HandC Services Workbook - Template v1

# Caterpillar: Confidential Green
Key Steps to Success

Dedicate a Parts Product Growth Specialist for H&C (or
Define the Customer Experience - leverage Value Prom
Map the Opportunity and Align with Channel Coverage
Optimize the Branch Experience - convenient, clear serv
Target Jobsite Opportunities - large customer container
Complete Coverage with Location Expansion and Mobile
Build Expertise - Recruiting, Training, and Retention
Build Capability to Deliver - Inventory, Toolings, and Ope
Drive Customer Awareness of H&C Services - marketing
Profitability chart
Tie to BC deliverables
Leading indicators
Commit to review

dedicated PPG Specialists
Define customer experience
CX - all makes, all models, with gaurantee turnaround
How To
"5 steps" of how to - see retail as example

PPGS
CX Definition
Mapping of opportunity and aligning to channel for execusion
Maximize branch experiense - supplement with delivery

Look for opportunity with jobsite
Complete the coverage with mobile

th Specialist for H&C (or Hydraulics) - key resource to drive the strategy and growth
ce - leverage Value Promises - All Makes, 30-Minute Walk-in Turnaround, etc.
with Channel Coverage
e - convenient, clear service point, fast response, all makes
arge customer container solutions as well as smaller DIM (tooling, inventory, training packages)
ion Expansion and Mobile - Rental Stores, Mobile Vans, SLDs, etc.
aining, and Retention
entory, Toolings, and Operations
H&C Services - marketing and communication plan

nel for execusion

Hose & Couplings Service Growth
Strategic Definition of Winning
H&C Services Growth Executive Sponsor

H&C Services Growth Business Manager / Specialist
H&C Services Growth - STUs 2018

2019
2020
2021
2022
2023 (2 x 2018)
2026 (3 x 2018)
Customer Experience Commitments

Mixed Fleet
H&C Dedicated Storefront/Counter
Walk-In Turnaround Time
Field / Mobile Response Time
Channel Distribution of Growth Channel

See Place - Channel tab for strategic review Branches
Location Expansion
Jobsite
Mobile
Other 1
Other 2
Delta to target
Financials
Investment
Capital - facilities and tooling
Capital - mobile / jobsite assets
Capital - inventory
Expense - people
Expense - training
Expense - marketing
Other
Profit After Direct Expenses
H&C Services Growth - KPIs KPIs

Dealer would target and track at the branch or channel level STUs
PSE Won-Closed Rate
Hoses / Day
Mixed Fleet STUs

DIM Customer Conversions
Walk-In Turnaround Time
Mobile / Field Delivery Response Time
Lost Sales Due to Lack of Inventory
Quality: % Assemblers Current on Training
Notes for Actions

CI STUs (@ DN) YOY % Growth
$2,000,000
$2,200,000 10%
$2,400,000 9% $7,000,000
$2,856,000 19% $ 456,000
$6,000,000
$3,398,640 19% $ 542,640
$4,000,000 18% $ 601,360 $5,000,000
$6,000,000 50% $ 2,000,000
$4,000,000
$3,000,000
2020 2021 2022 2023 2026
x $2,000,000
x
$1,000,000
x
Field Mobile $0
2018
2020 2021 2022 2023 2026

$ 1,800,000 $ 2,000,000 $ 2,200,000 $ 2,400,000 $ 3,400,000
$ 155,000 $ 300,000 $ 320,000 $ 500,000
$ 600,000 $ 700,000 $ 800,000 $ 900,000 $ 1,300,000
$ 300,000 $ 600,000
$ 95,000 $ 100,000 $ 200,000
$ - $ - $ - $ - $ -
$ - $ 1,000 $ 3,640 $ (20,000) $ -
2020 2021 2022 2023 2026

$0 $0 $0 $0 $0
2020 2021 2022 2023 2026

H&C STU Growth Targets - w/ Channel Allocation
$7,000,000
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
2018 2019 2020 2021 2022 2023 2026
Branches Location Expansion Jobsite Mobile

