Winning and Retaining Business in the Australian Mining Equipment Sector, 2014

Synopsis
In February and March 2014, Timetric surveyed 110 mine managers, maintenance managers, procurement managers and other key decision-makers in over 90 operating Australian mines. The survey primarily assessed heavy mobile equipment, however respondents were also asked about their practices and preferences in areas such as mining software, technology, and maintenance.

Areas of analysis include:
‧ Customer priorities when buying mining equipment, with ratings of the importance of 16 separate factors for customers when choosing mining equipment, including cost factors, supplier attributes and product attributes.
‧ Ratings of existing suppliers across the same factors, identifying best-performing suppliers and how well suppliers performed versus the importance of each factor.
‧ In-depth analysis of the major suppliers, namely Caterpillar, Joy Global, Komatsu and Volvo, including their overall performance ratings and their ratings for each of the factors relative to its importance.
‧ Rankings of the leading suppliers for each equipment type, with respondents indicating who they viewed as the top suppliers in Australia for trucks, excavators, loaders, shovels, dozers, drills, continuous miners, longwall systems, engines, tyres, pumps and mining software.
‧ Insight into the likelihood of switching supplier and key action points for suppliers for product and service improvements required.

Summary
Overall trends in the data revealed:
- Customer priorities in supplier selection are product quality and availability of parts
- Suppliers perform well, but customer satisfaction is frequently lowest in the most important areas for customers
- Volvo and Komatsu received the highest average satisfaction ratings, with Caterpillar considered the leading supplier for most categories of mining equipment
- Account managers make a significant impact in the selection process
- Although loyal to their suppliers, customers look for improvement in parts availability and product quality

Scope
Winning and Retaining Business in the Australian Mining Equipment Sector, 2014 published by Timetric – Mining Intelligence Centre, provides readers with a detailed analysis of customer preferences in the Australian mining sector. The analysis is based upon Timetric’s survey of 110 mine managers, procurement managers and other key decision-makers

Reasons To Buy
‧ Identify key areas for differentiation by understanding what factors most influence choice of supplier.
‧ Target product and service improvement areas based on where mining equipment suppliers are currently underperforming relative to customer expectations.
‧ Develop successful sales and marketing strategies through an understanding of the leading competitors and their strengths and weaknesses.

Key Highlights
‧ When choosing an equipment supplier, respondents rate ‘Production reliability and quality’ and the ‘Availability of replacement parts’ as most important. However, over half of respondents feel that suppliers need to improve in the latter.
‧ Overall the major suppliers perform well in terms of customer satisfaction, however, their weakest ratings were given for two of the three most important factors for respondents.
‧ Account managers make a significant impact in the selection process with 77% of respondents citing ‘Better understanding of your needs’ and 81% indicating ‘Better ability to build a long-term relationship’ as differentiating factors when choosing their current main supplier.
‧ There was a greater likelihood for respondents to switch supplier where satisfaction was low. While on average 7% plan to switch supplier within the next five years, this percentage is much higher for respondents whose satisfaction scores were below average.
‧ Although most are loyal to their suppliers, customers are specifically looking for improvements in parts availability, product quality and the ability to support cost reductions.

Table of Contents
1 Executive Summary
2 Customer Priorities in Supplier Selection
2.1 Introduction
2.2 Key Factors when Choosing a Supplier
2.3 Summary
3 Supplier Performance and Key Success Factors
3.1 Introduction
3.2 Overall Supplier Performance
3.3 Individual Supplier Performance Relative to Customer Importance
3.4 Leading Suppliers by Factor
3.5 Benchmarking the Major Suppliers
3.5.1 Caterpillar
3.5.2 Joy Global
3.5.3 Komatsu
3.5.4 Volvo
3.6 Leading Manufacturers by Equipment Type
3.7 How Suppliers Differentiate Themselves
4 Customer Retention and Key Improvement Areas
4.1 Introduction
4.2 Post-Sales Satisfaction with Suppliers
4.3 Customer Ratings of Main Supplier Relative to Peer Group
4.4 Anticipated Switching Within the Next Five Years
4.5 Key Areas for Product and Service Improvement
5 Action Points and Recommendations
6 Appendix I
6.1 Selected Data Tables
7 Appendix II
7.1 Survey Background
7.2 Analysis of our Survey Sample
7.3 Equipment Sourced from Main Supplier
8 Appendix III
8.1 What is This Report About?
8.2 Methodology
8.3 Contact Timetric
8.4 About Timetric
8.5 Disclaimer


