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Caterpillar Confidential Yellow

SAP Service Parts

Management

Carrie Thompson

Global Program Manager

Ford Motor Company

CVN Event● Chicago, IL ● June 26, 2013


SPM History

1999-2000

Systems aging; build or buy?

2000-2002

Created partnership with between Caterpillar and Ford

Motor Company

Created a vendor selection project

Signed contract with SAP


Best-In-Class Logistics Performance

Increased Customer Satisfaction

Dramatic Cost Reduction

Service Parts Solution Across Multiple Industries

Concept

• ~ 80% common processes/ technology

• Leverage Ford and Caterpillar volumes

• Commercialize system software

• Exit development

• Become implementers and integrators

Intellectual Property

Know-how

Capability

Scalability

Benefits

• Lower development costs

• International capabilities

• Natural (planned) technology upgrade path

• Shared Risks between Caterpillar, Ford, and

SAP

Solution Development Strategy

MAKING PROGRESS POSSIBLE

Transforming Caterpillar Parts

Network

MAKING PROGRESS POSSIBLE

Jane Huggins

Global Product/Process Owner

Caterpillar


About Caterpillar Caterpillar is the world's leading manufacturer of construction

and mining equipment, diesel and natural gas engines,

industrial gas turbines and diesel-electric locomotives. The

company also is a leading services provider through Caterpillar

Financial Services, Caterpillar Remanufacturing Services and

Progress Rail Services.

Founded in 1925 by Holt & Best

Headquartered in Peoria, Illinois

Caterpillar employs approximately 150,000 employees globally

and generates more than $60 billion in Revenue

Caterpillar serves 190 Global Dealers & 2006 Dealer branches

Parts Distribution supports over 3 million products on 7

continents and 700k unique part numbers with 95% availability


Caterpillar Parts Network

• Parts Distribution and Logistics … responsible for service parts,

manufacturing logistics, and transportation.

Right part, right place, right time


Strategic Objectives

Increase dealer and customer satisfaction – Customer first!

Achieve Common Processes through Common Systems

Eliminate disparate, local systems

Minimize system development and support costs

Increase flexibility

Upgrade technology platform


SPM Journey

CAT/Ford form

alliance for SPM

solution

2000

• Begin SPM solution build

with SAP

2002

2005-

2006

SAP SPM solution

delivered and

implementation

started

First EWM facility

go-live

2007

SAP APO

Global Demand

Forecasting and

Inventory Planning

and second EWM

facility go-live

2009 2011

SAP APO

Global Distribution

Requirements Planning

(DRP) and procurement

and third EWM go-live

2012

First CRM/FI/GTS

integrated with fourth

EWM go-live

2014-2018

Asia/Pacific,

Europe,

Americas

+Ord Mgmt.,

gATP,

Deployment


EWM Benefits

Quality Improvements

Process Standardization

Velocity improvements

Integrated Yard Management

System Directed Routing

Exception Driven Processing

Bin Level Accuracy – Pick Bin Determination

Accountability Improvements

Warehouse Monitor


SPP Benefits Realized One Standard System World-Wide for managing ~ $2.2B of inventory More Precise Supplier Schedules due to increased accuracy of:

Inbound Material via ASN Ordering for Expected Demand On-Hand Inventory Information Supplier Collaboration

Improved Supply Chain Visibility through Supply Network Collaboration and the DRP Matrix:

Across all facilities world-wide At the Intermediate Parent, Child Location, and Contract Packagers For Product Replacement Information For Inbound Material

Improved Front-End for easy viewing and navigating


SPP Benefits Realized

SPM plans in daily buckets / Legacy planned in weekly buckets

Potential 2 day inventory reduction @ child locations = $20M - $25M

Enables Supplier Network Collaboration

SPM has visibility to “actual” ASN's in-transit & plans accordingly

Legacy only plans based on receipts

Inventory reduction opportunity on low-volume products

Enhanced consolidated ordering functionality accounts for fractional

demand

Greater Bin Level Accuracy as SPM plans to the bin versus planning to the

expected receipt



Ability to plan schedules due any day of the week versus all schedules due on

Friday allows you to get material earlier in the week

Improved service on seasonal parts Enhanced SPM prorate safety stock functionality can be applied to seasonal parts

Enhanced preseason buy and anticipated demand coverage

Supports Deployment in advance of demand

Enhanced Supplier Shutdown functionality allows you to spread varying

percentage of requirements across periods. Legacy spreads it evenly across

periods.