Other 1 Other 2 STU Expense

2018
2019
2020
2021
2022
2023
2026
2026

STU Branches Location Expansion Jobsite Mobile Other 1 Other 2
$2,000,000
$2,200,000
$2,400,000 $ 1,800,000 $ - $ 600,000 $ - $ - $ -
$2,856,000 $ 2,000,000 $ 155,000 $ 700,000 $ - $ - $ -
$3,398,640 $ 2,200,000 $ 300,000 $ 800,000 $ - $ 95,000 $ -
$4,000,000 $ 2,400,000 $ 320,000 $ 900,000 $ 300,000 $ 100,000 $ -
$6,000,000 $ 3,400,000 $ 500,000 $ 1,300,000 $ 600,000 $ 200,000 $ -
4000000 4600000 5500000 6000000 9000000

0 400000 500000 1000000 1500000
0 0 400000 800000 1600000
500000 750000 1000000 1500000 2000000
435000 500000 550000 800000 1100000
100000 200000

Expense
$0
$0
$0
$0
$0

Customer & Market
Opportunity - Where Do We Lose H&C Opportunity - Cat Products

H&C Opportunity - Competitive Equipment
H&C Opportunity - Broad Industry
Total
2020 Base STUs
Highest Lost Opportunity Branches Branch Name

Mapping tool to support branch1
branch2
branch3
branch4
branch5
branch6
branch7
branch8
branch9
branch10
Top 20 Customers
customer1
customer2
customer3
customer4
customer5
customer6
customer7
customer8
customer9
customer10
customer11
customer12
customer13
customer14
customer15
customer16
customer17
customer18
customer19
customer20
Dealer Rental Services
Competition Key Competitors

competitor1
competitor2
competitor3
competitor4

competitor5
Voice of Customer What key customer requirements for H&C Services have been gathered?
What key customer requirements are missing - where do we have gaps in our k
Develop plan to gather customer voice
Notes for Actions

Total Won Lost POPS
$8,000,000 $8,000,000 0%
$24,000,000 $24,000,000 0%
$48,000,000 $48,000,000 0%
$80,000,000 $0 $80,000,000 0%
$2,400,000
Lost Opportunity (Hydra) Opportunity within X miles (Coverage Map Tool)
Lost Opportunity POPS Units
Opportunity within X Key Values / CX they provide / Price Position

miles low price, on-site delivery, convenient location, friendly environment, 24/7 response, mixed fleet su

&C Services have been gathered?
missing - where do we have gaps in our knowledge of customer needs?

POPS (Cat base)
0%
0% PINS 25%
0% Ratio 2.5 General guidance: Total Industry is 2.5X the Cat + Competitive
0%
10 Non-Traditional Customers Est. Opportunity Think customers in other industries with H&C opportunity
customer1
customer2
customer3
customer4
customer5
customer6
customer7
customer8
customer9
customer10
ent, 24/7 response, mixed fleet support, etc.

+ Competitive
th H&C opportunity

Service (Product) - Define the Customer Experience
Articulate the Unique Selling Propostion of Cat Dealer H&C Services
Value Promises
Hassle Free Service
Maximum Uptime
One-Stop Convenience
Trust in Expert Support
Security in Quality Parts

- Define the Customer Experience
Selling Propostion of Cat Dealer H&C Services
Customer Experience / Commitments

Easily accessible branch locations in close proximity to customers (highest opportunity locations)
Clear signage for customer awareness of available Hose Service and where to go
Direct customer entry point to dedicated Hose Service Parts counter
Welcoming environment, offering a customer wait area and viewing window into Hose assembly workshop
Hose assemblies labelled using Cat label printer c/w QR code for easy reordering
Best in class operating hours
Off hours and Weekend service offered though a direct call out service
Delivery service to customer site or drop box
Hose replacement services in the field
eCommerce interface to order hose assemblies
30-minute turnaround time for walk-in customers

2-hour response time for delivery or mobile services
Build mixed fleet hose - other commitments and CX apply equally to mixed fleet hose
Knowledge of industry and competitive products

Implement a support line for customer questions
Hose Inspections performed with any machine maintenance or service
Commitment to quality parts and assembly
Notes for Actions

