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  • Caterpillar Inc: More than Just Machinery

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    It was one of the most interesting field trips I have ever had. It was field trip to discover how the giant tractors were manufactured. It was a field trip to figure out a unique business model that has been lasting their success for more than 85 years. It was a field trip to understand how they conquer the world’s industrial market. They are the most favorable consumers’ choice in industrial machineries and services. They are recognizable by yellow color and a specific logo of ‘CAT’. Guess what? They are Caterpillar.

    Caterpillar is the world’s largest company that designs, manufactures and sells machinery and engines for industrial use. They are founded in 1905 in San Francisco area with a Holt’s steam traction engine, initially implemented in the cable car. In 2013, they cultivated a worldwide network, which sells products and provides services to all consumers from different geographical regions, such as China, Australia, European countries as well as South Americas. In the past decade, when the economy balance is shifting from western to Asian region, Caterpillar never missed the opportunities. Currently, they are managing businesses and building customer’s relationship in the emerging countries, especially China, the star of world’s economy growth engine. The business model of Caterpillar is so unique that their main revenue doesn’t come from selling equipment; instead they sell parts and services. Caterpillar has been well known of its American-standard quality. Recently, in response to the emerging of environmental awareness, Caterpillar is leading the world industry to announce zero-emission tractors to the world.

    Caterpillar is headquartered in central Illinois, Peoria. Every student in the program was so pleased to have this opportunity to visit Caterpillar. The operation of Caterpillar can be separated into two parts, the manufacturing facility and the distribution center. The giant tractors were built here and exported to every corner of the world every day. In the manufacturing plant, we learned how giant tractors are produced, tested, and packaged. The manufacturing process was organized and structured that they follow a principle named ‘Caterpillar Production System’. The production system inherited some of the DNAs from the TPS system we become familiar with in our Process Management course. They were using Andon cord in production management and also visualization of the process to display real-time situation of the current process. An interesting fact to be mentioned was that all the tractors produced were customized according to clients’ needs. We have an opportunity to examine the Singapore’s model. The tractor is more manually controlled compare to American model, with higher technological advance.

    The distribution center of Caterpillar occupied the largest of the total area. The orders of parts and accessories were sent to the center everyday. The parts are then packed and distributed to consumers. The interior of the center was surrounding with conveyor belts that moved around the high-rise shelves. It was used to transport the parts and accessories from the shelves to the packaging zone and prepared to ship. They cooperated with the UPS carrier service to deliver products to consumers. There is a very special unit hidden inside the distribution center, Morton Metallurgical Lab. The function of the lab is to research and develop the materials they used for tractors in order to stand out among rivalries. In addition, the lab researchers also investigate the reverse engineered parts flowing in the market. Since the non-genuine parts might possibly harm their tractors, the research data regarding non-original parts would be important to educate their consumers and differentiate them from the Caterpillar Standard.

    It is their powerful know-how capabilities that have allowed them to be a sustainable business for over 85 years. I was so amazed after the visit from Peoria. I was learning from a world-class industrial leader. However, from my point of view, it’s not only the know-hows that make the Caterpillar so successful, but also the ethical values they deliver to people. “We would rather lose businesses to avoid the violation of our values”. This is the most impressive message I have learned from Caterpillar. Last but not least, I really appreciate Caterpillar and staffs who schedule this wonderful field trip for us. Thank you Mandy for assisting bus 2 in the trip and also Xavier, Kyle and Peter who entertained everyone in the bus with your sweet voice.

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