A New Caterpillar Emerges

Submitted by: SLG 5 Section C

Niraj Narendra Shirsat 2010152

Pankaj Arora 2010153

Pankhuri Pandey 2010154

Paul Mampilly Augustine 2010155

Praveen Trivedi 2010156

Preetkamal Kaur 2010157

Priyam Gupta 2010158

CATERPILLAR : Construction Equipment Company

Had a reputation for low cost of manufacturing along with excellent distribution & after sales services.

Intense competition from Japanese manufacturers.

Losing out on reputation and market share

JAPANESE WAY

Low cost of manufacturing due

Cross-functional teams: relied heavily on teams of people from different functions for product development

Decentralized control: very decentralized in their decision making process, decisions in hands of people most familiar with the product

Updated factories :Latest techniques in robotics, JIT inventory, flexible manufacturing technology

OLD ORGANIZATIONAL STRUCTURE

Company was organised based on functional basis.

Decision-making process was highly centralized Department heads such as manufacturing made decisions and

sent them down the hierarchy.

No use of latest techniques in robotics, just in time inventory systems and flexible manufacturing technology.

PROBLEMS

Slow development

time

Lower productivity

Higher costs

The result was

Eroded Caterpillar’s

market share.

RESTRUCTURING : DONALD V. FITES

4 centralized support divisions & 14 product divisions were created• Each was a profit centre with responsibility for profits & losses,

and return-on-investment goals.

Cross functional teams introduced with each product development team• Each division had cross-functional product teams responsible for • marketing, product design & manufacturing to increase

productivity. • Requiring marketing, engineering & manufacturing to work

together reduced product development time by 50%.

Marketing decisions were decentralized to the regional level for rapid response time.

Manufacturing upgraded its facilities, used product teams, and increased productivity 30%.

Gains from restructuring

Full advantages of Product teams: from functional basis to product basis. Product

team structure in which cross functional teams are responsible for all aspects of product performance results in efficient production with better product quality at lower cost

Decentralized decision making: though it continued to have centralized R&D & purchasing

Plant modernization resulted into 30% productivity increase.

Thank you