Global Supply Chain MAKING PROGRESS POSSIBLE Jim Waters Vice President Caterpillar Production System Division Caterpillar, Inc.
Global Supply Chain
MAKING PROGRESS POSSIBLE
Jim Waters Vice President Caterpillar Production System Division Caterpillar, Inc.
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Yellow Iron and Clean Power
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Products and Services
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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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Global Leadership
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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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§ 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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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