Value Chain

Companies that connect their businesses end-to-end – from customer all the way back through its chain – will gain and maintain industry leadership. Caterpillar is building capabilities to do so, by engineering our value chains just like we engineer our products, into a synchronized system that maximizes quality, value and speed to the customer.

Suppliers
Provide product inputs and materials

Caterpillar
Manufactures equipment and provides technology solutions.

Dealers
Distribute our products and solutions to our customers

Customers
Use our products and solutions on job sites and in energy applications

Supplier Network

Our suppliers are an essential link within our value chain and our commitment to quality. We look for suppliers who demonstrate strong values and commit to the ethical principles outlined in our Supplier Code of Conduct. This Code includes provisions on human rights, innovation, diversity and inclusion, as well as environmental responsibility and sustainability. We expect suppliers to comply with the sound business practices we embrace, follow the law and conduct activities in a manner that respects human rights.

To ensure impacted suppliers understand our expectations, we request that they respond to our supply network self-assessment or complete a training program. During 2017, we increased and expanded our scope of suppliers across the enterprise included in the supplier code of conduct self-assessment process.When the self-assessment process reveals issues of concern, Caterpillar senior management is apprised, and suppliers are expected to implement corrective action plans for mitigation or remediation. Any supplier’s failure to take corrective measures when required may lead to additional actions, up to and including the termination of our business relationship. To date, over 8,000 of our priority suppliers have completed a self-assessment. By 2020, our goal is to have responses from 95 percent of our priority suppliers.

We continue to expand the Assurance of Supply Center (ASC) to support our enterprise strategy to manage a world-class supply network. The ASC is a network knowledge service organization and data platform that captures and transforms complex supply network data from dozens of systems into a suite of simple but powerful business tools that can be used for everyday decisions. This technology enables an agile supply network that delivers at the right time and right cost, while reducing waste caused by trial and error or delayed decision making.

Another supply network consideration at Caterpillar is compliance with applicable laws and regulations. Caterpillar works with its suppliers to determine the content of each of the products Caterpillar manufactures or contracts to manufacture. In some instances, Caterpillar is also required to expand its due diligence to determine the origin of certain components. A cross-functional business team develops systems and processes for conducting such reviews. Caterpillar monitors metrics that could indicate risks in the supply network. These efforts continue to be important in creating transparency in the supply network.

Supplier Code of
Conduct Self-Assessments
In 2016, Caterpillar began proactively requesting suppliers to complete a self-assessment to confirm their alignment to Caterpillar’s Supplier Code of Conduct. Our goal is a response from 95 percent of our priority suppliers by 2020.

Supplier Diversity

Diversity within our supply base is important to Caterpillar, and we strive to mirror the demographics of the varied markets in which we operate. Our goal is to provide sourcing opportunities to a wide range of diverse business types – minority-owned small businesses, veteran-owned small businesses, women-owned small businesses and many others – throughout our enterprise. Seamless integration of these businesses allows for synergies as we assist them in growth and development.

Our supplier diversity team supports our employees in identifying the diverse suppliers available, analyzing performance of diverse suppliers and verifying certifications. At Caterpillar, supplier diversity is a process of inclusion that enables us to leverage and connect with an historically underutilized supply base.

A More Sustainable Logistics Network

For transportation, sustainability has always been a focal point of how to design shipping networks, optimize transportation modes and configure products for optimal shipping. Our transportation team manages movement of production material and service parts around the world to support Caterpillar manufacturing and dealers. The group seeks to identify the optimal schedules to increase truckload utilization, which in turn reduces the number of trucks on the road. Transportation also works closely with packaging teams to determine the best way to stack material on a single truck or in an ocean container. Higher utilization of a single vehicle reduces the number of shipments overall.

Today we are leveraging the scale and expertise of Caterpillar’s supply network to help our dealers and customers receive their products more efficiently. We now transport product from the production yard to the dealership. Dealers can collaborate with us on when and where they want a machine shipped, check the shipping status online and instantly get information on location and estimated time of arrival. By including the “last mile” as part of our overall value chain design, we are delivering products with higher dealer satisfaction, improved delivery performance and visibility, and lower cost.

Dealer Network

Our independent dealers serve as a critical link between our company and our customers. We rely on them to collaborate with us in building and maintaining our long-standing customer relationships. Cat® branded products and services are distributed through a worldwide network of Cat dealers, 48 of which are located in the United States and 123 located outside the United States.

The large majority of our worldwide dealers are independently owned and operated, and many of these businesses have been in families for multiple generations. The Cat dealer network brings value to customers through unmatched service, integrated solutions, after-sales support, fast and efficient parts fulfillment and world-class rebuild capabilities. We work with our dealers to provide products, services and support solutions necessary to satisfy customer needs worldwide. Other brands in our portfolio are distributed through their respective channels that optimize customer value in accordance with their brand value propositions.

Our distribution model, which has consistently delivered unmatched local support, is increasingly measured by global standards. Together, Caterpillar and our dealers are focused around four objectives:

  • Strengthening the Cat dealer model
  • Enhancing customer focus
  • Achieving superior economics for Caterpillar and the dealer
  • Seizing opportunities while mitigating risks

Our dealers worldwide are working side-by-side with Caterpillar employees from every area of the company on projects focused on such things as e-commerce, digital solutions, service strategy, rental and used equipment strategy and parts logistics.