondary data and have interviews with three main groups as follows:

 The first group includes four people who are working at Kobelco Vietnam (1) Mr Nguyen Thanh Tuan -Sales Manager; (2) Mr Nguyen Trong Hieu- Customer Support Manager; (3) Ms Phan Thanh Nha-Senior Parts Section and (4) Mr Trinh Xuan Thang – Senior Service Section

 The second group includes End-users of Kobelco Vietnam who have ever bought and used Kobelco’s products

 The third group includes Dealers of Kobelco Vietnam

Through interviewing and data collection, the researcher found that the after-sales service type was inappropriate and it led to un-satisfaction of customers There are four potential

factors causing the unrelated after- sales service activity: Reactive after-sales service,

customer care, field technical assistance and spare parts distribution

Bowman (10) stated that after –sales service is provided by suppliers as per customers’ request, suppliers can serve them reactively Reactive post sales service is as same as a reaction what suppliers requite to their customer’ complaints (11)Thus, Berry (12)suggested that reactive approaches could not find out the problem of service The complaint of customers includes three steps: problem comprehended, problem stated and solution seeking as stated by Best.(11)

The interactions with customer will more awful if the complaint does not solve positively The negative disposal from supplier impacts badly on after-sales service provided and decrease customer’s satisfaction on service Phau (13) stated that almost heavy equipment is

used more wide-ranging and originative than light equipment Therefore, heavy users have

knowledge about strengths and weaknesses of products The suppliers begin to contact heavy users to collect information as much as possible to improve the service and overcome the problem (14)

3.1.1 Corrective maintenance

Corrective maintenance contains unscheduled activities to correct deficiencies during the year

in which they occur Equipment is permitted to operate until breakdown After that, it is replaced or repaired as stated by Paz.(15) Gallimore (16) indicated that firstly, machine is restored temporarily to recover normal operation and lasting repairs is done later This maintenance is to minimize manpower, keep money in order to maintain machine’s running

in short time Therefore, it increases overall cost of maintenances because of unpredictable damage (17)

There were series activities performed in creative maintenance as follows:

 Step 1: Identify failure

 Step 2: Localize and isolate

3.1.2 Emergency maintenance

Emergency maintenance is understood that the activities are unscheduled maintenance to correct deficiencies immediately Its purpose is to prevent damaged, property loss, etc These repairs are implemented in very short time about several hours Mr Trinh Xuan Thang- Senior

Service Section stated that:

Because there was no periodic inspection or preplanned maintenance activities, Kobelco service could not control status of machine When failure occurred suddenly, emergency maintenance is priority method to consider solving the problem The incurred fee was very expensive which was higher than plan from four to eight times There were some reasons as follows:

 Urgent shipment schedule of spare parts cost more than regular shipment

 Labor cost of working overtime was double cost of normal working

Kobelco made free inspection to machine after delivery first 50 hours of operation while other competitors like Komatsu, Huyndai, Hitachi applied service proactively with regular inspections to customers (see Table 2) It led to after-sales service of Kobelco less professional than other brands Mr Trinh Xuan Thang – Senior Service Section shared that:

Customers strongly complaint that Kobelco did not provide maintenance service in periodically at jobsite compared with other competitors Komatsu, Hitachi and Huyndai I supposed that unscheduled activities of reactive after-sales service impact negatively on after-sales service of Kobelco

Table 2 Inspection schedule of machine

According to Mr Nguyen Thanh Tuan- Sales Manager and Nguyen Trong Hieu-Customer Support Manager, customers strongly complaint about reactive post sales service of Kobelco because it not only accrued big amount of repair fee but also affect seriously to their business They will have been considered carefully before using Kobelco’s service or buying machine

in the future To sum up, reactive post sales service was not suitable for users and the root cause of inappropriate service type From that, it led to market share decline in recent years 3.2 Customer care

Customer care is defined as an activity that offers information of technical, warranty extension

as stated by Saccani.(9) Customer service has many types and different distribution system Customer can absorb technical information from company through centralization of call center, company website and local repair store Kantsperger(18)found that the activity of customer transferred from simplicity to complexity At first, the mission of customer service

is to give information of service and process orders, but now the task is more complex by consulting and maintaining the relationship Kahn (19) concludes that almost enterprises pay attention more on customers due to customers’ view In order to exist in fierce competitive market what products are constantly being improved with fast speed, the companies have to change to adapt

