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Following five years of downturn in the industrial manufacturing industry, business is picking back up for Caterpillar. Yet increased complexity along the supply chain has led to a need for better planning processes, prompting Caterpillar to partner with o9 Solutions. We sat down with Caterpillar\u2019s Senior Procurement Manager, Andrew Lee, to see how o9\u2019s Integrated Business Planning solution helps Caterpillar stay competitive in a more dynamic manufacturing environment.<\/em><\/p>\nQ: <\/strong>What are the current manufacturing trends that Caterpillar embraces, and how are they impacting your business?<\/strong><\/p>\n At Caterpillar, we\u2019re especially interested in the move toward product-as-a-service. We want to diversify our offerings from exclusively selling machines to selling total solutions. If you\u2019re building a new runway at an airport, we want to provide and manage the whole fleet of machines. Not only does this enable us to more effectively manage operating hours, IoT components give us more insight into the effectiveness of our machines and help us predict machine failures.<\/p>\n This change is especially important because of the cyclical nature of our business. As you may know, we saw a big rebound last year as business picked up in the fracking, oil refinery, construction, and mining industries. Unlike the last downturns in 2009 and 2010, where businesses recovered in six months, a lot of our suppliers didn\u2019t see the rebound we did. This time it feels more like a permanent change, so S&OP processes are more important than ever.<\/p>\n Q: <\/strong>I would think that would lead to an increase in supply chain complexity as well.<\/strong><\/p>\n That\u2019s right \u2013 because of the uncertainty within the market, it\u2019s hard for us to communicate the right signals to our suppliers. Often when we enter a downturn, people along the supply chain will try to zero out the safety stock to appease managers who expect to see inventory turn, but that only creates a bigger hill to climb once business picks up again.<\/p>\n On top of that, our customers expect us to offer thousands and thousands of product configurations. Generally, we\u2019re actually very good at predicting forecasts, but when it comes down to planning for specific configurations\u2014whether to use a wide or narrow track, or what volume to include for a boom and stick\u2014we have more trouble building accurate plans.<\/p>\n Q: What<\/strong> drew you to seek out a new business planning approach?<\/strong><\/p>\n Since 2010, we\u2019ve been looking for a more effective business planning approach, but it wasn\u2019t until 2015 that we got in touch with o9. Sanjiv [Sidhu, o9 Founder and Chairman,] and my director Pat Murzyn, immediately hit it off, and we used our first ten weeks to come up with an operational proof-of-concept.<\/p>\n Initially, we didn\u2019t want to spend too many IT resources on a solution we weren\u2019t very familiar with, so we didn\u2019t even connect the platform to our database. Despite the manual processes that this required, o9 quickly demonstrated the superiority of their product.<\/p>\n Q:<\/strong> What set o9\u2019s solution apart from other Integrated Business Planning solutions on the market? <\/strong><\/p>\n First and foremost, o9\u2019s solution was competitively priced. o9\u2019s team also has a lot of business knowledge, putting them well ahead of other vendors we\u2019ve worked with. We often need to teach \u201cSupply Chain 101\u201d to consultants from firms like Deloitte, Accenture, and McKinsey, but o9 could come in and immediately add business value.<\/p>\n Another major factor that attracted us to o9 was the solution\u2019s flexibility and compatibility with systems we already used. From the start, the o9 platform had to interact with seven other systems that we were using on our supply chain, and it plugged in seamlessly. Last year, we tried to find a new solution to help manage the various product configurations we offer. We gave this challenge to o9, and it took them just ten weeks to design a tool that helped us rationalize inventory on our existing platform.<\/p>\n Q: <\/strong>How has the solution helped with cross-organizational communication?<\/strong><\/p>\n Before, if production didn\u2019t have a part needed to make a machine, they would blame inventory for not having it on hand. When it took us days or weeks to collect the data, people would panic and make decisions based on their emotions. o9 gives us a platform from which we can instantly access all the data, making it much easier to analyze problems rather than randomly assigning blame. o9 enables us to find the root cause of a problem that we can then take steps to solve.<\/p>\n This also means that we\u2019ve shortened the time from when we hear about a problem and when we\u2019re able to address it. Even if we don\u2019t respond correctly 100% of the time, we are able to keep a history of responses that can be analyzed and self-corrected using machine learning. Eventually, our goal is to use this added analysis to enable more predictive insights.<\/p>\n