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
ID: 22140039
MASTER OF BUSINESS ADMINISTRATION
SUPERVISOR: Nguyen Thi Mai Trang

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

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.
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
6.1.
ALTERNATIVE SOLUTION 1: ASSEMBLING GPS (KOMEXS – KOBELCO MONITORING
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.

CUSTOMER SUPPORT
DEPT.

SALES& MARKETING
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
DOOSAN
32.3%

SUMITOMO
LIUGONG

21.7%

Figure 3. Market share of Construction Machinery Brands in 2015
(Source: ERG report in KISCO)


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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


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


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%

34%

35%

10%

12%

8%

2013

2014

2015

30%

30%

21%

20%
10%

6%

18%

19%

5%

4%

2%

2010

2011

2012

Satisfactory

Normal

0%

2009

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.

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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)


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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.

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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
be considered to solve.

Information provision still limits due to no purchasing online system. Ms. Phan Thanh Nha –
Senior Parts Section emphasized that:
There were 98% of clients who come directly to office and order parts, only 2% of customers called
for buying. Kobelco had not still set up system of purchasing online. Therefore, information provision
was limited for customer to access and contact quickly.

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

17

attributes that cannot be irresolvable and its effect on satisfaction with product quality
weakens over time.
Table 3. Warranty time of spare parts
Warranty time (months)
Category
Kobelco

Komatsu

Hitachi

Huyndai

Engine

12

12

9

9

Boom

6

6

3

6

Motor

3

6

3

6

Electric

9

12

9

9

Sensor

3

6

3

6

Solenoid

3

6

3

6

Valve

3

6

3

6

(Source: Kobelco After-Sales Service Section)
3.3.

Field Technical Assistance

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,


18

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.


19

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
Sources

2009

2010

2011

2012

2013

2014

2015

Genuine

80%

78%

75%

76%

70%

60%

50%

K2GP

20%

22%

25%

24%

30%

40%

50%

(Source: Imported Analysis of Parts Section)
3.4.

Spare parts distribution

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 partsupply on time, can sharply improve customers’ satisfaction in interaction and quality of aftersales 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