In Kobelco, customer care is undertaken by customer support department Upon receiving feedback of equipment’s status from clients, they will classify into different levels of breakdown to give the most appropriate solution For those slightly damaged machinery, they will advise clients on the spot settlement Conversely, as for big troubles, these information will be recorded and revert to the customers after receiving specific decisions from senior

That is the reason why customers complained that the technical service of Kobelco did not take action on time and the process of problem handling was rarely slow

3.2.1 Information provision

Kobelco provides technical information in website or official paper Customers can choose types of contact such as phone, fax or email Most of cases, customers get in contact via phone which is available from 7 am to 4.30 pm, while it takes longer time for email feedback Company did not apply any special policy for urgent cases what customers need responses as soon as possible Mr Trinh Xuan Thang- Senior Service Section informed that:

There is no special policy for fastness of feedback from Kobelco It depends on each specific case, for example, Service Section will give priority support for serious problem whereas normal problem will

3.2.2 Warranty extension

Kobelco did not apply warranty policy for spare parts what have low life- cycle for example oil, filters, sprocket, tooth, seal kit, roller The warranty time was only for main parts like Engine, boom, motor, electric, sensor, solenoid, valve (see Table 3) It could be seen that the time of warranty of other competitors like Komatsu, Hitachi, Huyndai was longer than this of Kobelco Slotegraaf(20)stated that the consumers are interested in their product’s warranty period, they feel satisfied with product quality heighten In contrast, satisfaction with

attributes that cannot be irresolvable and its effect on satisfaction with product quality weakens over time.

Table 3 Warranty time of spare parts

Category

Warranty time (months)

(Source: Kobelco After-Sales Service Section)

Field technical assistance is including maintenance, warranty, repair, product disposal as stated by Saccani.(9)A speedy growth of outsourcing created profit for company to compete

in the market.(21)It is suggested that outsourcing has been become more popular from 1990’s and depended on the field technical assistance’s activity.(22)Armistead et al (23) suggested that the enterprises with big amount of service mostly prefer to the outsourcing Russell (22) agreed that because there are technical problems always make troubles to customers, they need high level of corporation from the sellers Chien(24) demonstrated that it aims to provide after- sales service quickly to customer in case the products break down in the warranty period Moreover,

the warranty plan should be predicted accurately in order to offer warranty in long time A manufacturer has responsibility to ensure the function of product by providing warranty as stated by Blischke WR et al.(25)

3.3.1 During and after warranty assistant

The warranty period of Kobelco machine is 12 (twelve) months or two thousand (2,000) hours of operation whichever comes first from the date of delivery to the first user This warranty time is the same as other competitors like Komatsu, Hitachi, Huyndai generally Within the warranty period, except some limitations, Kobelco will repair or replace at its option, free of charge, F.O.B KOBELCO’s factory or Distributor at KOBELCO’s option,

any part or parts of the warranted machine which are found by KOBELCO to be detective in material and workmanship Any parts replaced must be returned to KOBELCO’s factory in Japan, Thailand or its authorized Distributor, transportation charge prepaid by sender

3.3.2 Product disposal

The lifetime of the machine is average from 10 to 15 years The older model has the longer lifetime compared to later model although newer machine is applied advanced technologies For example, Kobelco mark 8 was innovated to lower fuel consumption and more efficient performance against mark 6 As for used machine from 1980s that is out of date, harmful with environment and difficult to buy spare parts in current market Mr Nguyen Thanh Tuan –Sales Manager said that:

Kobelco imported used machine with the quality up to 80% from Japan, then machine was repair and sold However, machine is warranted main components like engine, hydraulic system with 06 months

or 1000 hours which ever come first After 06 months, Kobelco will not be in charge of product disposal for customers

In addition, there were two sources of spare parts that Kobelco imported from oversea The first one is genuine parts in Japanese manufacturer, the second one is not genuine parts namely K2GP what were produced in China In recent years, in order to save transportation cost and time, Kobelco intensified to import more K2GP spare parts which accounted for 20% in 2009, then it over doubled in 2015 (see Table 4) The more sources of not genuine parts increased, the lifetime of parts decreased

Table 4 Sources of spare parts

(Source: Imported Analysis of Parts Section)

