Changing World-Changing Supply Chain-Changing Expectations

Barb Schwarzentraub, Director, Global Component Manufacturing, Caterpillar Inc.

Importance of Innovation

Every day as leaders we are faced with increasing demands of the competitive marketplace, our customers, suppliers, shareholders, and employees. The complexities of our supply chains and changing manufacturing technologies represent increased opportunities to maximize the value from our services and processes.

To succeed in any market, the customers that our supply chains serve must make more money or receive more value from the products and services delivered to them by the supply chains involved. There are also many alternative choices to provide differentiation. The status quo is no longer enough in the age of instant gratification and a shared economy; customers will no longer wait for long manufacturing lead times or long supply chains to fulfill needs. Increased differentiated value is fundamental to our manufacturing completely through to the delivery to our customers. As we continue to develop future manufacturing capabilities, our customers must be first and foremost in our thoughts as the demands and speed of the supply chains with manufacturing lead times never before achieved must now be realized. Are you thinking about speed and innovation in your companies to achieve? Innovation completely through to our customers is of paramount importance to deliver in the future. Are you focused on the present or challenging yourself to deliver in the future, leapfrogging capabilities to do so?

Our ability to combine information from seemingly unrelated events to make predictive moves for our manufacturing supply base through our supply chains is the way for the future

In manufacturing at Caterpillar, this means our supply chains must deliver solutions to meet a mission critical need for the customer. It is the replacement part for a landscaper’s skid steer or a large mining truck—both are delivering results to meet existing and emerging customer needs with the dirt they are moving. Our customers expect to make money because Cat products and Caterpillar’s supply chains perform both in the aftermarket support and the machines and engines.

All of you reading this may not deem your supply chains “mission critical” for your customers, but all of our supply chains serve customer needs and desires regardless of industry. The performance of our supply chains must represent the lowest total costs to maximize value for our customers. But how we have performed in the past is not the performance that will be accepted in the future. You must challenge your capabilities apart from the rest. Lean supply chains, which maximize flow, are foundational but they are no longer enough. The innovations with data, analytics and creativity in personalizing the product are required to be differentiated in the eyes of the customers.

As an industry, we must harness the Internet of Things to realize the possibilities. Our ability to combine information from seemingly unrelated events to make predictive moves for our manufacturing supply base through our supply chains is the way for the future. These combined analytics offer up greater value for our customers with the products available when desired with lower costs throughout the chain. We must use analytics to know our customers’ existing and emerging needs better than they do by utilizing predictive and analytic supply chains.

This translates into better global resources utilization with customers achieving their desired results better than ever imagined. Are you doing enough to challenge your previous capabilities to differentiate and innovate in the future? What are you encouraging your manufacturing engineers to do to look through the customer eyes? Is it enough?

Harnessing technology enables manufacturing and supply chains to be viewed as adding value to both the bottom line and our customers versus solely costs to be managed. This drives management as an asset for competitive advantage versus cost cutting. What can this mean? Everyone is talking about “big data” and predictive capabilities to assure whether the customer requirements are achieved to maximize the customer experience as a result of the supply chain. This improves top line growth with products at the right time–even anticipating the needs and requirements of the customers. For manufacturing, it implies a speed and nimbleness never before achieved, creativity, and innovation. As we look across our industries in the future, manufacturing is at crossroads– harnessing capabilities with robotics and automation but delivering with analytics and speed will be required. We must continue to challenge our thinking and challenge the status quo to drive innovations and results for our customers like never before.

It is an exciting time in our industry and for our future. As the industry leaders, we have the opportunity to link manufacturing and supply chains through innovative use of technology and data to create a different future. We must do it to stay ahead and not fall behind.