Supply chain overhaul for Komatsu

Komatsu Australia is engaged in a complete overhaul of its supply chain — covering shipping from its factories, transport within Australia and New Zealand, uniform quality machines, and the implementation of strategic procurement.

Headed by Michael Bragg, Komatsu Australia’s general manager, supply chain, the overhaul of the company’s supply chain and procurement systems is already delivering substantial customer benefits including shorter delivery times, better and more consistent machine quality, and improved cost control.

“When Komatsu Australia’s restructuring began three years ago under company president Bill Pike, there was no supply chain management within the company,” Bragg says.

“I was appointed with a specific brief to focus on logistics deployment and supply chain management across the company.”

“We are looking for opportunities for efficiency, with one of the first areas being to focus on the machine logistics pipeline.”

“This includes mapping the supply chain from factory to customers, understanding lead times and developing shipping standards,” he says.

“For example, we are dealing with 12 different factories around the world. No matter where a machine comes from, we will eventually require it to be in a standard set up and a standard package — with the aim being to reduce shipping costs and gain more control over our cost structures.”

Komatsu Australia is using its SAP system’s logistics management capabilities to improve supply chain management.

“This is allowing us to cover the entire pipeline of logistics, all the way from the factory through to delivery to the customer,” says Bragg.

“Already this is paying dividends in delivery of machines from the factory to the customer.”

Another major change has been the appointment of a single company to handle machine transport throughout Australia.

“In early October 2007, we appointed McAleese Transport to handle all our heavy haulage of equipment around Australia, covering both mining and construction,” he says.

“In doing so, we’ve gone from 70 different players to a single transport supplier. Before we did this, our transport costs were going through the roof.”

“However, costs were not the only issue for this move. There were also OH&S issues and compliance issues that were not being addressed with so many different transport suppliers.”

According to Bragg, consolidating transport ensures the company has much better visibility of where equipment is at any one time.

“We are fully complying with legislative requirements, and we are better controlling our costs,” he says.

Komatsu Australia’s Utility Central was one of the first implementations of the company’s improved supply chain management.

Utility Central has just delivered its 600th machine since it was established in late 2005.

“The advantages of centralising our utility products pre-delivery preparations in one place include improved quality, faster delivery times to customers, lower costs and the delivery of a standardised machine,” Bragg says.

“We are now working on implementing strategic procurement on a wide range of goods and services nationally, with the aim of keeping our costs down, and delivering a uniform standard of products and services throughout Australia and New Zealand.”

One of the company’s next developments will be the release of Komatsu Genuine Attachments — a Komatsu-branded, Australian- and New Zealand-built, engineering-compliant range of buckets and quick hitches for excavators and wheel loaders across the construction range.

Komatsu Genuine Attachments will be available from the first quarter of 2008.

“As part of this, we are substantially reducing lead times for the supply of buckets and attachments,” Bragg says.

“We’ve adopted a philosophy of developing strategic supplier relationships, working closely with these suppliers with the aim of having a long-term relationship, and helping them grow their capabilities — even to the extent of supplying Komatsu markets outside of Australia and New Zealand,” he says.

There is also a range of other supply chain projects in the pipeline sponsored by his colleagues in sales and operations, said Bragg.

Further information (AUSTRALIA): Komatsu Australia, ph 1300 KOMATSU (1300 566 287), website e-mail

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