Who is Caterpillar?
Dealers & mining
• World’s leading manufacturer• ofCat
construction
Business
equipment; diesel & natural •gasCat
engines;
andUnits
industrial
gas turbines.
• Provider of financing, insurance, leasing, counter-trade
and logistics
• $20.15B sales in 2002, $5.2B exported
from the U.S.
• Expect sales growth to $30B by the
end of the decade
Who is Caterpillar?
• Employs 68,990 Worldwide • Cat Dealers
• Cat Business Units
• Manufacturing facilities in 21 countries.
• Marketing headquarters in 11 countries.
• Distributions Centers in 19 countries.
Our Dealers…
Dealers
• Products distributed around •theCat
globe
by independent
• Cat Business Units
dealer network
• 90,000 people dedicated to the customer
• 60 Dealers in the US and over 150 outside
• 1840 branches / 1100 Rental Stores
Work Tools & Services
• Our aim is to be the leader in providing work tools and related
services that enhance Caterpillar machine performance.
• Manufacture tools for construction, mining and forestry
equipment.
• Over 2,500 end items sold in 2002.
• Employ 450 in three facilities.
Customer Overview
(Dealers)
High Sales $
Medium Sales $
Low Sales $
Finning
Toromon
t
Toromont
Kramer
Toromont
NC Machinery
Hewitt
Atlantic
NC Machinery
Halton
Pape'
Western
States
Tractor & Equipment
Butler
Western
States
Fabco
Ziegler
Syracuse
Michigan
Foley
Patten
Nebraska
Holt
of
Cal
HO Penn
Wyoming
Peterson
Ohio
Altorfer
Wheeler
Martin Tr
Wagner
Quinn
Carter
Whayne
Fabick
Fabick
Thompson
Mchry
Johnson
Empire
JA Riggs
Rust
Alban
Walker
Dean
Foley Tr
G&R
Holt of
Ohio
Cashman
Greg
Poole
Stowers Carolina
Blanchard
Yancey
Warre
n Cat
Thompson
Tractor
Louisiana
Carlton
Puckett
Mustang
Holt of
Texas
Ring
Power
Ringhaver
Kelly
Our Demand
Customer buying criteria…
3). Cost
2). Quality
1). Availability …Availability …Availability
Customer availability expectations…
1998
Today
1. Customers held 2 to 3 months
of Work Tool inventory
1. Customers hold limited inventory
2. Make-to-Stock Products
• Order to ship in 3–4 weeks
2. Make-to-Stock Products
• Order to ship in 0–5 days
3. Make-to-Order Products
• Order to ship in 7-8 weeks
3. Make-to-Order Products
• Order to ship in 3-5 weeks
Customer availability expectations have changed…
Why?
1998
1. Dealers held 2 to 3 months
Work Tool choices
inventory
Today
1. Dealers hold limited inventory
have increased 50% since ‘98
Make-to-Stock
Productsfor
2. Make-to-Stock
DealersProducts
are not willing to2.invest
in inventory
• Order to ship in 0–5 days
• Order
in 3–4 weeks
fear toofship
obsolescence
3. Make-to-Order Products
3. Make-to-Order Products
Competition
tough…others
• are
Orderproviding
to ship in 3-4quick
weeks
• Order
to ship in 7-8isweeks
availability.
Our Challenge….
Create a Supply Chain that
External
Internal
1). Meets Dealer / Customer availability expectations
2). Meets Dealer / Customer price & quality expectations
3). Meets increasing expectations of inventory turnover
4). Meets our financial expectations…margin & profit
Product Supply
85% of Supply is
from North America
Overview
Canada: 13%
Europe: 5%
Sweden: 1.5%
Japan: 1%
U.K.: 6.5%
U.S.: 52%
Mexico: 20%
Over 2500 End Items Sold in
Indonesia: 1%
High Sales $
• 3 Mfg Facilities
• 2 Partners
• 6 Key Suppliers
• 3 Distribution Centers
Medium Sales $
Low Sales $
Finning
Toromo
nt
Toromont
Kramer
Toromont
NC Machinery
Hewit
t
Atlanti
c
NC Machinery
Halton
Pape'
Western
States
Tractor & Equipment
Butler
Western
States
Fabco
Ziegler
Syracuse
Michigan
Foley
Patten
Nebraska
Holt
of
Cal
HO Penn
Wyoming
Peterson
Ohio
Altorfer
Wheeler
Martin Tr
Wagner
Quinn
Carter
Whayne
Fabick
Fabick
Thompson
Mchry
Johnson
Empire
JA Riggs
Rust
Alban
Walker
Dean
Foley Tr
G&R
Holt of
Ohio
Cashman
Greg
Poole
Stowers Carolina
Blanchard
Yancey
Warre
n Cat
Thompson
Tractor
Louisiana
Carlton
Puckett
Mustang
Holt of
Texas
Ring
Power
Ringhaver
Kelly
Product Supply vs. Demand
Component Supply
The “speed” of replenishment
is critical for meeting
Customer “demand” while
minimizing Inventory
investment.
200 Suppliers
8500 Part Numbers
Quebec
Kansas
Florida
Understanding Our Customer’s “Demand” for Products
Resource Planning Model
Marketing Companies'
Forecasts
Strategic Plans
Sales & Operations Planning
Plans
Volume and Rates
Feedback
Rough-cut Capacity
Planning
Mix Planning
Products
1). 18 Month Sales Plan
•19 Product Families
2). Supply Plan
Do we have capacity
to supply?
Determine Forecast Split
Make-to-Stock (MTS) vs.
Make-to-Order (MTO)
Master Production Scheduling
Materials Planning
Materials & Parts
Detailed Capacity Planning
Purchasing Execution
Schedule Products per
the “new” Supply Plan
Hours
Production
Execution
Commit to:
1). Ordering Products &
Materials
2). Manufacturing Products
Caterpillar Confidential: Yellow
Forecast provided
by
Dealers & Reps.
2003 Forecast
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
S&OP
110
MTS vs. MTO mix is discussed for each of 19 Product
Families
Forecast
110
Our Challenge….
How are we
doing?
Create a Supply Chain that
External
Internal
1). Meets Dealer / Customer availability expectations
2). Meets Dealer / Customer price & quality expectations
3). Meets increasing expectations of inventory turnover
4). Meets our financial expectations…margin & profit
Key Elements of an effective Supply Chain
Understanding the “playing field”
What makes the customer tick?
What Products, What Lead Times, What Price
What is the competition offering?
Sales & Operations Planning Process
Drives Capacity Planning
Facilities, People, Supplier Commitments
Essential for achieving
Acceptable Lead Times
Acceptable Levels of Inventory