Saccani(9)agreed that distribution of spare parts is in charge of inventory, order and delivery management Kennedy et al(26)confirmed that spare parts which sold to customer, are not the final parts The finding indicated the companies that meet their clients’ requirements of part-supply on time, can sharply improve customers’ satisfaction in interaction and quality of after-

sales service.(27)The delivery time of spare parts depended on each item what was available

on stock or not Customer will feel satisfied if the spare parts can supply on time for their requirement So the distribution system is more stable and stabilize, the level of satisfaction

is higher In addition, inventory management aims to provide spare parts timely for equipment repaired as stated by Hopp (28)Kennedy (26) concluded that holding inventory assists maintenance and troubleshooting efficiently, because it is very difficult to predict the number

of parts which should be replaced in the future For unplanned maintenance, it will cost more expense in case damaged parts do not replace as soon as possible

3.4.1 Inventory management

Kobelco has seven parts warehouses in seven offices at Dong Nai province, BacNinh province, Lao Cai province, Dien Bien province, Nghe An province, Da Nang province and Gia Lai province While Hitachi and Huydai stock parts and make service in almost each province of Vietnam in order to assist customers thoughtfully

3.4.2 Delivery of spares parts

The delivery time of spare parts depended on each item what is available on stock or not If the items are available at warehouse, it would take one or two days for delivery However, in case the spare parts are not available at stock, it needs to be ordered from foreign manufacturer

in Japan, Malaysia or Thailand As usual, it took around two weeks – four weeks to deliver spare parts to customers after receiving their order Therefore, customers were not pleased with the time of delivery because it made their business stagnant As a result, delivery time affected to buying decision of clients because they will buy spare parts from other firms instead of Kobelco

4 CAUSES AND EFFECT

The preliminary causes and effect tree will be developed as Figure 5 as bellows:

According to above causes and effect tree and respondents interviews, it found that inappropriate post sales service is the big problem that led to market share of Kobelco decreased and ranking position dropped down in recent years In short term it affects to business activity and revenue of company, but in long term brand image of Kobelco is gradually lost Because of the serious and emergency of this factor, it requires Board of

Inappropriate After - Sales Service type

Market share decreases

Reactive After – Sales Service Customer care

Field Technical

Assistance distribution Spare parts

Corrective maintenance Information

provision

During and after

warranty assistance

Product disposal

Delivery of spare parts

Inventory management

Emergency maintenance Warranty

extension

Ranking position decreases

Figure 5 Causes and effect tree

Director of Kobelco Vietnam focus on them and find the best soultion to overcome immediately

Almost people who join in depth interview including company’s staffs and customers address

the key factor leads to the inappropriate post sales service is reactive after-sales service Nevertheless, it can not denied that three other factors like customer care, field technical assistant and spare parts distribution also impact on after-sales service activity of Kobelco But they are less urgent than reactive after-sales service and can be solved internally in short term Consequently, it is time to deeply focus on key factor: Reactive after-sales service

5 CAUSE VALIDATION

As confirmation of correspondents through in-depth interviews and theories informed, there are many causes led by inappropriate after-sales service: reactive after-sales service, customer care, field technical assistant and spare parts distribution

Through customer service records collected by customer support department annually, it acknowledged that satisfaction of customers for Kobelco’s service is decided by many

elements Customers were satisfied with information provision and field technical assistant which have high percentage 80% and 60% respectively Spare parts distribution and warranty extension are two significance factors whether customers are not happy so much but they will consider using in the future On the other hand, they extremely unpleased with reactive post sales service of Kobelco, for instance, corrective maintenance and emergency maintenance are highest percentage of dissatisfaction 65% and 50% respectively (see Table 5)

Table 5 The significance of different factors in making decision in using the

after-sales service of Kobelco

(Source: Customer Service Report in 2015) Based on above report, it can be recognized that reactive post sales service is proved to be the main factor of this issue because of its impact on level of customer’s satisfaction about after-sales service in general and Kobelco’s business as a whole

 As for customers who are using Kobelco’s machine, it directly affects satisfaction of customer and they are no longer interested in the services and products of Kobelco Currently, they still used Kobelco excavator, but it tend to be changed other brands in the future

 Turn on new customers, when they heard the bad information of Kobelco’s service which

is unprofessional services and not proactive, they become anxious and would consider more before deciding to buy new equipment from the company

 For customers of competitors, they will continuously use the equipment of rivals without studying about Kobelco’s product

