Operations Strategy Report For Caterpillar: Integrating Marketing Functions And Resource Requirements

Formulating an Operations Strategy that Integrates with the Resource Requirements and Marketing Functions for Caterpillar

Caterpillar is one of the leading firms that exercise its operational functions in the field of manufacturing and production of equipments, engines and locomotives that are associated with mining, construction, diesel and natural gas. The firm manufactures diesel electric locomotives, turbines and other machineries and equipments that are associated with mining. Besides these products, the firm has also recently taken up the business of providing financial services (cat.com, 2018). As the company has a long history and record of innovation in terms of technology and customer solutions, operations strategies governing supply chain is very important and crucial for the firm. This report tends to analyze and evaluate the various operations strategies that the firm can use to align the supply chain with the marketing functions existing.

As the firm manufactures equipments and machinery that are used for agricultural and mining purposes, the resources required by the firm include the most updated forms of technology in addition to the large infrastructural requirements (Brewster 2017). Apart from these the other resources required by the firm include a meticulous network of distributors and logistics that will help in maintenance of proper relations with the suppliers as well as other stakeholders.

The marketing functions that are used by Caterpillar include the market research and other promotional activities and initiatives that help the firm to figure the array of products that will help it to gain and capture a larger share of the market and hence increase its cohort of target customers.

The operations strategy used by a firm in its functioning are primarily involved with reaching the set objectives and goals for the quarters or for that financial year. The two main types of operations strategies used by the firm in reaching its objectives of higher revenue generation as well as capturing a higher customer base include both corporate strategies and customer driven strategies. The other most important strategy used by the firm includes development of newer products and services. These strategies help in the amalgamation and integration of resources utilized by the firm along with marketing functions. The corporate strategies used by the firm help in efficient and easy networking and cohesion between all the departments and additional resource relations present within the firm. The firm is also actively involved in utilizing and implementing corporate strategies that help in capturing higher sections of the target market by use of disruptive business models that help in catering to the needs and demands of customers and the changing trends of the market. The last set of operations strategy used to cater to the changing technological innovations taking place in the firm as well as in the market include, manufacturing and providing increased research and development of goods and services that are new and will help in capturing higher share of the market as the firm makes sure that they are the only firm in the market producing the newest variety and quality of goods.

Critical Assessment of Managerial Skills and Competencies Required for Management of Supply Chain and Operations

The managerial skills that is required for efficient working of the supply chain amidst the rapidly occurring changes in the spheres of technology and commerce include the skills that are needed to be present in the new era of management supply (Jacobs, Chase and Lummus 2014). Some of these skills include concepts of project management, accounting costs efficiently, and technical viability. In this context the ability to understand financial statements and work on the same is also very important. The other set of management skills include understanding of e-business plans and e-procurement plans. The duties of supply chain managers are varied and also include the responsibilities of trouble shooting and problem solving on an everyday basis (Christopher 2016). Especially in the context of the functioning of Caterpillar, the responsibilities of the supply chain managers include understanding and evaluating global issues or situations that affect the smooth functioning of the already existing branches or that affect the expansion of the firm into other countries (Schönsleben 2016). Essentially as Caterpillar is concerned and involved with machinery and equipments for earth moving and agriculture, the core responsibilities of the managers demand more than just logistics handling and inventory purchasing. As the firm is currently facing issues of emissions from the vehicles produced from the customer feedbacks obtained, the complete set of responsibilities and accountabilities facing the supply chain managers are enlisted and described as follows:

• Ensuring the production quality is maintained and ensured with the new products and services that the company is now producing or planning to produce. It is one of the most crucial responsibility for the managers to propose and monitor both research and product designs for any new services or products that the firm is planning to launch for the first time in the target market.
• Ensuring that issues of leakage and other disruptions do not happen in the context of inventory or other raw materials storage
• Ensuring there is a reduction in costs of travel and connectivity for both finished goods as well as raw materials and also ensuring that the supply chain is smooth and is the most convenient way of transferring goods across different points. In this context it is very important to mention the importance  of network design that will help in ensuring that the allocation of accountability across the networks is also maintained in a fastidious manner
• One of the most important responsibilities lying in the aspect of technology and innovation is for the managers to ensure that the most updated forms of technology is being used and at the cheapest rates through maintenance of good will and long term relationships with the suppliers.
• For the supply chain managers it is also important to use the data collected and processed by the application of smart devices for developing and using disruptive business models to produce goods and products that are the latest and the newest in the market
• The managers of Caterpillar should also increasingly involve manufacturing and procurement training and workshops so that the employees are able to handle increased levels of work through maximum capacity utilization. This again involves process design wherein the process of both developing a new product as well as skills associated with the manufacturing of the product are designed in such a way that the profits accrued out of it are maximum.
• The monitoring of all the above prescribed measures should be done with the help of customer feedbacks based on which objectives pertaining to the supply chain management should be laid

  The layout and the areas wherein the operations functions will be formulated and exercised are described with the help of the following table and the key areas which are to be addressed are also mentioned:

The above segregation of operations function will help eventually in the efficient and effective process of change and lean management (Heizer 2016). This will help in the growth of the firm while catering to the needs of customers and their changing preferences and demand trends specific to different parts of the world. This is very important for the firm as it will also help the firm to cater to the corporate social responsibilities which is essential for the sustainable production and functioning in the long run for the firm.

