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Global Supply Chain
MAKING PROGRESS POSSIBLE
Jim Waters Vice President Caterpillar Production System Division Caterpillar, Inc.
CATERPILLAR: CONFIDENTIAL GREEN Page 2
MAKING PROGRESS POSSIBLE
Heavy Industrial Supply Chains and Globalization
Yellow Iron and Clean Power
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MAKING PROGRESS POSSIBLE
Heavy Industrial Supply Chains and Globalization
Products and Services
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Heavy Industrial Supply Chains and Globalization
Strong Growth, Promising Opportunities
$0B
$10B
$20B
$30B
$40B
$50B
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07*
*Based on the midpoint outlook contained in the July 20, 2007, earnings release.
1990 – 2006 Sales & Revenues CAGR = 8.4% 1990 – 2006 Profit per Share CAGR = 20.5%
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MAKING PROGRESS POSSIBLE
Heavy Industrial Supply Chains and Globalization
Global Leadership
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Heavy Industrial Supply Chains and Globalization
Team Caterpillar
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Caterpillar Production System
Chase Waste: Drive for the continuous and relentless elimination of waste in all processes, with priority on safety and qualityrelated wastes Pull: Use Pull replenishment to only build what is needed, when it is needed, in the amount it is needed Make Value Flow: Simplify processes to quickly identify problems and increase process efficiency Drive Standard Work: Standardize tasks and utilize common processes as the foundation for Continuous Improvement Even the Load: Balance the workload to level production and reduce process variability Validate Our Processes: Prove the process and technology work before introducing them into production
Operating System
Put Safety First: Build a Safety First culture by placing the highest priority on eliminating safetyrelated waste Take the Customer’s View: Make decisions based on the customer’s view and the longterm Caterpillar strategy, even at the expense of nearterm goals Go, See, Act: See it firsthand to ensure thorough understanding Stop to Fix: Cease production when a problem occurs to correct it in process; this means we build instation as planned Develop People: Identify, attract and develop people and teams to build Caterpillar’s longterm capability
Cultural System
Actively Listen: Conduct process improvement dialogues at all levels, demonstrating the value people’s ideas by quickly implementing them Make it Visual: Build the visual workplace so no problems are hidden and opportunities can be realized Align the Targets: Deploy cascaded metrics and targets across the value chain aligned to the enterprise strategy supporting People, Quality, Velocity and Trough Act Decisively: Make decisions by consensus, thoroughly considering all options, and implement with a sense of urgency
Management System
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Heavy Industrial Supply Chains and Globalization
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§ Fears of global competition
§ Shifts toward protectionism and isolationism
§ Mischaracterizations of trade and globalization
§ Energy and sustainability
Dangers on the Horizon
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Heavy Industrial Supply Chains and Globalization
Energy and Sustainability – Inextricably Linked § Demand outstripping supply – prices impacting
competitiveness § Economic growth, security and competitiveness at risk § Robust, comprehensive energy policy essential:
– Stimulate TECHNOLOGY development to increase efficiency
– Expand DOMESTIC production and supply – clean coal – Encourage economic and environment SUSTAINABILITY
§ Sustainability at Caterpillar – compliance / business opportunity
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§ $10.5B in exports from the United States
§ Global production supporting 48,000 domestic jobs
§ Exports to China up 40%
§ More than 5,000 new U.S. jobs created
Competing – and Winning
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§ 1 in 5 American jobs is related to trade
§ 31 million Americans depend on imports and exports for their jobs
§ One quarter of U.S. GDP is directly linked to trade
§ Unemployment has dropped significantly as we’ve liberalized trade
Trade and American Jobs
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By the Numbers
§ 40% higher global prosperity
§ Global economic welfare up $613B
§ Average family income up $10,000
§ 300 million people lifted out of poverty
§ 95 percent of the world’s population outside the U.S.
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§ Creativity and resiliency – culture of entrepreneurship
§ Vibrant, marketbased economy
§ Technical expertise – research, engineering, innovation
§ Tradition of openness, flexibility, government restraint
Strengths of American Business
The Business Community Must…
Build bridges, not walls
Educate policymakers
Spread the good word
Encourage bipartisanship
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