Quality Best Practices

Organization Analysis

Caterpillar's global network of agents provides customers with a competitive and competitive platform that enables customers to deal with people they know and trust. All of the company's sales agents are almost independent of the local company. Many agents and customers maintain business relationships that span at least two generations. Caterpillar's agents are located in more than 180 countries and regions, providing customers with equipment, services, and financial services. In addition, through more than 1,500 outlets around the world to provide rental services.

As the company's global business chain unfolds, Caterpillar has embarked on a global unified logistics system. At present, Caterpillar's logistics services company, through the world's 25 countries or regions, 105 offices, and factories, including automotive, industrial, consumer durables, technology, electronics, manufacturing logistics and other market segments, more than 65 Home-based companies to provide world-class supply chain integration solutions and services. Customers who have now located anywhere in the world can get the required parts within 48 hours, providing a guarantee for customers to resume operations in a timely manner.

The distribution system is one of Caterpillar competitive advantages: Caterpillar relationship with each independent agent enhances the value of Caterpillar products and services. In addition, Caterpillar’s supply chain is recognized as world-class: in the industry, Caterpillar has the lowest total cost of sales channels and the best asset utilization. For example, Caterpillar has more than 100 manufacturing facilities worldwide. Then, Caterpillar sells the products directly to the distributor, and the distributor sells it directly to the user in the exclusive sales area.So the Cat logistics can quickly assess the efficiency of customer supply chain, and the successful planning and implementation of value-added processes, simplify the assets, reduce costs and improve response speed( Chief Executive Officer).

CAT's competitive advantages in the logistics and product service system, and with the close relationship between customers. This does not mean that CAT products are designed and manufactured as competitors. But the reason why in the past and now compared to the competitiveness of the opponent is CAT's logistics and product service system. The backbone of this system is the world's 186 independent agents, they sell tools and engines to develop heavy industry, and provide products and services. They play a very important role in helping to develop relationships with customers and how to improve their products and services.

As a Material Requirement Planning at Caterpillar will supervise the material planning and functions for the facility, ensuring material availability and Point Of Use availability and drive disciplined inventory systems usage and collaboration with material suppliers. Material Requirement Planning system includes plans, initiates and maintains a material procurement process that establishes and achieves the least total cost, best quality and timely delivery for facility material purchases from internal/external suppliers. Includes managing inventory and record accuracy through monitoring shortage/surplus exception, supplier follows ups, negative on-hands, and daily delivery performance. In order to meet production and parts requirements while optimizing inventory levels, lot sizing, lead times, packaging, and transportation costs.

Material Requirement Planning provides direct support to manufacturing operations through managing incoming requirements and scheduling of production work orders. Includes the identification and implementation of methods to assure suppliers are meeting Caterpillar's technological, communication, material delivery, financial management, and quality needs. Based on the Six Sigma project to manage and anticipate manufacturing requirements through the management of incoming demand and production work orders in order to forecasting and arrange production line.

Facility Location

According to the Factor Rating Method, it shows Korea is the better place to expand the business than Russia. The following table display the factors and the reason.

Corruption: Giving 0.25 weight. In the Business Insider article(2014) “The 17 Most Corrupt Countries in the World”, lists the world's most corrupt 17 countries. While the chart shows Russia's corruption is higher than South Korea (Transparency International, 2016). Bribery of this matter, not only affects the overall development of a country, more importantly, is to make rich big businesses get more and more government benefits, consortium and political power of mutual parasitic dependence, people's life It will not improve.

Political Issue: Giving 0.25 weight. Globalized market liberalization and free trade must be driven by political.

Neighboring Countries: Giving 0.15 weight. It is obvious that neighboring countries have a certain degree of influence on a country. Such as North Korea's threat to South Korea from time to time, while China is biased towards North Korea.

Nationalism: Giving 0.25 weight. A country with strong nationalism will have some influence on other countries.

Cultural: Giving 0.1 weight. The concept of time for the Russians is not so important, they like slowly. English is more common to the Russians. Compared to the cultural differences in South Korea, Korean language barriers are larger, nationalism is more prosperous, so when Caterpillar contact with them, the best way is through local relationship to approach Korean firms.