Recommendations for Lean Management and Overall Competitiveness

The following set of principles should be evaluated to ensure smooth functioning of lean management of Caterpillar:

• The value that the customers place on the products and services of the firm should be analyzed and monitored by the management and a top down approach should be taken up for deciding cost  of the products and services in the target market (Martínez-Jurado, P.J. and Moyano-Fuentes 2018). This process will also eventually help the firm to remove excess costs incurred by the firm.
• The value stream for the products and services of the firm should also be determined and evaluated. This required intensive monitoring of the product cost and features starting from manufacturing to delivery of the product to the reduction in usage and expiration of the product (Martínez-Jurado and Moyano-Fuentes 2014). Lean thinking helps in linking the suppliers with the customers and integrates the demand and supply in such a way that the waste generated reduces and is even eliminated in most cases. Caterpillar should thus take up initiatives and activities that will help in bringing about lean management through the implication of value stream monitoring activities.
• Lean management basically focuses on elimination of waste which is done by maintaining a good and smooth flow of products and services through the monitoring of a good value chain that never brings about a stop or halt in the production system or process. This process ensures that the processes of production and delivery are synchronized and aligned to the changing types and quantities of customer demands (Bhasin 2015). In fact this is the most crucial of all the processes of lean management as it causes reduction and sometimes even complete elimination of the waste and increases the value of the product and services to the customers.
• Next, is the concept of pull approach which ensures that the inventories of the firm are managed efficiently and effectively and too much of production does not happen ahead of time. In this particular context, a framework and estimation is very important as it helps in regulating the amount of production and also the cycles of product generation. This step should be carefully assessed by the supply chain managers as it should consist of cycles which are short and flexible so that nothing is produced without the order from the customers. Efficient delivery networking and schedule is also ensured and monitored by the pull approach. It also caters to the process of keeping the production units informed of what is required as of the present month or the quarter and not the entire year so that the present needs can be focused on.
• The last step involves setting of targets that ensure that perfection is maintained in the entire supply chain so that the quality is maintained and the production processes are made to be perfect in terms of less cost incurrence and the key reason behind this whole process is the maintenance of the attitude of best quality services and products.

Of late the process of ensuring and maintaining overall business competitiveness has become very difficult due to the processes of globalization and increase in the total supply and demand of a lot of products and services in different sectors (Sala-i-Martin et al. 2015). Thus it will be very important for caterpillar as a firm to perform product differentiation and produce products that are heterogeneous and are not perfect substitutes. Further, the firm should also increase the amount of investments in the assets that are intangible as the returns from these are much higher as compared to the returns from the fixed assets. The fact that Caterpillar is well known for its innovation and technological improvisation itself proves that they are on the right track towards enhancing overall business competitiveness. The complete set of recommendations for the different aspects of supply chain management of Caterpillar to adopt and execute are mentioned in the subsequent parts of this section:

• As mentioned earlier the pull approach of lean management must be used for maintaining the stock of goods and products according to the current demand of goods from the customers
• The systems that are associated with providing and receiving information that is smart devices that will help in collection, processing, evaluation and analyzing of data which in turn will help to build products and services that are new and innovative and different from other products existing in the target market. The data processed by the smart devices will also be used for building disruptive business models that will help ensure that the processes and the procedures as well as the networking measures used in the context of supply chain management are the most up to date and in accordance with the changing patterns and trends of demands of the customers and the ongoing factors that affect the market as a whole
• In the context of supply chain management of costs, the use of outsourcing is very important as it will help Caterpillar to reduce costs associated with production and maintenance of products substantially. Thus, this can be used as a strategy to reduce the costs and also obtain better quality of equipments which can further be used together to produce the best quality finished goods
• Lastly, the firm should also develop strategies that will help faster delivery speed through shipping or air freight routes that are both feasible and cheap and help in keeping up to the speed and quality of delivery together at the same time

References

Bhasin, S., 2015. Lean management beyond manufacturing. New York, NY: Springer.

Brewster, C., 2017. The integration of human resource management and corporate strategy. In Policy and practice in European human resource management (pp. 22-35). Routledge.

cat.com. 2018. Available online at: https://www.cat.com/en_GB/company.html

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Heizer, J., 2016. Operations Management, 11/e. Pearson Education India.

Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.

Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, pp.134-150.

Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2018. Lean Management and Supply Chain Management: Interrelationships in the Aerospace Sector. In Operations and Service Management: Concepts, Methodologies, Tools, and Applications (pp. 1208-1242). IGI Global.

Sala-i-Martin, X., Crotti, R., Di Battista, A., Hanouz, M.D., Galvan, C., Geiger, T. and Marti, G., 2015. Reaching Beyond the New Normal: Findings from the Global Competitiveness Index 2015–2016. The Global Competitiveness Report, 2016(2015), pp.3-41.

Schönsleben, P., 2016. Integral logistics management: operations and supply chain management within and across companies. CRC Press.

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