Operation Management Sales and Planning - Caterpillar

Sales and Operation Planning

Batch: MBA-FT (2014-2016)

Date of Submission: 3rd March, 2015

About Caterpillar

Caterpillar is world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial turbines. It has total employees around 114,000 and sells its products in 108 countries. It has a worldwide dealer distribution network, which employees around 133,000 employees which acts as a contact point to end users. It has a revenue of around US $55.6 billion.

6- Sigma implementation

Caterpillar implemented 6 Sigma on a global level from January 2001. From the company perspective, anywhere there was an outcome, there was a process. If there was a process, there was variation in performance. If there was variation in performance, the process was subject to 6 Sigma. From production to revenue and customer service and supply chain in every department 6 – Sigma was implemented. The company rolled out the program in “waves,” and, by the end of 2001, had 700 Black Belts. Today there are roughly 2,000. Black Belts at Caterpillar are trained by Master Black Belts and receive a minimum of 160 hours of training while also working on their first project.

Caterpillar used a transformational deployment strategy in implementing 6 Sigma as opposed to a functional or targeted strategy. The latter two focus on specific processes or individuals and, although they require less initial investment, make it difficult to integrate 6 Sigma into other parts of the company, largely because there’s no common language and company-wide commitment. In Caterpillar’s case every employee was trained with basic concept of 6 – sigma. Training was same for production or finance personnel. Due to this result 6 Sigma would permeate complete in the company. Every area—from research and development to production, marketing, finance, and accounting—has provided major inputs into implementation and used 6 Sigma to review and change internal processes. Caterpillar had adopted the DMAIC methodology to map the processes. In the first year of implementation Caterpillar trained 700 of its employees for the 6 – Sigma black belt. At present no of employees with black belt is around 2000.

Caterpillar had taught to its suppliers & dealers about the effective use of 6- sigma method. Of its 850 suppliers more than 1000 black belts has been created, which help in project execution faster. Of it 165 global dealer Caterpillar had created around 1000 black belts. Which also helped in project execution faster and more customer satisfaction. As Caterpillar embraced the methodology, dealers have also accepted the idea of making 6 Sigma a top-down methodology that pushes the training and concept down to the workers at the lowest level.