For the above reasons, Caterpillar will develop business opportunities in Korea.

Caterpillar is a name of a company that deals with excavator equipment’s sell. It seeks to expand its operations in Korea. The aim and goal of every company is to sail through continued success and ensure its products are known internationally. This can be facilitated through opening of various branches in different areas of the world (Ritter, J., (1990). However there are various factors to consider when determining its situation and the day to day operations. Such factors include bottlenecking issues, transportation efficiency and how these factors affect the pull and push system to be employed in the daily management of the company (Nachum, L., and Wymbs, C., ( 2002). This paper aims at thoroughly investigating these factors and giving necessary recommendations to curb them.

Bottlenecking issues

They refers to those factors that may act as stumbling blocks in the efficiency of any given organization or company (Nachum, L., and Wymbs, C.,( 2002). Literally, a bottleneck is the neck of bottle but in business terms, it implies any possible problem that may be a hindrance to a business therefore it proves important to identify any possible bottleneck that may affect the location and the operations of the Caterpillar Company. Some of these problems include:

The people themselves greatly determine the daily revenue that the company would be securing. This ranges from the staff and the available customers who are willing to purchase the product produced by the company (Ritter, J., (1990). Therefore to ensure success of the company, people in the both the management and subordinate staff of the Company should to be in sufficient numbers and also they should be willing to devote their labor at a given wage.

Storage; as the company seeks to produce more products to meet the extended customer’s needs, storage facility becomes important. In order to counteract this problem the company should acquire more land to facilitate the construction of the storage facility. Also necessary capital is required and therefore the company should borrow money to facilitate the construction.

The organizational environment which deals with both external and internal factors is likely to affect the operations of the company either positively or negatively. Internally, the culture may pose a threat to the company and consequently it maybe one that pulls back the company from prospering. To change this, the leaders should devise ways of shaping the company culture with clear guidelines of how the employees are expected to behave (Ritter, J., (1990). Similarly, the external environment may also bring issues that the company may or may not have control over them. Some of them include, company’s intermediaries who link the company to customers, competitors and the general public as well. To address such unfortunate occurrences, a thorough environmental analysis should be done in order to make the company’s operations and product to suit to it.

The technological issue encompasses possession of the appropriate equipments to facilitate the process in the company (Sun Q., Tong, W., and Yu, Q., (2002). Technology is inseparable from any business venture. With the years passing by, businesses have relied heavily on it and it’s true to say that the sustenance of this company will depend on how it is well acquainted with modern technology. As a matter of fact if organizations had not endorsed modern technology in their operations there would no major difference with the ancient organizations. Therefore technology is another bottleneck issue to the success of this company (Ritter, J., (1990). Lack of proper technology would definitely lead to its incompetence in competing with other related companies in the world. To be at par with the competition in terms of producing quality products and also easen the process of production, necessary equipments such as, accounting tools, information management systems, equipments for supply should be put into place (Ritter, J., (1990). Manual operations should be done away with.

Transportation constraints

Effective transportation makes the process of distribution efficient in that it facilitates movement of goods from one area to another in search for customers (Sun Q., Tong, W., and Yu, Q., (2002). Infrastructure in a company acts as a roadmap which comprises of the following; the daily operations, the processes as well as employees. Through transportation goods are moved to the market and subsequently distributed to final users or consumers (Ritter, J., (1990). This is implies that the company won’t successfully thrive in an area with poor transportation networks and therefore if such transportation bottlenecks arise, the company has to come up with mitigation measures to counter this problem. Some of these measures include, adopting air transport in moving its goods to various markets (Sun Q., Tong, W., and Yu, Q., (2002). Also, lending a hand in improving the local roads in the area as this would also help in its operations locally.

Pull or push system

In compliance with the bottleneck issues and transportation issues discussed above, I vehemently believe that the push system most prefers caterpillar in its endeavors to succeed in its proposed branch (Ritter, J., (1990). This is because this system will enable the company effectively compete with its competitors internationally as there would be enough raw materials needed for production hence ensuring that all customers orders are met successfully(Ritter, J., (1990). This would in turn foster good customer satisfaction. However, proper storage facilities should be established.

