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1.
2.
Understanding Global Engineering and Product development
through India
India assessment
How did we develop our vision?
How does the future look like in this space?
Agenda:
3. The World Is Flat, Thomas Friedman, presents seven rules
that he believes are true for a business to succeed in the flat
world: Rule #1: When the world goes flat Rule #2: And the small
shall act big Rule #3: And the big shall act small Rule #4: The
best companies are the best collaborators. Rule #5 : In a flat
world Rule #6: The best companies outsource to win, not to
shrink.
4.
80 years old
Caterpillar is a Global Organization
World leader
Largest manufacturer of construction and mining equipment,
diesel and natural gas engines and industrial gas turbines.
Technology leader in construction, transportation, mining,
forestry, energy, logistics and electric power generation.
Caterpillar had sales and revenues of $41.5 billion in
2006
Approximately fifty percent of sales and revenues were to
customers outside of the United States , thus making Caterpillar a
global enterprise.
5. Lines of Business
6. Global Footprint 278 facilities in 40 countries on 6
continents 182 Cat dealers with 1,923 branches and 1,587 rental
stores
7. Strategic Vision Values alignment
Critical Success Factors
People
Quality
Product
Emerging Markets
Trough
Strategic Areas of Improvement
New Product Introduction
Encode 6 Sigma
Our Values in Action
Integrity
Excellence
Teamwork
Commitment
8. Lower Emissions Requirements Driving acceleration in NPI
agenda
9. Global Engineering opportunities Generic Development
Enabling Development Core Vehicle level Systems Integration
Experience Complexity
10. Challenges
Geographic differences
Time zones
Visa Issues
Administrative
Specific Training Skill set vs. product training
Cultural differences Communication
PRAM - Plan Relationship Agree Maintain
Just say no
I dont know
11. Our Values
Integrity
Continuous feedback in all directions
Build relationships
Excellence
Establish roles
Provide room to learn
Create success stories
Teamwork
Change management
Cultural Training
Commitment
Support at all levels Team and Management Long-term
relationships
Involve partners up front
Integrity Excellence Teamwork Commitment
12.
13. How did we develop the Vision ?
14. Caterpillar Confidential: Green (11/09/05)
15.
High-performing Global Product Development Team
Develops Superior Products through Set Based Engineering and
Global Engineering Strategy
Delivers Excellent Value to Product Group Customers
Vision
16. PPD Global Engineering 105 Team Members In-house and
offshore Cat India Design center at Satyam
17. Current Product Development Few Concepts each sub-system
Developing sub-systems independently and then Integrating all at
Machine level Unplanned changes Fire fighting Point Based
Concurrent Engineering Iterate if required Information extracted
from Toyota product development system-James Morgan & Jeffrey
Liker
18. Vision for future Product Development Projects Many
Concepts each sub-system
Evaluate against System Interactions
Cost
Interface studies
Eliminate the weak, add knowledge and combine different
ways
Set Based Concurrent Engineering Information extracted from Toyota
product development system-James Morgan & Jeffrey Liker
19. Point-Based Engineering 3 Bicycles Set-Based Engineering 3
Frames 3 Drives 3 Wheel sets 3 Brakes 3 Suspension =243
Combinations Moving from Point-Based to Set-Based Engineering
Information extracted from Toyota product development system-James
Morgan & Jeffrey Liker
Multiple subsystem alternatives explore more cheaply (allows
platform projects)
Expanded subsystem learning feeds knowledge back for future
projects
20. Traditional Model Global Model Product Development Model
Not leveraging Caterpillar Core skills for core activities
Excessive dependency on single talent pool - career moves due
to growth
Lack of capacity and flexibility Project Peaks/Lows
Resource constraints - Lack of proper balance between New
product development & Current product support
Better alignment between product development
Generic/Enabling/Core activities
Multiple resource pool
Resource flexibility for project Peak/Low needs
Proper resource deployment across product development and
current product support
21. Set-Based Engineering Operation Model Global Engineering
capabilities Set-based concepts from Global Partners Specifications
General Targets Sub-System Targets
22. How did we develop this model?
Evaluated through pilot projects- Jan06 to March06
Engagement started in April06
Started with in areas where we can create success stories
Change management through success stories, travel to STC to
understand Satyam capabilities (Leadership Team, Team Leads)
Product knowledge training through Team Leads
Weekly planning meetings in U.S
Quarterly governance meetings
Outstanding mid-career recruitment from Satyam
Took advantage of Satyams existing ODCs for Leadership
recruitment
Satyams world-class training for new recruits (3 months)
23. Evaluation of Global Engineering Model- through value chain
Global -Inception Cultural Challenges Positional authority Power
Distance Uncertainty avoidance Individualism Project Team
Development Recruitment/Retention Communication Education
&Training Management Style International Operations Difference
of work ethics Buy-in from Parent operations Access &
Technology
24. What do we need to be successful?
Leadership Team with Driving force to Delight Customers
Servant Leadership to remove Fear of unknown to Customers
Leadership Channeling their Ambition toward building Best in
class
Leadership
E ngage and Develop Others S ee the Future R einvent Continuously V
alue Results and Relationships E mbody Values
25.
