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Komatsu, Ltd.
Komatsu Ltd was one of Japan's largest heavy industrial manufacturers. Komatsu was a large international firm with revenues of ¥989 billion. The company was organized on three major lines of business: Construction equipment, industrial machinery, and electronic-applied products.
Construction Equipment
Komatsu was the world's 2nd-largest manufacturer of a complete line of construction equipment. The firm's product line contained over 300 models, including bulldozers, hydraulic excavators, wheel loaders, and dump trucks. With a more than 30% share of the domestic excavator market, Komatsu was the largest player in the Japanese market.
The Product Development Process and Design for
The product development process at Komatsu lasted 2 years on average.
The Product Planning Stage
The product planning process, which was last updated in 1981, began with the preparation of a long-range development plan.
The Design Stage
The objective of the design stage of product development was to prepare the product for prototype production. The design phase consisted of 3 major steps: 1st, a conceptual drawing of the product: 2nd, layout drawings for the product and third, detailed parts drawings. During the first step, the first of four design-for-manufacturability studies was conducted. The A study evaluated the feasibility of achieving the target cost and the overall manufacturability of the design .
The Trial Production Stage
The objective of the trial production stage was to finalize the design of the product Trial production consisted of producing prototypes of each product and was conducted at the plants at which the product was to be manufactured. The completion of trial production allowed the final, or D. study to be carried out . This study examined the ease of production and assembly of the new product and confirmed its quality. If any problems were encountered, a Trial-Manufacture Problem Document was issued.
Reducing the Time to Market
Players in the highly competitive market for excavators and bulldozers had begun to compete based on the time it took to get new products to market. Part of Komatsu's plan to improve its design for manufacturing was to change its relationship with its suppliers. In 1993, Komatsu manufactured about 30% of its products, designed and subcontracted another 50%, and purchased from outside suppliers the remaining 20%.
Target Costing
Throughout the product development
These preliminary target costs or target values, were used to help identify when the application of cost reduction techniques was required.
Product engineers were expected to identify several design alternatives for each major subassembly of a new product. Two factors were considered: quality and cost. A new design alternative was only adopted if it achieved both the desired levels of quality and cost. Frequently, one of the alternatives proposed produced a higher quality product but at a higher cost. The product engineers then explored ways to manufacture the higher quality alternative at a lower cost. If a cost-effective way to implement the new alternative was identified, then it was adopted; otherwise, the alternative was abandoned or subject to further study for future applications.
The process of design analysis in the way the engine and torque converter, transmission, and steering clutch and brakes were positioned in the firm's larger bulldozers. In the old design, these three modules were physically separate. This approach, required 86 hours to mount and dismount these modules during maintenance.
The process of functional analysis at Komatsu can be illustrated by the development of the target cost of an excavator cooling system. It began with an analysis of the functions of the cooling system and how they were achieved. The primary function was identified as its cooling capacity; secondary functions included how quickly it started cooling after the engine was first switched on and how stable a temperature it maintained.
The determinants of cooling capacity were ranked in the order of importance. The most important determinant of cooling capacity was identified as the surface area of the radiator. The second most important determinant was the size of the fan, followed by the rotation speed of the fan, the volume of water in the system, and the ambient air temperature, The functional analysis began by plotting the cooling capacity versus the radiator surface area for all existing products that used the same type of cooling system.
Required:
What are the strengths and weaknesses of Komatsu's target costing system?
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