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Caterpillar Analysis
Caterpillar Analysis
NB. Analyse the ways caterpillar can achieve its strategic intent.
Discuss how caterpillar can deal with the supply chain challenges;
Pricing marketing strategy for BHL series of small backhoe loaders in the
Building Construction Product division.
Focus strategy has been adopted by concentrating on a few popular
caterpillar models to majority o customers.
Prior the company had a complicated supply chain due to many product
offering that were built to order and priced basing on itemized price lists but
this could lead to customer satisfaction.
High demand/ customer base led to holding of large stock levels to provide
choice for customers. This resulted into much documentation and service
provision hence increasing operational costs.
Suppliers frustration was rampant due to the fragmented nature of
caterpillars products demand as forecasting was a challenge.
Rationalization Building Construction product was made basing on customer
reaction, cost saving opportunity.
Product distribution centre for finished product that aim at increasing velocity
and improve delivery time to dealers, high level of service and short
availability.
Dubai PDC imports caterpillar machines globally and exported by road and
sea to Middle East and East Africa destinations. This hub was chosen due to
its strategic location and good port facilities.
Tendering exercise was used to have a competitive supply base to provide
regional clearance, forwarding and distribution, customer brokerage, road
transportation.
Al Futtain logistics selected using the evaluation criteria of capabilities,
continuous improvement, transport experience, solid infrastructure base,
strategic location, supply chain experience, competitive pricing.
Transportation
What customers want and what they will pay determines the transportation
mode choices made product by product.
Achieving product cost saving of 400-500 dollars is possible with low cost
transportation mode by working with customers on the price/ delivery
tradeoffs.
Technology has facilitated use of low transportation cost modes utilization.
Caterpillar built a control tower using visibility solution from GT Nexus to
achieve end to end visibility.
The control tower measure carrier’s performance and variability in different
carriers’ performance. Lower variability translates into lower need to carry
inventory.
Use of ocean and air shipment hubs to get scale on a lane which make
caterpillar an important customer that can pre book ocean capacity with no
dwell time and in air mode, it ships hub to hub to maximize cube.
Caterpillar changed from flying spare parts overnight to using many more
three to five day flights where customer expectations were aligned on a lower
cost but slower delivery.
Supply chain technology
Recruitment of randy krotowski as vice president and chief information officer
in 2012 who was experienced by being at chevron for 30 years.
He conducted consultative meeting to understand people’s goals
Built relationships with dealers and customers
Put an IT strategy and got top management support with completion date of
2018
Caterpillar hopes to provide customers with more IT solutions to help them
use company equipments more productively.
Putting technical information in the hand of dealer technicians while in the
field.
IT priority areas include internal project focusing on manufacturing supply
chain, customer facing technologies by providing customers with commercial
software solution .
Learning from peers and competitors by integrating data sharing through
cloud development, service oriented architecture and agile development.
Development of a fully integrated EDI solution to manage suppliers, products
and parts
Drop ships and inventory processes were established to optimize product flow
and freight logistics to facilities world wide.
Group O was out sourced to design and host a web portal to integrate 600
global suppliers and manege 3500 products and parts
The portal provides controlled order acknowledgements, compliant electronic
advanced shipping notices,pack lists and shipping labels, integrated invoice
processing and work flow alerts, mult-level security and role based
administration, real time reports and operational metrics in an easy to read
dashboard.
Group O worked collaboratively with suppliers to improve on time delivery in
the noncore supplier base to eliminate shipping compliance issues between
suppliers and 32 caterpillar facilities worldwide.
The solution provides visibility, transparency, simplification and
standardization, reducing supply chain interruptions through documentation
and execution across supplier network.
The Ground Transportation Operations Centre- Americas, a new freight
optimization software allow GTOC-A to optimize ground shipping through
dynamic load planning that determines optimal transportation modes and
consolidates existing transportation movements.
Due to GTOC-A facilities have reduced transportation spend by 6-10 %, fewer
travel miles through load consolidation, trailer utilization costs thus few trips,
low fuel consumption and fewer CO2 emissions.
Supply management
Supplier relationships
Analyse the STEEPLE factors which might impact on the caterpillar supply
chains
Demand planning, coordinating inbound and out bound logistics, route and
network planning, location of facilities, selecting the best transport mode,
management of third part logistics providers, currency differences, legal
differences, custom duties, long distances, security of items in facilities and
transit, transportation costs due to the weight of the machines.
Explain the methods which might be used to measure performance in
caterpillar supply chains in order to improve their efficiency and
effectiveness.
Reducing non value adding activities, reducing total cost, reducing cycle time,
improving responsiveness to requirements, enhancing quality and service,
improving communication, balancing service level and cost, improving supply
chain relationships, cost and risk management transparence.
Discuss why and how the caterpillar uses segmentation to analyse its
range of supplier/ customer
NB: The tools for segmentation include Kraljic matrix, Pareto analysis, Supplier
preferencing model
Evaluate the extent to which the supply chain of caterpillar was lean or
agile.
Methods; balanced score card, focus groups, survey and feed back, KPIs,
SCOR model etc
Performance metrics: profitability, revenue, market share, time to market,
stock availability, savings, customer satisfaction, on time delivery in full,
stock turn over, efficiency, order cycle time.
Discuss the key performance indicators for the supply chain management
function of caterpillar.