2020 2021 2022 2023

Execution Model Reference

Place - Channels
Strategic Review Leverage opportunity mapping tool

1. How much opportunity is within reasonable distance for customers to come
2. Where are there pockets of competitive coverage that is not supported by
3. Where are there high concentration of machines outside of existing branch
Relative to the opportunity identified in #2 and #3

Are these candidates for on-site solution?
Are these customers interested in DIM solutions?
Are there existing alternate facilites that could be leveraged with additional ca
Are there opportunities to add mobile solutions for coverage?
Notes on Channel Expansion Existing Branches

Should feed the DOW channel growth plan Existing Alternate Facilities (e.g. Rental Stores)
New Alternate Facilities (e.g. Microstore)
Jobsites - Dealer Executed
Jobsites - DIM Customers
Mobile
Second Level Distributors
Other
eCommerce Can customers order/buy hose assemblies on-line?

stance for customers to come in to branches with existing capability?
rage that is not supported by existing branch capability?
nes outside of existing branch capability?
e leveraged with additional capability (branches w/o capability, Rental Stores, TEPS, etc.)
or coverage?
Notes for Actions Investment

Process - Capability
Mixed Fleet Product
Inventory
Tooling
HIS 2.0
Hose Assembly Customer Area
Hose Assembly Work Area
Label Printing
Hours of Operation and Off-Hour Support
Delivery Services
Hose Replacement Services
Hose Inspection Services
On-Site Container Solutions
DIM Service Solutions

Mobile Solution

Knowledge / Discussion Points
Cat Coupling product line has expanded (500+ couplings) to cover many OEM brands and industries (96% coverage)
Key equipment OEMs, like Deere and Komatsu are migrating to ORFS - the Cat sweet spot
Mixed fleet capability in the HIS2.0 Hose Builder Tool, including upload of "Black Book"
Cat can provide the Cat equivalent part number for any competitive coupling
Ensure inventory is planned in alignment with sales expectations

For mixed fleet inventory, Caterpillar has prepared a recommendation to get started (669 unique coupling PNs)
Run stocking recommendation for Cat equipment based on Serial Number list (branch or customer)
Combine mixed fleet and Cat equipment stocking recommendations to identify gaps
Caterpillar risk sharing inventory investment via PIC Central Override
Establish and execute process to identify lost sales due to lack of inventory
Evaluate tooling gaps based on channel expansion plan

Evaluate tooling utilization for any capacity constraints
Expanded dealer tooling offerings available
Container solutions defined
https://his2.cat.com (must use Chrome) - improved interface and functions
Clear signage and identification of Hose Assembly services - outside and inside facility
Clean, comfortable waiting area - ability to view the hose being made
Dedicated work area - clean, organized, in view of the customer

Proper tooling - well maintained and calibrated
Contamination Control in place
Direct access to HIS, SIS, needed dealer systems - multi-monitor for ease and professionalism
Easy access (proximity) to inventory - couplings organized to find easily
Competitive reference material (like "coupling board") readily available to support speed and quality
Ensure quality of assembly process - Cat Inspect app has Hose Shop Audit
Hose assemblies labelled using Cat label printer c/w QR code

Develop protocal for non-Cat hose assemblies - how can they be idenfitied to allow easy re-ordering
Industry leading hours of operation - most convenient service

Contact number and supporting structure in place to service off-hour customer needs
Establish fast response for customers in the field - leverage parts runner, drop boxes, courier services, etc.
Establish fast response for customers in the field with full service remove - build - install hose
Can be Mobile Van or combination of branch and field service / delivery service
Establish clear expectation that hoses are inspected as part of PM, TA-1
Establish clear communication and follow-up of issues found during the inspection
Cat Inspect App has Hose Inspection Form available
Design container solution based on customer needs. Layout and tooling guidance available in Container Design Guide
Clearly define support services (training, inventory, etc.) and roles/responsibilities with the customer
Consider On-Site CVA structure to define services offered
Support solutions around tooling, training & inventory for the customer to be self-sufficient