In conclusion, reactive post sales service is unprofessional service because the users always require active technical assist for their equipment Customer support department and relative departments were indicated to improve this situation, but it is facing some following difficulties:

 Firstly, there are only 33 technical staffs while the number of machines sold totally 551 units from 2009 to 2015 It means that each mechanic as taken care 17 units in average Thus the human resource is not enough to serve well

 Secondly, currently there is seven service centers established across the country So each center manages the amount of units in nine provinces It is recognized that the service center number is less than the demands of service which are provided to users

To resolve this situation and be more proactive in providing services, companies consider approaching some potential solutions such as recruiting more technical staffs, establishing more service centers or applying GPS technology to track the activities of machine efficiently

6 ALTERNATIVE SOLUTIONS

In order to solve the biggest factor causing inappropriate after-sales service, Kobelco’s Board

of Director gave some directions and missions to all departments, especially customer support department in order to expose the best solution for reactive after-sales service In this case, proactive after – sales service is considered the best type of service for heavy equipment currently because it not only supports company overwhelm the limitation of reactive after-sales service but also brings the highest satisfaction to End-users

Mr Nguyen Trong Hieu - Customer Support Manager said that:

Because there are not many customers who can predict the problem of machine and ask for service in order to avoid disruption machine’s operation Or customers are difficult to recognize the defect of equipment until the problem happens Thus, proactive after-sales service is actually best way to support customers

Some studies and researches examined that doing service proactively is better than service recovery Berry (12) found that service problem can be identified by proactive method Other finding indicated that proactive post sales service creates good relationship with customers through initiative taking, predicting risk (29) Minton (30) proposed that proactive approaches are to applied to handle warranty claims, product problem Therefore, proactive post sales service helps supplier interact efficiently with its customers and deal with problem effectively

In addition, it assists customers in recognizing utility from products which they bought Thus

it creates high percentage of supplier’s clients who is being satisfied with after-sales service

There are two potential solutions implemented such as assembling GPS system to machine

and establishing more service centers

MONITORING EXCAVATOR SYSTEM)

 What is KOMEXS?

KOMEXS is both a wireless equipment monitoring system and a secure, web-based, application used for reviewing the data which collects and sends KOMEXS not only gives you the power of knowledge, but also the convenience of managing your fleet on the Web, wherever you are KOMEXS data is packaged specifically for easy and intuitive analysis in

maps, lists, graphs and charts that are ready for viewing at your convenience It will be installed to almost machine mark 8—and it’s ready to run free the first five years (no communication service fees) This technology can also be installed in almost anything using

a 12V or 24V electrical system to collect basic operating information

 How does KOMEXS work?

KOMEXS uses a network of low earth-orbit satellites to relay basic and critical performance data from your machine to your computer as well as to your local Kobelco distributor—who’s readily available for expert analysis and feedback It collects detailed information from your machines on a daily basis and through event-driven occurrences You are then provided with daily, monthly, and annual reports on both basic and more advanced aspects of machine performance Through the web application, a variety of search parameters are available to help you quickly find information about specific machines based on key factors such as utilization rates, age, various notification messages, and more KOMEXS data can also be pulled into your existing management and office applications or downloaded directly into spreadsheet programs for further analysis KOMEXS doesn’t just provide information; it provides answers

 What can KOMEXS do for you?

KOMEXS gives you the power and knowledge to help you make fact-based, basic and strategic business decisions regarding your machines and their operations This pays off in increased productivity and availability, proactive support, smarter management, and much

more The information KOMEXS reports will vary by machine model for Kobelco Equipment

 KOMEXS functions

 Working data displays the status of daily working, use of the optional attachment, and

parking state per month The period of the daily operation time is displayed per month The graph of the monthly total operation time is displayed with the work type per year The operation time and radio by work type are displayed in the selected target range Each model of fuel consumption are displayed Operation information (working hours, days, work load, etc.) during the period of time specified in the target range is listed

 Last location and location history are displayed on the Web map/Google Earth (night,

afternoon, real time) For the selected target machine, the units that are located within the specified distance are displayed on Google Earth the Web map

 Maintenance information can be downloaded as an Excel file Replacement time of

consumables can be checked Negative value shows the elapsed time since the approximate timing of replacement

 Alarm of machine informed the low engine oil pressure and IT controller disconnected

 This system is used for maintenance planning in order to change passive maintenance to

positive maintenance

 Benefits