List of Tables
Table 1: Highest average rated supplier for each criteria
Table 2: Highest Average Rated Supplier for Each Criteria, 2014
Table 3: If you had the Choice Again, would you Choose this Manufacturer?
Table 4: Anticipate Switching to a Different Supplier for these Products within the Next Five Years?
Table 5: Average Ratings for Key Factors when Choosing an Equipment Supplier, 2014
Table 6: Average Ratings for Key Factors when Choosing an Equipment Supplier by Mine Type, 2014
Table 7: The Importance when Choosing a Supplier, 2014
Table 8: Average Ratings for Key Factors when Choosing an Equipment Supplier by Commodity, 2014
Table 9: Areas of Improvement for Equipment Suppliers, 2014


List of Figures
Figure 1: Average Ratings for Key Factors When Choosing an Equipment Supplier 3
Figure 2: Precious Metals vs. Total Average Ratings for Key Factors 3
Figure 3: Average Importance Ratings vs Average Performance Rating for Main Supplier, 2014 4
Figure 4: Areas Where Main Suppliers Differentiated Themselves as Part of the Selection Process Relative to Their Competitors (%), 2014 6
Figure 5: If You Had the Choice Again Would You Choose the Same Manufacturer? (%), 2014 6
Figure 6: Do You Anticipate Switching to a Different Supplier Within the Next Five Years? (%), 2014 6
Figure 7: Areas of Improvement for Equipment Suppliers 7
Figure 8: Average Ratings for Key Factors When Choosing an Equipment Supplier, 2014 12
Figure 9: Average Ratings for Key Factors When Choosing an Equipment Supplier by Mine Type, 2014 13
Figure 10: Average Ratings for Key Factors When Choosing a Supplier (Part 1), 2014 14
Figure 11: Average Ratings for Key Factors When Choosing a Supplier (Part 2), 2014 14
Figure 12: Average Ratings for Key Factors When Choosing an Equipment Supplier by Commodity, 2014 15
Figure 13: Average Importance Ratings vs. Average Performance Rating for Main Supplier, 2014 18
Figure 14: Overall Performance vs. Overall Importance, 2014 19
Figure 15: Product Attributes – Performance vs, Importance, 2014 19
Figure 16: Cost – Performance vs Importance, 2014 20
Figure 17: Supplier Attributes and Capabilities – Performance vs Importance 21
Figure 18: Main Heavy Mobile Equipment Suppliers by Share of Respondents (%), 2014 23
Figure 19: Caterpillar – Breakdown of Respondents by Mine Type and Mineral (%), 2014 24
Figure 20: Caterpillar - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 1), 2014 25
Figure 21: Caterpillar - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 2), 2014 25
Figure 22: Joy Global – Breakdown of Respondents by Mine Type and Mineral (%), 2014 27
Figure 23: Joy Global - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 1), 2014 28
Figure 24: Joy Global - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 2), 2014 28
Figure 25: Komatsu’s Breakdown of Respondents by Mine Type and Mineral (%), 2014 30
Figure 26: Komatsu - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 1), 2014 31
Figure 27: Komatsu - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 2), 2014 31
Figure 28: Volvo – Breakdown of Respondents by Mine Type and Mineral (%), 2014 32
Figure 29: Volvo - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 1), 2014 33
Figure 30: Volvo - ratings of importance versus actual manufacturer performance for key criteria when choosing a supplier (Part 2), 2014 34
Figure 31: Leading Suppliers by Share of Respondents – Surface Equipment (%), 2014 36
Figure 32: Leading suppliers by share of respondents – Underground Equipment (%), 2014 37
Figure 33: When Choosing to Buy from this Supplier, where do you Feel They Differentiated Themselves as Part of the Selection Process Relative to the Competition? (Part 1) 38
Figure 34: When Choosing to Buy from this Supplier, where do you Feel They Differentiated Themselves as Part of the Selection Process Relative to the Competition? (Part 2) 39
Figure 35: If you had the Choice Again would you Choose the Same Manufacturer? 40
Figure 36: View of Main Mobile Mining Equipment Supplier vs Peers in the Market, 2014 41
Figure 37: Do you Anticipate Switching to a Different Supplier within the Next Five Years? 42