Warehousing Strategies

There are many factors that must be put into consideration before choosing any business location. This is because a business cannot operate solely. It entirely depends on different stakeholders who influence the profits and hence determine the success of the business. For instance, a firm depends on buyers to purchase the products and hence make profits. On the other hand, the suppliers supply raw materials and hence must be considered before establishing any business. There are other factors like climatic conditions which should also be considered (Ritter, 1990).

However, this depends on the type of commodity being produced. For instance, perishable goods cannot be produced in a harsh climatic condition that would instead increase the rate of decay. Moreover, the means of transport must be a considered. The final products have to be transported to the customers. On the other hand, the raw materials must also be supplied to the company. This implies that a business of a warehouse ought to be positioned strategically such that there is an efficient flow of commodities in and out of the warehouse. This paper discusses the strategies which a warehouse ought to use to reduce the cost, meet customer needs and look into the advantages of locating the warehouse near the manufacturing site (Tong and Yu, 2002).

Cost saving

There are many strategies that ought to be put in place to reduce the cost as much as possible. First and foremost, the firm should automate its functions. Automation will reduce the size of labor force required for the operations of the warehouse. When the labor force is lower, the monthly wage bill will also be lower. Moreover, automation reduces the time needed for doing the different tasks. This means that the total output per unit time will generally improve. Automation improves on the efficiency of activities within the warehouse. It is easy to monitor the movement of all things in the premises. With this, theft will be minimized since it is done by the use machine. Machines cannot be easily tampered with easily.

I recommend the fitting of CCTV cameras all around the place. This will ensure that there is maximum security around the place during the day and also in the night. CCTVs monitor all the staff movement, and any item touched can be easily traced. They make the employees fear being identified or connected with any offense of theft in the firm. Bearing in mind that the main aim of the business is to serve customers and earn profits, it would be good to educate the employees on how to handle the clients effectively by
establishing a good relationship with them. They should have a welcoming spirit which will highly improve on the customer loyalty (Ritter, 1990).

Customer needs

Automation will have a many positive effects to the customers. First, it will speed up the operations. As a matter of fact, every customer would wish to be served within the shortest time possible. This saves on time and other resources. Via the process of automation, it is easy to know which goods belong to which client. In many warehouses, it is very common to find a situation where goods are given to the wrong customer. This brings many inconveniences since they have to be returned, which requires extra expenses. It is possible to damage the goods along the way which might lead to compensation charges by the firm. In some extreme cases, the customers may completely decline the commodities and demand to be offered with new ones. This is likely to damage the customer loyalty (Ritter, 1990).

Educating the employees on the best way to handle the customers will lead to better services. Note that a warehouse mostly involves interaction with clients. This calls for good strategies for making the clients happy. All things should be done bearing in mind that the quality of the services markets the business.
Same location

There are numerous advantages accrued to a warehouse that is located near the manufacturing site. First, very short time will be required in transporting commodities from the production site to the warehouse. Many customers would prefer such scenario since it will save them on time. In case a buyer wishes to purchase a commodity without the knowledge of where to keep it, having an adjacent warehouse will easily solve this problem. Moreover, it is an effective way of cutting the transportation cost. If the cost for transportation is low, the demand for services will be generally high. Many people will be attracted to the company as a result of this. When the warehouse is located adjacent to the production site, the management can easily man the two premises. It will be easy to promote team work among employees from the both sides. In terms of marketing, it is easier to promote the products when they are stored close to the manufacturing site (Tong and Yu, 2002).The experts can show workability of the different equipment to the clients. In the event that the potential customers feel that the brand cannot satisfy their needs, then they can decide to buy from other related firms within the industry. This enables them to make informed decisions. As far as after sale services are concerned, it is very convenient to the management to provide such. It is easy to showcase the brands prior to buying. Moreover, it is easy to sell the products at lower prices since the firm only incurs production expenses and thus the customer is not expected to compensate for the transportation costs (Tong and Yu, 2002).

Quality Best Practices