Provide on-going support - advice, inventory checks, etc. to maintain relationship and solution effectiveness
Consider On-Site CVA structure to define services offered
Ensure proper sizing and tooling of mobile vehicle

Ensure correct inventory for the population being served
Establish resource dispatching and communication process to ensure fast response to customer emergency calls
Establish mobile operator compensation / incentive structure to drive entrepreneurial drive for sales and building customer base

References Notes for Actions
https://his2.cat.com
ASC
link?
Work with ASR/ASC
PEDJ0351 Tooling Brochure

PEHJ0415 Container Brochure
PEHJ0415 Container Brochure
PEDJ0351 Tooling Brochure

Mobile Playbook
See Inventory section above

Investment

Process - People
Hose Assembler Training
DIM Customer Assembler Training
Hose Assembler Career
Sales Staff Training

Ensure proper training and refresher plan to safely build hose
Ensure proper training refresher plan to correctly identify parts and assembly procedures for non-Cat hose assemblies
Ensure proper training and expectation setting for customer interactions - friendly, fast, consult on root causes, upsell, etc.
Develop a formal training plan that is tracked through training/HR systems
Ensure a clear plan for the H&C trainer responsibilities - how with they gain and maintain the knowledge to train others
For jobsite DIM solutions, need to develop customer training capabilities to support solutions being sold
Recruit and cultivate the right people to execute the H&C Services business - passion, services/customer focus, technical skills
Develop clear career path for employees in the hose business - ensure sustainable, knowledgeable resources
Ensure proper training and refresher plan for sales staff (PSSRs, ISRs, Counter) to communicate H&C Services to customers
Build value selling message for H&C Services, including product and value promises


Investment

Price
Cost Build Up
Competitive Price
Merchandising Program

How are hose assemblies priced - parts and labor?
How are additional value-added services (field delivery, mobile solution, etc.) priced?
What is the typical price premium compared to similarly spec'd hose assemblies?
What are the value-added services competitor are providing to influence the price?
Ensure awareness and appropriate usage of any merchandising programs

Competitor 1 Competitor 2 Competitor 3

Notes for Actions

Promotion
Branch
Marcom / Campaigns
Media

Ensure clear signage and in-store promotion of H&C Services
Ensure customer facing employees communicate H&C Services - awareness, offers, upselling, etc.
Develop and deploy marketing material that communicates the value promises of the H&C Services
Develop campaigns/offers to support the value promises (e.g. "30 minutes or free")
Develop a structured marketing campaign plan to ensure timing, frequency, and messaging supports growth
Ensure dealership shows up in "hose assembly services near me" Google search
Consider multi-media approach - email, social media, web banners, print, billboards, in-store fliers, etc.
Search Engine Optimization (SEO) in place

Cat H&C Marcom

Investment

Key Steps to Deploy Mixed Fleet (All Makes) Services


Key Steps to Deploy Mixed Fleet (All Makes) Services
Review mixed fleet coupling list for common makes (prepared by Caterpillar, available from ASC)
Run stocking recommendation for Cat equipment based on Serial Number list for target branch (https://his2.ca
Combine both parts lists and compare against existing inventory at target branch - identify gaps and start with s
quantity of two of each part number (ensures you can make one hose assembly)
Ensure Hose Assemblers are trained to identify hose and couplings from non-Cat assemblies - Mixed Fleet Hos
Builder Tool in https://his2.cat.com
Organize coupling inventory for efficient identification and retrieval - consider job aids such as a coupling board
and plug kits to quickly confirm threads
Hose assemblies labelled using Cat label printer with QR code - establish a labeling protocal for non-Cat hoses
reordering
Establish turnaround time expectation for making mixed fleet assemblies - 30 minutes for walk-in business.
Ensure proper training and communication to key internal roles so they can support mixed fleet with customers
ISRs, Parts Counter, Hose Assemblers, Technicians)
Ensure clear signage at branch locations so customers are aware that All Makes of hose assemblies are offere
Develop and deploy marketing plan (multi-channel) to promote All Makes service and 30-Minute Turnaround Ti

