Tài liệu Reactive after sales service or proactive after sales service the case of kobelco construction machinery vietnam co., ltd

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Minh Quyen REACTIVE AFTER-SALES SERVICE OR PROACTIVE AFTER-SALES SERVICE: THE CASE OF KOBELCO CONSTRUCTION MACHINERY VIETNAM CO., LTD MASTER OF BUSINESS (Honours) Ho Chi Minh City – 2016 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Minh Quyen REACTIVE AFTER-SALES SERVICE OR PROACTIVE AFTER-SALES SERVICE: THE CASE OF KOBELCO CONSTRUCTION MACHINERY VIETNAM CO., LTD ID: 22140039 MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Nguyen Thi Mai Trang 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.  1.2.  COMPANY INTRODUCTION ............................................................................................................ 1  COMPANY STRUCTURE ................................................................................................................... 3  2. PROBLEM CONTEXT .................................................................................................................. 5 2.1.  2.2.  BUSINESS SITUATION OF KOBELCO VIETNAM ............................................................................. 5  CURRENT STATUS OF AFTER- SALES SERVICE AT KOBELCO VIETNAM ................................... 7  3. PROBLEM IDENTIFICATION................................................................................................... 11 3.1.  3.1.1. 3.1.2. 3.2.  3.2.1. 3.2.2. 3.3.  3.3.1. 3.3.2. 3.4.  3.4.1. 3.4.2. REACTIVE AFTER-SALES SERVICE ............................................................................................. 12  Corrective maintenance ..................................................................................................................... 13 Emergency maintenance .................................................................................................................... 14 CUSTOMER CARE .......................................................................................................................... 15  Information provision......................................................................................................................... 16 Warranty extension ............................................................................................................................. 16 FIELD TECHNICAL ASSISTANCE .................................................................................................. 17  During and after warranty assistant ................................................................................................. 18 Product disposal .................................................................................................................................. 18 SPARE PARTS DISTRIBUTION ........................................................................................................ 19  Inventory management....................................................................................................................... 20 Delivery of spares parts ..................................................................................................................... 20 4. CAUSES AND EFFECT .............................................................................................................. 21 5. CAUSE VALIDATION ............................................................................................................... 22 6. ALTERNATIVE SOLUTIONS ................................................................................................... 24 ALTERNATIVE SOLUTION 1: ASSEMBLING GPS (KOMEXS – KOBELCO MONITORING 6.1.  EXCAVATOR SYSTEM) ........................................................................................................................ 25  Benefits ................................................................................................................................................. 27 Cost:....................................................................................................................................................... 29 6.2.  ALTERNATION SOLUTION 2: ESTABLISH MORE SERVICE CENTERS ........................................ 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 1. INTRODUCTION 1.1. Company 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 2 for directly import, and since 2009 we was granted the license for selling product to the endusers. 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. 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. 3 1.2. Company structure KCMV MEMBER'S COUNCIL MANAGING DIRECTOR ADMINISTRATION DEPT. ACCOUNTING DEPT. SALES& MARKETING DEPT. CUSTOMER SUPPORT DEPT. AFTER-SALES SERVICE SECTION PARTS SECTION TRAINING SECTION SERVICE SECTION 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 4 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 aftersales 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 aftersales service greatly impact on operation and business situation of company. 5 2. PROBLEM CONTEXT 2.1. Business situation of Kobelco Vietnam 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. Kobelco's Market Share 2009-2015 25.00% 20.00% 18.50% 18.80% 19.0% 19.90% 16.30% 15.00% 15.50% 15.00% 10.00% 5.00% 0.00% 2009 2010 2011 2012 2013 2014 2015 Figure 2. Kobelco’s Market Share 2009-2015 (Source: ERG report in KISCO) 6 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. Market share of Construction Machinery Brands in 2015 3.8% 0.0% 6.3% 15.5% 5.2% KOBELCO KOMATSU HITACHI 15.2% HYUNDAI CAT 32.3% DOOSAN SUMITOMO LIUGONG 21.7% Figure 3. Market share of Construction Machinery Brands in 2015 (Source: ERG report in KISCO) 7 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) 2009 KOBELCO KOMATSU HITACHI HYUNDAI CAT DOOSAN SUMITOMO LIUGONG 2010 2 1 4 5 3 6 7 8 2011 2 1 3 4 5 6 7 8 2012 2 1 3 4 5 6 7 8 2013 2 1 3 4 5 6 7 8 2014 4 1 2 3 6 5 7 8 2015 4 1 2 3 6 5 7 8 3 1 2 4 6 5 7 8 (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. 2.2. Current situation of After- Sales Service at Kobelco Vietnam 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 8 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 aftersales 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 9 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. 10 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 20092015. 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). Level of customer’s satisfaction about after-sales service of Kobelco 90% 75% 80% 70% 78% 80% 64% 58% 60% 55% 46% 42% 50% 40% 30% 30% 21% 20% 10% 18% 34% 35% 8% 10% 12% 2013 2014 2015 19% 6% 5% 4% 2% 2009 2010 2011 2012 Satisfactory Normal 0% Unsatisfactory Figure 4. Level of customer’s satisfaction about after-sales service of Kobelco (Source: Yearly Report of After- Sales Service) 11 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: 12 • 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. 3.1. Reactive After-Sales Service 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 13 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 • Step 3: Disassemble • Step 4: Remove failure item and repair • Step 5: Reassemble After finishing these above steps, machine could be returned to run temporarily and it possibly broke down again. Therefore, customers usually blamed that machine was regularly disruptions in operation process. 14 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 Session 1 2 3 4 5 6 Machine Free inspection (hours) Kobelco Komatsu Hitachi Huyndai Delivery v v v v v v v v v v v v v v 50 500 1000 1500 2000 v v (Source: Kobelco Service Section)