{"id":5248,"date":"2017-04-05T21:22:44","date_gmt":"2017-04-06T01:22:44","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/komtrax-use-of-data-analytics-in-construction-machine-industry\/"},"modified":"2017-04-05T21:24:00","modified_gmt":"2017-04-06T01:24:00","slug":"komtrax-use-of-data-analytics-in-construction-machine-industry","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/komtrax-use-of-data-analytics-in-construction-machine-industry\/","title":{"rendered":"KOMTRAX \u2013 Use of data analytics in construction machine industry"},"content":{"rendered":"<p>Komatsu is the world second largest construction machine company behind Caterpillar. The company has focused on the use of data long before the notion of \u201cBig Data\u201d became prevalent. Since 2001, Komatsu has not only sold its products but also provided Komatsu Machine Tracking System (KOMTRAX), the system incorporates censors and GPS into Komatsu products and provides users real time information including location, utilization, maintenance condition, and fuel consumption etc.<\/p>\n<p>&nbsp;<\/p>\n<p>KOMTRAX<\/p>\n<p><iframe loading=\"lazy\" title=\"Komatsu KOMTRAX\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/Lguao0ou4XA?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxa.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5245\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxa-300x219.jpg\" alt=\"\" width=\"416\" height=\"304\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxa-300x219.jpg 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxa-600x437.jpg 600w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxa.jpg 656w\" sizes=\"auto, (max-width: 416px) 100vw, 416px\" \/><\/a> <a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxb.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5246\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxb-300x165.jpg\" alt=\"\" width=\"555\" height=\"305\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxb-300x165.jpg 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/komtraxb.jpg 600w\" sizes=\"auto, (max-width: 555px) 100vw, 555px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Value Creation<\/strong><\/p>\n<p>As you can see from the chart, by gathering and visualizing all data of the machine, Komatsu provides the following benefits to users:<\/p>\n<p>\uf06c Real time monitoring of utilization for optimal machine deployment<br \/>\n\uf06c Prompt repair and preemptive maintenance<br \/>\n\uf06c Higher resale value with transparent work and repair history<br \/>\n\uf06c Engine lock system to prevent from theft<br \/>\n\uf06c Free consultation for further cost reduction opportunity by real time machine deployment and maintenance etc.<\/p>\n<p>Regarding its consultation service, for example, if the machine turned on engine for 100 hours but only worked 60 hours, KOMTRAX visualizes the data and advises customers to either change numbers of machines for the construction site (and allocate the machine to some other site) or advise the driver or superintendent to change work flow which Komatsu has built its expertise through collecting and analyzing vast datasets.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Value Capture<\/strong><\/p>\n<p>Komatsu does not aim to monetize KOMTRAX directly from customers. By providing the system almost for free, Komatsu uses the system as an effective marketing tool. However, beyond marketing, Komatsu also captures the following values through KOMTRAX:<\/p>\n<p>\uf06c Asset seizure in case of users\u2019 default (Komatsu provides installment sale with pledge of the products)<br \/>\n\uf06c Utilization of data gathered from all machines for precise demand prediction<\/p>\n<p>As Komatsu sells its products with KOMTRAX, it enhances data collection sources. By gathering real time data of the all machines around the world, Komatsu can use the real time data to predict the demand trend and utilize the prediction to achieve lean production and minimize working capital and product lead time.<\/p>\n<p>As a result, its revenue growth rate and profitability has improved drastically since 2003, surpassing those of Caterpillar, the market leader of the industry (due to the initial CAPEX and free installment of KOMTRAX to users, its profit margin did not improve for the first 2 years after the launch of KOMTRAX).<\/p>\n<p>Financial performance<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/Financial.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-5247\" src=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/Financial-300x180.png\" alt=\"\" width=\"507\" height=\"304\" srcset=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/Financial-300x180.png 300w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/Financial-768x462.png 768w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/Financial-1024x615.png 1024w, https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2017\/04\/Financial-600x361.png 600w\" sizes=\"auto, (max-width: 507px) 100vw, 507px\" \/><\/a><br \/>\nSource: Capital IQ<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Future prospect and challenge<\/strong><\/p>\n<p>KOMTRAX has contributed to the improvement of financial performance of Komatsu. It provides win-win value proposition to both Komatsu and users. However, due to the fierce competition against Caterpillar, it fails to monetize data analytics and consultancy service from customers. Going forward, one question would be whether Komatsu should monetize its data analytics service, as its customer value proposition has been already proved. In my opinion, its benefits to customers are huge and they can adopt subscription model and obtain fee from customers without sacrificing retention. Then Komatsu can use the proceed for further R&amp;D. Since competitors would emulate innovative products or services, Komatsu cannot sit still and need to invest in further development of its products and services in order to remain competitive in the business.<\/p>\n<p>&nbsp;<br \/>\nSource<br \/>\nhttp:\/\/www.komatsuamerica.com\/komtrax<br \/>\nhttps:\/\/www.salesforce.com\/jp\/blog\/2013\/12\/vol3-bigdata.html<br \/>\nhttp:\/\/business.nikkeibp.co.jp\/article\/bigdata\/20140208\/259472\/<br \/>\nhttp:\/\/www.komatsu.com\/CompanyInfo\/press\/2016092705594127458.html<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Komatsu revolutionized itself from selling machines to providing data analytics<\/p>\n","protected":false},"author":550,"featured_media":5249,"comment_status":"open","ping_status":"closed","template":"","categories":[1403,776,1404],"class_list":["post-5248","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-construction-machine","category-data-analytics","category-komatsu"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/data-and-analytics-as-digital-assets\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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