Supply Chain Management Transformation and Strategy

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Supply Chain ManagementTransformation and
Strategy
Presented By Chaitanya Johri Date August 9,2007
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Phased Evolution

• The trend is currently moving towards centralized
  planning combined with decentralized execution.
• Technology allows the rapid propagation of
  business information from functional and
  geographical areas of the
• extended enterprise, which enables decision
  makers to plan and execute with the intent of
  maximizing
• enterprise-wide profitability.

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Phased Evolution
Impact of phased evolution on the various
functional areas of supply chain management
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Supply Chain - Major Decisions
All 4 decisions mentioned above are interlinked
and are critical to the success of a modern
organization. To make a supply chain successful
one needs to take all location, production,
inventory transportation decisions based on
facts providing concrete trade off between cost
service levels.
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Supply Chain - Major Decisions

• The 4 key factors have a major impact in terms of
  strategic and operational sense
• Location Decisions The geographic placement of
  production facilities, stocking points, and
  sourcing points is the natural first step in
  creating a supply chain.
• Production Decisions The strategic decisions
  include what products to produce, and which
  plants to produce them in, allocation of
  suppliers to plants, plants to DC's, and DC's to
  customer markets. As before, these decisions have
  a big impact on the revenues, costs and customer
  service levels of the firm.
• Inventory Decisions These refer to means by
  which inventories are managed. Inventories exist
  at every stage of the supply chain as either raw
  materials, semi-finished or finished goods. They
  can also be in-process between locations. Their
  primary purpose to buffer against any uncertainty
  that might exist in the supply chain.
• Transportation Decisions The mode choice aspect
  of these decisions are the more strategic ones.
  These are closely linked to the inventory
  decisions, since the best choice of mode is often
  found by trading-off the cost of using the
  particular mode of transport with the indirect
  cost of inventory associated with that mode

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Integrated Supply Chain Model
Increased VISIBILITY and access to REAL-TIME
information will make a greater proportion of
SUPPLY chain EXECUTION decisions pre-emptive
rather than reactive.
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Cat Logistics Client Framework
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Cat Logistics Today- Scaling the world
Europe, Africa, Middle East CIS
Americas
6 Continents 25 Countries105 Facilities Shipping
to 200 Countries 10,500 Employees 200M
Sq. Ft. 160M Orders/Yr 16B lbs. Of
Freight/Yr 700M Transportation Purchased/Yr 18M
SKUs Serviced/Yr
Asia Pacific
63 Facilities
4871
People
36 Facilities
14 Facilities
630 People
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Cat Logistics -Realigning Business Efficiencies

• Caterpillar Logistics was formed as a
  wholly-owned subsidiary of Caterpillar Inc. to
  offer logistics services to clients in year 1987.
• Since its inception Cat logistics has focused on
  providing time-sensitive, service-critical,
  unpredictable demand solutions to its clients
  using state of the art technology.
• Cat Logistics leveraged its exiting supply chain
  capabilities and represented a significant growth
  opportunity to its clients.
• Cat logistics has served more than 60 clients and
  this knowledge has allowed us to constantly
  improve the logistics solutions and competitive
  advantage for all our clients.
• Today, Cat Logistics is one of the fastest
  growing divisions within Caterpillar.
• 22 CAGR 2004 2006
• 3X Growth projected from 2000 2010
• More than 60 of our growth is with current
  clients

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Some of our Partners
Automotive
Aerospace Defense
Industrial
Consumer Durables
Technology
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Cat Logistics Service Offerings

• Inventory Validation Controls
• Statistical Test Count
• Inventory Accuracy Audits Metrics
• Inventory Records Integrity
• Inventory Adjustments
• Customer Claims Processing
• Customer Returns Processing
• Performance Reporting
• Inbound Logistics Support
• Inbound Receiving Exception Processing
• Accounts Payable Processing
• EDI / ASN Support
• Warehouse Audits Controls
• Location management
• Storage process verification
• Order Fulfillment

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Cat Logistics Service Offerings

• Customer Services (Dealer Support)
• Customer Services is a service center that is
  the single point of contact for dealer inquiries.
  Customer services communicates needed customer
  information and acts as a liaison and expeditor
  with Materials Management, Transportation, and
  Operations to answer dealers inquiries.
• Supplier Delivery Management
• Expediting
• Communicating deliver expectations to suppliers
  and plants such as priorities for filling
  customer backorders and schedules
• Ongoing monitoring of supplier performance
• Performance Management
• Manage Supply chain performance objectives.
  Identify Key Performance Indicators, track and
  monitor performance variances, create real-time
  performance reporting, and drive closed-loop
  performance improvements
• Program Management
• Flexible, scalable, and global project
  leadership for the successful implementation of
  key customer requirements. Program Management
  provides organizational and structural support,
  overall program visibility, consistent process
  and communications, and accurate status reporting
  utilizing 6 Sigma from start to completion.

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Cat Logistics Value Creation

• Increase Revenue
• Improve Product Availability
• Capture lost sales
• Reduce number and age of stock-outs
• Exceed Customer Value Expectations
• Enhance Brand Image and Loyalty
• Increase Asset Utilization
• Optimize Inventory Investment To Meet Service
  Goals
• Improve Operating Margin
• Reduced handling storage costs (Inventory
  Carrying Cost)

CASH
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Thank You