Komatsu Boosts Customer Experience Through Supply Chain Improvements

By Rodney Weidemann

When it comes to the supply, maintenance and reconditioning of mining equipment, challenges within the supply chain and logistics environment are among the biggest causes of bottlenecks in delivering an effective service to customers. Issues such as long lead times and regulatory compliance all play a role in impacting how well original equipment manufacturers (OEMs) can help their customers.

According to Michael Bengover, Komatsu’s director of operations, customers generally look at three aspects when it comes to equipment: Is it the right price? Is it available in time? Will they receive the level of quality they demand?

“Perhaps their biggest concern is what we call ‘delivery doubt’ – are they certain they will be able to get their equipment operational in time – which is a fear that is exacerbated when there are speedbumps within the supply chain,” he says.

“Understanding this, Komatsu has taken immediate action to improve the situation and to foster better customer/supplier relations. Traditionally, a lot of the OEM parts used for maintenance and repairs have long lead items of up to 12-18 months. Because of this, we have focused on ensuring that certain strategic parts have been localised, while maintaining their compliance with local legislation and ensuring they remain of the expected high market standards.”

The aim, he says, is to reduce the cost of these items, thereby helping customers to remain more competitive, while still delivering best-in-class quality and shortened lead times.

“Already, our suppliers are based close to our operations, and we are now entering into supplier agreements with these players, to ensure they keep critical inventory on their shelves at all times, to help us reduce lead times further.”

Improving forecast accuracy

Meanwhile, Komatsu’s supply chain director Thomas Pullen indicates that the company is leveraging digital technology to assist it in understanding how best to forecast future demand for these parts. By implementing advanced technologies to monitor the condition of underground equipment, Komatsu is always aware of the state of it, meaning it can proactively ensure parts will be available when required.

“By significantly improving our forecast accuracy, thanks to the effective analysis of data related to the condition of components and sub-components, we can anticipate when a machine needs to receive an intervention by one of our field service teams.

“We are also still considering additional localisation categories, and these will be identified by our operations people, who provide feedback on potential weaknesses in the current designs. This data will then be used to ensure our suppliers are able to meet the highest possible standards,” he says.

“It is imperative that they produce items that are free from defects and build these in a factory that is deemed safe. To this end, we audit our suppliers stringently, to ensure this will be the case. The service level agreements we sign with these suppliers are designed to mitigate risk, improve service delivery, and ensure the requisite stocking agreements.”

Pullen says in the past, Komatsu faced challenges around its inability to properly measure its suppliers’ capabilities and the lack of product localisation, which were further exacerbated by these suppliers having such long lead times.

“What has been incredible is how we were able to work closely with them to solve these challenges, as evidenced by the fact that we have reduced our component lead time to just six weeks, and have ambitions of driving this down further, with the goal of a mere seven-day lead time.

“This has been achieved by aligning the lead times with, and integrating these into, our business processes. In other words, by leveraging internet of things (IoT) sensors to determine which equipment might have premature failure, we are already aware of what parts likely need replacing, and which others can be reconditioned – so the components can be ordered proactively, before they are actually required.”

Defragmented supply chain

Bengover adds that Komatsu’s smart services centre in eMalahleni analyses the data from the installed IoT sensors in real time, to determine where any issues lie. Whether the problem is identified via temperature monitoring, vibration checks, or some other form of study, they can quickly determine whether a part is wearing out too fast, and put plans in place to proactively resolve the issue.

“Until we made these positive changes to eliminate the bottlenecks of the past, there was precious little predictability as to when we would be in a position to repair equipment on site, rebuild it at our factory, or even have the parts available to undertake repairs,” he notes.

“This, in turn, placed strain on the entire supply chain and led to us being in a position to only put fires out by expediting equipment, components and parts, as and when the machines failed. This meant utilising costly air freight to get replacements to clients – a problem that has been resolved by our access to local sources and the ability to more effectively plan ocean freight, thanks to our massively improved forecasting accuracy.”

Pullen points out that Komatsu has further defragmented its supply chain by reducing the number of suppliers offering products in the same category, while ensuring that those that remain are the most appropriate and effective suppliers.

“In this way, we not only improve the revenue growth of the remaining suppliers, but we also position ourselves to reduce our own costs,” he says.

“We have also boosted our delivery effectiveness by ensuring that our original equipment, rebuilds and individual component streams are under one roof, allowing us to provide a complete, end-to-end service to our customers, in a timeous and effective manner.”

The goal, he says, is to keep the end customer happy, by offering them agility and flexibility while meeting their demands – this approach makes a huge difference in the overall customer experience.

“Our focus from a people, process and product perspective is to ensure that our customers receive their parts or machines on time, at the right price point, and within a quality service framework.”

At Komatsu, “We have moved from ‘delivery doubt’ to ‘delivery predictability’, while still meeting customers’ comfort and quality expectations. We’ve worked diligently to streamline our processes, and thanks to the close collaboration between our production and demand planners, we’ve successfully eliminated previous bottlenecks. This has enabled us to shift from being a reactive service provider to a proactive one,” says Pullen.