H&C Services Growth Action Plan
# Area
Strategic Plan Development / Definition of Winning
Customer & Market Intelligence (VOC / Competition)
Branch Solutions (Existing, Expansion, Microstores, Delivery Services, eCommerce)

Jobsite Solutions (Containers, DIM)
Mobile Solutions
Execution (Targets, KPIs, Incentives, Employee Engagement, Internal Communicatio

Misc

Growth Action Plan
Action Item Description

pment / Definition of Winning
ntelligence (VOC / Competition)
isting, Expansion, Microstores, Delivery Services, eCommerce)

ntainers, DIM)
PIs, Incentives, Employee Engagement, Internal Communications)

Status Due Date D/W/M
Not Started - On Plan Months (6-12 Months)



Responsible

Comments

Strategic Plan / DOW Not Started - On Plan Days (30 Days)
Customer & Market Not Started - Behind Weeks (12 Weeks)
Service / Product /CX In Process - On Plan Months (6-12 Months)
Process - Capability In Process - Behind

Process - People Complete
Price
Promotion
Targets / KPIs / Incentives
Misc

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# Caterpillar: Confidential Green

Key Steps to Success

 Define the Customer Experience - leverage Value Prom

 Map the Opportunity and Align with Channel Coverage

 Optimize the Branch Experience - convenient, clear serv

 Target Jobsite Opportunities - large customer container

 Complete Coverage with Location Expansion and Mobile

 Build Expertise - Recruiting, Training, and Retention

 Build Capability to Deliver - Inventory, Toolings, and Ope

 Drive Customer Awareness of H&C Services - marketing

# Caterpillar: Confidential Green

"5 steps" of how to - see retail as example

Maximize branch experiense - supplement with delivery

# Caterpillar: Confidential Green

ce - leverage Value Promises - All Makes, 30-Minute Walk-in Turnaround, etc.

with Channel Coverage

e - convenient, clear service point, fast response, all makes

aining, and Retention

entory, Toolings, and Operations

H&C Services - marketing and communication plan

# Caterpillar: Confidential Green

# Caterpillar: Confidential Green

H&C Services Growth Executive Sponsor

H&C Services Growth - STUs 2018

Customer Experience Commitments

Channel Distribution of Growth Channel

Profit After Direct Expenses

H&C Services Growth - KPIs KPIs

# Caterpillar: Confidential Green

Notes for Actions

# Caterpillar: Confidential Green

2020 2021 2022 2023 2026

2020 2021 2022 2023 2026

2020 2021 2022 2023 2026

# Caterpillar: Confidential Green

Branches Location Expansion Jobsite Mobile

# Caterpillar: Confidential Green

# Caterpillar: Confidential Green

4000000 4600000 5500000 6000000 9000000

# Caterpillar: Confidential Green

# Caterpillar: Confidential Green

Opportunity - Where Do We Lose H&C Opportunity - Cat Products

Highest Lost Opportunity Branches Branch Name

Dealer Rental Services

Competition Key Competitors

# Caterpillar: Confidential Green

Notes for Actions

# Caterpillar: Confidential Green

Lost Opportunity (Hydra) Opportunity within X miles (Coverage Map Tool)

Lost Opportunity POPS Units

Opportunity within X Key Values / CX they provide / Price Position

# Caterpillar: Confidential Green

# Caterpillar: Confidential Green

ent, 24/7 response, mixed fleet support, etc.

# Caterpillar: Confidential Green

# Caterpillar: Confidential Green

Articulate the Unique Selling Propostion of Cat Dealer H&C Services

Trust in Expert Support

Security in Quality Parts

# Caterpillar: Confidential Green

Selling Propostion of Cat Dealer H&C Services

Customer Experience / Commitments

30-minute turnaround time for walk-in customers

Define the Customer Experience - leverage Value Prom

Map the Opportunity and Align with Channel Coverage

Optimize the Branch Experience - convenient, clear serv

Target Jobsite Opportunities - large customer container

Complete Coverage with Location Expansion and Mobile

Build Expertise - Recruiting, Training, and Retention

Build Capability to Deliver - Inventory, Toolings, and Ope

Drive Customer Awareness of H&C Services - marketing