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Who is Caterpillar?

Who is Caterpillar?. World’s leading manufacturer of construction & mining equipment; diesel & natural gas engines; and industrial gas turbines. Provider of financing, insurance, leasing, counter-trade and logistics. Cat Dealers Cat Business Units.

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Who is Caterpillar?

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  1. Who is Caterpillar? • World’s leading manufacturer of construction & mining equipment; diesel & natural gas engines; and industrial gas turbines. • Provider of financing, insurance, leasing, counter-trade and logistics • Cat Dealers • Cat Business Units • $20.15B sales in 2002, $5.2B exported from the U.S. • Expect sales growth to $30B by the end of the decade

  2. Who is Caterpillar? • Employs 68,990 Worldwide • Manufacturing facilities in 21 countries. • Cat Dealers • Cat Business Units • Marketing headquarters in 11 countries. • Distributions Centers in 19 countries.

  3. Our Dealers… • Products distributed around the globe by independent dealer network • 90,000 people dedicated to the customer • 60 Dealers in the US and over 150 outside • 1840 branches / 1100 Rental Stores • Cat Dealers • Cat Business Units

  4. 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.

  5. High Sales $ Medium Sales $ Low Sales $ Finning Toromont Toromont Kramer Toromont Hewitt NC Machinery Atlantic NC Machinery Halton Tractor & Equipment Western States Southworth Milton Butler Fabco Western States Pape' Ziegler Syracuse Michigan HO Penn Wyoming Cleveland Peterson Foley Patten Ohio Beckwith Nebraska G & R MacAllister Holt of Ohio Cashman Alban Holt of Cal Altorfer Wheeler Walker Martin Tr Wagner Dean Carter Whayne Fabick Quinn Foley Tr Shepherd Greg Poole Fabick Stowers Carolina Thompson Mchry Johnson Blanchard Empire JA Riggs Rust Yancey Warren Cat Thompson Tractor Carlton Hawthorne Louisiana Puckett Ring Power Mustang Ringhaver Holt of Texas Kelly Customer Overview (Dealers) Our Demand

  6. Customer buying criteria… 3). Cost 2). Quality …Availability …Availability 1). Availability

  7. Today • Customers hold limited inventory • Make-to-Stock Products • Order to ship in 0–5 days • Make-to-Order Products • Order to ship in 3-5 weeks Customer availability expectations… 1998 • Customers held 2 to 3 months • of Work Tool inventory • Make-to-Stock Products • Order to ship in 3–4 weeks • Make-to-Order Products • Order to ship in 7-8 weeks

  8. 1998 Today • Dealers hold limited inventory • Make-to-Stock Products • Order to ship in 0–5 days • Make-to-Order Products • Order to ship in 3-4 weeks • Dealers held 2 to 3 months • inventory • Make-to-Stock Products • Order to ship in 3–4 weeks • Make-to-Order Products • Order to ship in 7-8 weeks Customer availability expectations have changed… Why? Work Tool choices have increased 50% since ‘98 Dealers are not willing to invest in inventory for fear of obsolescence Competition is tough…others are providing quick availability.

  9. External Internal Our Challenge…. Create a Supply Chain that 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

  10. Europe: 5% Sweden: 1.5% Japan: 1% U.K.: 6.5% Indonesia: 1% 85% of Supply is from North America Product Supply Overview Canada: 13% U.S.: 52% Mexico: 20% Over 2500 End Items Sold in 2002

  11. High Sales $ Medium Sales $ Low Sales $ Finning Toromont Toromont Kramer Toromont Hewitt NC Machinery Atlantic NC Machinery Halton Tractor & Equipment Western States Southworth Milton Butler Fabco Western States Pape' Ziegler Syracuse Michigan HO Penn Wyoming Cleveland Peterson Foley Patten Ohio Beckwith Nebraska G & R MacAllister Holt of Ohio Cashman Alban Holt of Cal Altorfer Wheeler Walker Martin Tr Wagner Dean Carter Whayne Fabick Quinn Foley Tr Shepherd Greg Poole Fabick Stowers Carolina Thompson Mchry Johnson Blanchard Empire JA Riggs Rust Yancey Warren Cat Thompson Tractor Carlton Hawthorne Louisiana Puckett Ring Power Mustang Ringhaver Holt of Texas Kelly • 3 Mfg Facilities • 2 Partners • 6 Key Suppliers • 3 Distribution Centers Product Supply vs. Demand

  12. The “speed” of replenishment is critical for meeting Customer “demand” while minimizing Inventory investment. Component Supply 200 Suppliers 8500 Part Numbers Quebec Kansas Florida

  13. Understanding Our Customer’s “Demand” for 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) Schedule Products per the “new” Supply Plan Commit to: 1). Ordering Products & Materials 2). Manufacturing Products

  14. Caterpillar Confidential: Yellow Forecast provided by Dealers & Reps. 2003 Forecast 110

  15. MTS vs. MTO mix is discussed for each of 19 Product Families 110

  16. External Internal How are we doing? Our Challenge…. Create a Supply Chain that 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

  17. 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

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