Improved inventory accuracy/service as SPM uses the same matrix for

planning which ensures material is in the right location



Level Load Improvements Ability to plan schedules due any day of the week

Enhanced seasonal parts planning levels supplier receipts and resulting

deployments/allocations

Enhanced Supplier Shutdown functionality allows you to spread varying

percentage of requirements across periods and level supplier receipts

Enables Supplier Network Collaboration Enables supplier collaboration efforts

Enables working with suppliers to provide a ship date on past due schedules


CRM Benefits To Date

Functionality Implemented

Billing

Pricing

Dealer Claims

Dealer Returns

Billing accuracy improvements

Robust Pricing functionality

Rules Based Claims

Rules Based Returns

Increased automation/less manual tasks


QUESTIONS?

SAP Service Parts Management

Service Parts Management at

Ford Motor Company

Carrie Thompson

Global Program Manager

Ford Motor Company

CVN Event● Chicago, IL ● June 26, 2013

Confidential

• Ford Motor Company is a globally recognized leader in the

automotive industry

• Founded in 1903 by Henry Ford

• Headquartered in Dearborn, Michigan

• Ford employs approximately 198,000 employees globally and

generates more than $118 billion in revenue

• Ford delivers innovative vehicles to customers around the world

and has developed a robust infrastructure that provides after-

sales service to these customers

• Ford strives to improve control over parts supply and logistics

Slide 17

About Ford Motor Company

Confidential

• Realign all processes in the After Sales and Services area and

make them more efficient

• Achieve total supply chain visibility in real time

• Increase dealer and customer service satisfaction

• Minimize costs, especially ongoing IT costs

• Link suppliers, dealers, customers, and Ford in a single solution

• Reduce fragmented systems (130+ in EU, 40+ in US)

• Increase flexibility and promote ease of change

• Provide a base for global strategic growth in the PS&L business

Slide 18

Strategic Objectives

Confidential

Ford Parts Supply & Logistics (PS&L)

U.S.* Europe

Dealers Serviced ~3,800 ~2,500

Order Line Volume ~ 40 Million ~30 Million

Suppliers Managed ~1,500 ~1,500

Part Numbers 230,000 250,000

Number of Depots 26 7

Number of Employees ~1,700 ~2,000

*The US supply chain network went through a significant optimization

prior to beginning with the IT solution.

Slide 19

Confidential

SPM Journey – Why?

• Antiquated Legacy Systems (Dying in Europe and Refresh in U.S.)

• Complicated Legacy Systems (Dozens of Inter-related systems)

• Current regional solutions cannot be shared globally

• In-house Development vs. Shelf Software explored

• Ford/CAT/SAP partnership was created

• Jointly develop a best-in-class Service Parts Management Solution which could be used Industry Wide

• Ford End Game

• Global Organization (beginning with the US and EU)

• Foundation = harmonization/commonality (Goal 80% common processes minimum)

Slide 20

Confidential

Slide 21

FoESupply Chain Planning and Deployment

Warehouse Management

Commercial Management

FNASupply Chain Planning (Front Half)

Supply Chain Deployment (Back Half)

Warehouse Management

Warehouse Management - PRC

Commerical Management

Legend:Development Phase

Deployment Phase

Indicates 1st go-live of thread

Cust=Dealers, Export, Affiliates (Ford of)

2009 2010 2011 2012 2013 2014 2015 2016

Launch 12,000 Customer

ship pts over 14 Mths

Launch 2 Depots every 2 Mths

over 27 Mths (25 total

warehouses)

Ramp-up 5000 Active

Supplier ship pts over 18

Mths

Launch 4 Ford Depots

and 3 PLs over 27 Mths

Launch 19 NSCs

over 36 Mths

Most

complex

site

SPM Journey – How and When?

Confidential

Slide 22

Service Parts Planning - Benefit Realization

SPP Implementation in Europe Complete July, 2009:

Key Performance Indicator Impact

Service Parts Inventories -22%

Obsolescence -20%

Referral Costs -10%

Local Fill Rates

(current rate is 94%) +1.5%

Forecast Accuracy +20%

Confidential

Slide 23

Service Parts Planning - Benefit Realization

Additional SPP Benefits Expected:

• Common platform for worldwide service parts management

• Real-time visibility to parts in a global supply chain

• More accurate forecasting – particularly for seasonal and slow-moving

parts

• Improved safety stock planning

• Fair share allocation of parts across depots

• Improved collaboration with suppliers

• Reduced back orders

• “Power of Integration” – push deployment opportunities once

warehouse implementations are complete (EU specific, US already

does this)

Confidential

Slide 24

Thank You!

Questions?

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