Caterpillar Logistics Services, Inc.

Cat Logistics

01/26/20
Maureen Healy
Miami DC
Overview
 Cat Logistics heritage
 Caterpillar culture
 Cat Logistics overview
– Cat Distribution Services
– Manufacturing Logistics
– Transportation
– External Client Business
 Miami DC Overview
 Data Files
 Review of Concepts

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Cat Logistics
Heritage
Logistics – Part of Caterpillar’s Heritage
 Producing and supporting high-value, durable goods working in time-
sensitive, critical environments around the world
– Caterpillar manufactures more than 500 products to serve construction,
mining, forestry and power generation applications
– More than 170 manufacturing facilities and thousands of suppliers around the
world
– Distributes products in more than 190 countries
 World-class logistics increases customer loyalty and improves
shareholder value

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The Differentiator
 What sets Caterpillar apart?
Superior customer service through 180 Dealers
1,890 Dealer branch stores
1,467 Dealer rental outlets

 Enabled by… world class parts distribution

Cat Logistics distributes more than 750,000 unique
Caterpillar part numbers, with worldwide parts
availability of 99.7%

 Caterpillar’s ability to get the right part in the right place at the
right time separates us from the competition

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Caterpillar Culture
Our Values in Action

 Documents high ethical standards our

company has upheld for more than 80 years
 First published in 1974
 Global company with global standards and
expectations
 Living Our Values in Action
is an individual choice

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Our Values in Action and Leadership
Through living Our Values in Action, Caterpillar Production System
(CPS) will be an enabler for Caterpillar to achieve its Vision 2020 and
business strategy
 Leadership imperatives
 Leaders building leaders
 Making great leaders
 Employee Opinion Survey (EOS) and action planning
LEAD
with values
BUILD
customer focus
Integrity SET
Excellence high expectations

Teamwork DELIVER
results
Commitment DEVELOP
inspire and engage
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CPS and Three Systems
The Caterpillar Production System is the common Order-to-Delivery
process being implemented enterprise-wide to achieve our Safety,
Quality and Velocity goals for 2010 and beyond

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CPS and Eight Wastes
The ultimate goal of CPS is the elimination of waste. Waste is any
activity that consumes resources, but creates no value for the customer

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Cat Logistics
Caterpillar’s Supply Chain

Supply Chain

Supplier Manufacturing Distribution Dealer / Retail Consumer

Supply Chain is the flow of materials, information, and finances as they move in a process
from the origin point to the end consumer

Logistics involves all of the planning, execution & control required to successfully deliver the
product to the end consumer

The goal is to optimize this flow to achieve low cost and high customer service

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Supply Chain Excellence
Cat Distribution Services Manufacturing Logistics

MOSCOW
 MORTON  GRIMBERGEN
SHANGHAI
SINGAPORE
JOHANNESBURG
PIRACICABA MELBOURNE

Transportation External Client Business

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Caterpillar Distribution Services
 80+ year history of providing Caterpillar machine & engine owners
efficient and effective global logistics support through Cat parts
distribution network
 22 facilities in 9 countries
 Serving Cat dealers world wide MOSCOW
 MORTON  GRIMBERGEN
 Modernized Cat Parts Network (MCPN): SHANGHAI

– Americas, EAME and AP SINGAPORE

JOHANNESBURG
– Multi-functional facilities PIRACICABA MELBOURNE

– Located closer to dealers and suppliers

 Service Parts Management (SPM) software /
processes
 Strategically placed inventory
 24 x 7 x 365 operations

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Manufacturing Logistics
 Parts entering manufacturing facilities (inbound logistics)
 Inbound Logistics Centers (ILCs):
– Only hand-weight items (<35lbs or <16kgs / part)
– Warehousing, inventory management, sequencing,
assembly processing, kitting and sub-assembly
– 2 ILCs supporting 130 facilities (Belgium and Illinois)
 Logistics Service Centers (LSCs):
– Consolidating demand, planning, ordering,
staging & sequencing and storing
– Quick (overnight) delivery to geographically proximal
manufacturing plant(s) / Points of Use (POU)
– 19 LSCs supporting 21 manufacturing facilities

Regional Inbound Logistics Service

Logistics Center (ILC) Center (LSC) Manufacturing
Suppliers
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Transportation
 Transportation of finished products and parts across all modes – truck, rail, ocean and air
 Caterpillar and external clients
 One of the largest freight movers in the world:
– Transportation spend managed – $1.8 billion
– Carriers providing service – 600
– Country to country lanes managed – 900
 Track and trace tool enhancing visibility
 Sustainable development strategy

 Product Distribution Centers (PDCs):

– Supporting Caterpillar’s finished goods multi-lane
distribution strategy of product configuration
simplification and increased availability
– Strategically located PDCs (Australia, Belgium and UAE)
– Product examples – wheel loaders, excavators, track-
type tractors, wheel loaders and skid steers
– Modeling, implementation and operations
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The External Logistics
Business
Leveraging our Core Competency
 In 1987, Cat Logistics was formed as a wholly-owned subsidiary to offer
logistics services to external clients
 Providing logistics solutions to clients with needs similar to
Caterpillar’s—time-sensitive, service-critical, unpredictable demand—
leverages our capabilities and represents a significant growth
opportunity
 Today, Cat Logistics is one of the fastest growing
divisions within Caterpillar
– 15% CAGR 2002 – 2008
– 3X growth projected from 2000 – 2010
– More than 80% of our growth is with current clients
 Logistics knowledge gained by serving 60+ clients has
allowed us to constantly improve the logistics solutions
and competitive advantage for all our clients
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Significant Growth & Long Term Relationships
AUTOMOTIVE INDUSTRIAL