People/Culture:
Highly motivated People with Relentless Execution towards Time,
Cost & Quality
Disciplined Thoughts , Confront the Brutal Facts of their
current reality.
World Class Core Competencies in functional areas of
engagement
World class processes to deliver Superior Quality
Capacity through Peak Needs
Business model to Support customer needs on Product development
Initiatives
Resource availability between 2 to 6 weeks
What do we need to be successful?
26. Challenges Process Knowledge, Quality & Governance
Change Management Loss of core competency, Intellectual Property,
Access,Security and Connectivity
27.
Change Management among Leadership Team
Change Management
Change Management among CAT/Contract employees
28. Many reasons for the failure of Change Management
initiatives. Lack of leadership Too many projects happening at once
Not managing pain Losing focus on why changing Reward not in line
with new order No direction, nobody willing to make the final
decision Not communicating Trying to tackle too much at once Not
managing risks No Leadership support Assumptions about the
objectives have not been tested Losing sight of the end game
Source: Global survey of > 100 PA change management experts
Insufficient time spent on the right priorities
29. Employee response curve for change Time Response Sell the
Bargaining benefits and Depression/ Acceptance Train develop the
Provide resources Testing Sell Support the rewards the Denial
Provide evidence Convert opinion Anger the formers
30.
Increase urgency
Make change stick
Tips on Change management
Dont let up
Create short term wins
Empower action
Communicate for buy-in
Get the vision right
31.
IP Risks
Potential leakage of IP through existing project team
member
Potential leakage of IP through resource Attrition
Potential leakage of IP when resource roll out from Cats
project team and joins competitors project team.
Loss of core competency
Intellectual Property, Loss of core competency, Access,Security and
Connectivity
32. Product development critical roles (10% of PD Resources)
xxxxxxxs
xxxxxxx
xxxxxxx
xxxxx
xxxxxx
Product development enabling roles (40% of PD Resources)
xxxxxxx
xxxxxxx
xxxxxxx
xxxxxxx
Product development generic roles (50% of PD Resources)
xxxxxx
xxxxxxxx
xxxxxxx
Categories of Product development (PD) Roles Maintain As-Is 94%
Most critical tasks remain As-Is Portable to Off-Shore Portable PD
Resources 6% 1% of PD Resources 40% Moderately critical tasks
remain As-Is 60% 24% of PD Resources 10% Less enabler tasks remain
As-Is 45% of PD Resources 90% + + = 70% PD Resources Hypothetical
offshore model-example-Telecommunication industry
33. Looking at the Future
34.
Rule # 6
The best companies outsource
Flattening of the world rules reviewed
To win, not to shrink.
They outsource to innovate faster and cost effectively
Gain market share
Hire more and different specialists
35.
Every morning in Africa, a gazelle wakes up.
It knows that it must outrun the fastest lion or it will be
killed
Execution
Every morning in Africa, a lion wakes up. It knows that it must
out run the slowest gazelle or it will starve
It does not matter whether you are a lion or gazelle. When the
sun comes up you had better be running
36. Current spending on engineering services world wide by the
different industries ($750 billion in 2006) is projected to
increase to $1.1 trillion by 2020. The market is highly fragmented
by industry, Engineering services is a growth market.
Automotive at 19%
Aerospace at 8%
Utilities at 3%
Heavy Engineering 40%
High-Tech/ Telecom is the dominant and fastest growing sector,
with 30% of the market.
37. Businesses are increasingly viewing off shoring as a way to
counter market forces that are exerting pressure on engineering
services. Key Future Trends
While cost control remains a concern
Companies are also seeking access to a high quality talent
pool
For growing capacity
Increase productivity with Creativity and Process
automation.
38. Indian IT and software industry proved that they can
perform and meet Global Needs Accomplishments
Companies in India have developed capabilities
Skill sets
Leadership
Culture
Invested in technology platforms to leverage this
opportunity
39.
Indias current revenue base in the offshored engineering
services market is about $1.5B
India is well-positioned to increase its market share of
engineering offshoring
Business opportunity
By 15% to 30% by 2020.
The potential engineering market in India could exceed $60B by
2020.