Value Chain Analysis of Caterpillar

Caterpillar Inc. also goes by the name of CAT is an engineering equipment manufacturing, mining, and construction American multinational corporation. Benjamin Holt and CL Best founded the mining and construction company in 1925. Today, we’ll discuss the value chain analysis of Caterpillar supply chain analysis; primary and supporting activities in the process of value chain analysis Example Company. They are inbound and outbound logistics, operations, marketing, and customer service; infrastructure, HRM, technology, and procurement as an application of the value chain analysis process.

Substitutes of Caterpillar

• SANY
• JCB
• CNH Industrial
• Liebherr Group
• Hitachi
• Komatsu
• Kobelco
• Doosan
• John Deere
• Alamo Group
• Volvo
• XCMG
• Terex
• Scania

The Value chain analysis of Caterpillar supply chain analysis would analyze the primary and supporting activities in the process of value chain analysis. They’re inbound and outbound logistics, operations, marketing, and services; infrastructure, HRM, technology, and procurement. Here’s the supply chain analysis of Caterpillar value chain analysis company example as follows;

Value Chain Analysis of Caterpillar

Let’s discuss the primary and supporting activities involved in the process of value chain analysis of Caterpillar supply chain analysis. It is an application of value chain analysis based on Porter’s model; some of the key elements and components of value chain analysis are as follows;

Primary Activities of Caterpillar

Some of the five main primary activities in the value chain analysis of Caterpillar supply chain analysis are as follows;

Inbound Logistics of Caterpillar

I-Diverse Suppliers

Caterpillar Inc. deals with diverse suppliers and has established a very large supplier network in over 200 countries across the world. The company strongly believes in collaborating with diverse suppliers across the globe. However, it helps the company to reduce the risk factor and strengthen its brand position in the industry. Some of the main suppliers qualified for company’s diversity supplier program and they’re as follows;

• LGBT-Owned Business
• Certified Business 8(a)
• HUB Zone Certified Business
• Veteran-Owned Business
• Service-Disabled Veteran-Owned Business
• Disability-Owned Business
• Small Disadvantaged Business
• Minority-Owned Business
• Women-Owned Business
• Small Business

II-Regulations and Standards for Suppliers

Caterpillar Inc. has established very good professional relationships with its suppliers. In fact, the construction and manufacturing company has set up clear guidelines and standards for suppliers to make sure that they’re complying with human rights laws. It comprises of following elements and they’re as follows;

• Fair treatment of workers
• Equally treating all the suppliers
• Avoid releasing confidential information to the public
• Decreasing the risk factor by not endorsing the products of competitors

III-Suppliers’ Award

In order to boost the morale and confidence level of suppliers, Caterpillar Inc. offers the “Supplier of the Year” award to the top-performing suppliers. The company recognizes the significance and role of its suppliers for its global success, and it is a method of recognizing their role and performance. However, the company offers supplier of the year awards in various categories and they’re as follows;

• Resource industries
• Product support and logistics
• Energy and transportation
• Construction industries
• Aftermarket excellence

Outbound Logistics of Caterpillar

I-Outsourcing Transportation & Distribution

When it comes to the transportation and distribution of heavy equipment and machinery, Caterpillar outsources almost all of its transportation and logistics with third-party carriers. The company employs various channels like trucking companies, and ocean and rail carriers for the outbound logistical operations. In fact, the company distributes and ships finished goods to 150 countries worldwide by employing 700 ports.

II-Dealerships

Caterpillar has established 57 dealerships in the North American market and it is the responsibility of dealerships to manage the company’s logistical operations. US dealers manage 20% of the transport and shipment; the company’s dealers manage the remaining 80%. In fact, the company has set up a centralized distribution network to manage and control the international product movement.

III-Exports Network

Caterpillar exports the following percentages of manufactured engines and machines in the following countries;

• 50% in the USA
• 10% in the Europe
• 5% in Asia
• 5% in South American
• 30% in Mexico and Canada

Operations of Caterpillar

I-Manufacturing Facilities

Caterpillar has established a network of roundabout 110 production and manufacturing facilities in various countries across the world. Out of these, 51 plants are in the US, and the remaining 59 are in the following countries;

Australia, Belgium, Brazil, Canada, China, Czech Republic, Netherlands, Northern Ireland, France, Germany, Hungary, India, Indonesia, Italy, Japan, Mexico, Poland, Russia, Singapore, South Africa, Sweden, and England.

Marketing & Sales of Caterpillar

I-Sponsorships

Caterpillar launches various types of marketing and advertisement campaigns to amplify its brand influence and promote its products and services. Sponsorship is among the marketing strategic approaches. The company has successfully sponsored various types of mega sporting events and it has allowed the company to approach the mass audience and promote a positive brand image. Some of the main events that the company has sponsored are as follows;

• Major League Soccer
• National Hockey League
• Jack Miller in MotoGP,
• Crusaders in Super Rugby (Australia, Fiji, New Zealand, Pacific Islands)
• Cat Ladies Golf in Japan
• Chinese Basketball Association
• American Flat Track and FIRST Robotics

Services of Caterpillar

I-Multiple Services

Caterpillar offers a wide range of services to attract the new customers and retain the existing ones. Some of the main services are as follows;

• Industrial support
• Electrical power support
• Mining product support
• Marine product support
• Equipment safety
• Training services for operating the machines
• Technology support
• Expert solution and industry consultation
• Flexible support agreement
• Equipment upgrade and rebuild
• Maintenance repair
• Financial services
• Renting company’s equipment

Supporting Activities of Caterpillar

Some of the main supporting activities in the value chain analysis of Caterpillar supply chain analysis are as follows;

Infrastructure of Caterpillar

Caterpillar has established a very strong corporate infrastructure and on-ground infrastructure of production and manufacturing facilities, suppliers’ networks, distribution centers, and logistical networks. The well-organized infrastructure of the world’s leading mega engineering equipment manufacturing company helps the brand to smoothly conduct its operations without any disruptions.

HRM of Caterpillar

Caterpillar has employed approximately 113,200 employees to manage its mega-scale global operations. The human resource management department of the manufacturing and mining company plays a key in creating a workplace environment and providing equal employment for all regardless of race, gender, or any other differences.

Technological Development of Caterpillar

Caterpillar invested approximately 2.108 billion UDS on research and development in 2023. The research and development allow the company to design and build new technology, automate production and manufacturing processes with robots, and improve the existing equipment and machinery. As a result, the company gains a competitive edge in the industry.

Procurement of Caterpillar

Caterpillar is highly careful and cautious about ethical, responsible, and sustainable sourcing and purchasing of raw materials, equipment, and supplies. The company makes sure that its suppliers are complying with the human rights laws and fairly treating the workers and employees.

Conclusion: Caterpillar Value Chain Analysis Example Company | Application of Value Chain Analysis Process 

After an in-depth study of the value chain analysis of Caterpillar; we have realized that Caterpillar is the world’s leading mining and manufacturing company. If you are learning about the Caterpillar value chain analysis example company; then you should keep in mind the abovementioned primary and supporting activities. They’re inbound and outbound logistics; operations, marketing and sales, and services; infrastructure, procurement, HRM, and technological development as an application of the value chain analysis process.