MAINTENANCE, REPAIR & OPERATIONS (MRO) OTHER SERVICE PARTS

(Mining, Oil & Gas) (Aerospace & Defense, Technology, and Consumer Durables)

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Provide Our Competitive Advantage
 80 years of global product support heritage
– Globally integrated aftermarket approach
with sound, proven business practices

 Empathy – we live what our customers live

– We are the only major 3PL that has origins in
manufacturing and prime product support
Service
 Solution leader + = Parts
Management

– Co-developer of state-of-the-art flexible supply

chain IT system built by market-leader SAP

 Talented people and proven processes

– Subject matter expertise and years of experience
in the many facets of supply chain management

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Cat Logistics Global Network

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Cat Logistics Today

Europe, Africa, Middle East & CIS

Americas
6 Continents
23 Countries
20 Languages Asia-Pacific
130 Facilities & Offices
Shipping to 190+ Countries
12,000+ Employees
29M+ Sq. Ft.
160M+ Orders/Yr
76 Locations 21B lbs. Of Freight/Yr
7,000 Employees $1.8B Transportation Purchased/Yr
18M SKU’s Serviced/Yr 12 Locations
800 Employees
42 Locations
4,600 Employees

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Miami DC Overview

Miami Lakes, Florida

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Miami DC History
 The first Miami area facility opened in 1956
 The current Miami Lakes facility opened in 1976
 Facility expanded (C1) in 1997
 Facility expanded (C2) in 2002
 Yard Expansion Completed in 2007
 Opened Off-Site facility in 2008 (17,000 sq. ft)

C2 Building 2002
Yard Expansion
(Not Shown)
2007

C1 Building 1997

C Building 1976

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Miami DC Overview
 Facility Overview
– 441,000 sq. ft. under roof, 44,000 sq ft. yard, 17,000 sq. ft. under roof off-site
– 229,000 stocked parts / 264,000 locations
– 230+ employees, 3 shift operation (M-F) + Weekend Shift
 Volume Overview
– 12,000 Outbound lines/day
– 65% stock orders processed on 3rd and 1st shift
• 35% emergency orders processed on 1st and 2nd shift
– 3,000-3,500 inbound lines/day
– 500 cross dock cases/day
 Customers
– Facing facility for 1 Florida Dealer and export to over 33 other dealers
– Secondary facility in search tables for other dealers
– Ship to over 1,200 Destinations
– 55% of outbound is shipped in Ocean containers to facing dealers
– 43% of outbound is air or LTL to facing dealers
– 2% of outbound is shipped to non facing dealers

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Problem Statement
Need to develop 5 year space solution for Current Utilization by Concept
facility with implementable plan to achieve
85% maximum utilization. Plan for 5,000 TYPE FULL EMPTY TOTAL PCNT_FULL
additional parts to store each year across all
concepts.
CTL 2068 54 2122 97.46%

ELG 12780 1002 13782 92.73%

In scope: Improved use of current FLR 1778 118 1896 93.78%

concepts, new storage concepts, off-site GLS 610 12 622 98.07%

Out of scope: Facility expansion, Yard

GSK 2265 17 2282 99.26%

HRK 1607 2 1609 99.88%

HVR 10734 434 11168 96.11%

MZB 191549 21599 213148 89.87%

RCK 11508 2268 13776 83.54%

YRD 4102 364 4466 91.85%

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Facility Layout

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Facility Process Areas
Inbound Material Flow (Red)

Inbound / Inbound Sort

Maint.

Office

Staging Bays Pack Lanes

Loading Docks

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Outbound Material Flow (Blue)
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Facility Storage Areas

YRD

FLR ELG ELG/GLS

FLR CTL HRK HRK RCK RCK MZB

FLR FLR
RCK
YRD FLR

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Data Files
Item Master (Parts Stocked in Miami) Bin Map Sales History
•Part Number •Location •Part Number
•Recommended Storage Quantity •Part # (if occupied) •Country of Origin
(RSQ)
•Country of Origin •MR Qty
•Min
•Location Storage Quantity (LSQ) •Customer Code
•Max
•Facility Stock Available (FSA) •Pack With ID
•Pieces per entry
•“Concept type (CAT term for “slot”) •Order Class
•Forecast annual demand
•Concept size (slot size) •Weight
•Forecast annual entries (lines)
•Concept sector •Volume
•Package Quantity
•Required Completion Date
•Weight
•Picks (Impact of package
•Length quantities)
•Width
•Height

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MZB (Mezzanine/Bins)

Full quantity in one location

Parts under 30 lbs
Hand picked onto carts

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RCK

Parts may have multiple locations

Parts under 50 lbs
Hand picked using order picker

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CTL (Cantilever)

Crated and uncrated parts

Heavy parts
Parts may have multiple locations
Machine picked with reach truck
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ELG (Elongated)

Elongated parts
Hand picked using order picker
Difficult to store and pick
Slower moving parts

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FLR (Floor)

Large Crates, Filters, and Rollers

Primarily picked with reach truck or hoist
Mix of commodities

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GLS (Glass)

Fragile items
Stored vertically
80% Hand picked
20% Palletized picked with reach truck

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GSK (Gasket)

Long narrow commodity

Hand Picked with order picker
Fragile items

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HRK (Heavy Rack)

Machine picked with reach truck

Mixed commodities

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YRD

Weather Resistant Items

Most items >50lbs

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 QUESTIONS?

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