Interview: Caterpillar Logisitcs Services

Name: Knut Heinemann

Job Title: Logistics Consultant

Company: Caterpillar Logistics Services

Company Description:

We serve clients in a number of industries from automotive, aerospace, and manufacturing to high tech, industrial products, and consumer durables. We help companies solve their industry challenges involving inbound, service parts, and finished goods logistics.

Our heritage, know-how and experience have helped make us the right choice for more than 60 companies in the following industries:

• Aerospace & Defense
• Automotive
• Consumer Durables
• Energy
• General Manufacturing
• High Tech Hardware
• Industrial Equipment
• Technology / Communications

How long have you worked for Caterpillar Logistics?

Over 5 years

How long have you worked as a Logistics Consultant?

• 3 years Logistics Consultant
• 2 years in Transportation Management for a global German automotive client
• 1 year with an automotive supplier

During your time in this field, what changes have you seen?

The economy has certainly changed over the last 5 years. It is more price sensitive and as a result clients are under huge pressure and push this back to their suppliers. This has resulted in Caterpillar Logistics having to look to innovative ways, e.g. 6Sigma, to reduce our operating costs.

The market has also changed immensely from a European to a Global perspective. This has had the knock-on effect of requiring global modelling tools rather than just regional tools.

Regional modelling tools do not cover all the complexities of the supply chain. Thus, more flexibility is required in the tools to ensure that a globalised scenario can be set up.

Transportation needs to be more dynamic nowadays. In the past lane-by-lane transport was used regularly but now it needs to be much more flexible due to the global nature of the supply chain.

We have also found that a lot of businesses are now moving into Eastern European markets. Caterpillar has seen a large increase in sales in Eastern Europe due to the amount of construction taking place there. Increased demands for logistics activities in Eastern Europe have been one of the further consequences of this development.

Are the demands for your job very different from when you first started out?

The changed requirements in the supply chain work require those in my kind of position to have a much broader knowledge base than was previously sufficient. This is again a result of the more global demands of today's supply chain work. There used to be different people responsible for different areas of the supply chain, while today people involved in logistics work in different areas and regions need to have a broader logistics background.

How has your job changed as a result?

I started my career in Transportation Management and my sole responsibility was transport. These days, I am responsible not only for the transport aspect but also planning, operations, network modelling and network design. As mentioned previously, this requires me to have much broader knowledge and skills than before.

Clients now look for broader knowledge and services from their suppliers. They want us to have knowledge regarding aspects beyond the warehousing & transport functions so we can develop solutions based on all areas of the supply chain.

What is your opinion on the future of Supply Chain Planning?

In my opinion the future of Supply Chain Planning will be end-to-end solutions. All functional areas need to have a global view because regional tools will not fulfil the requirements of the majority of clients these days.

Currently we use a program called CAST for addressing strategic challenges. This gives us relevant input for the tactical modelling and furthermore for the execution on a day-to-day business. This requires linked software since it is time consuming and inefficient to transfer data and information between non-integrated packages.

I definitely see the future in end-to-end linked software and services solutions.

What personal challenges do you face on a day-to-day basis in your job?

The challenge to deliver proposals on time is very demanding because we are very reliant on the quality of data that is given to us by the client. It frequently occurs that data given to us needs a lot of cleansing before it can be used meaningfully in our modelling, which has the knock-on effect of delaying a proposal.

Also, client input which we received as part of a process called gathering "the voice of the customer" may not be understood correctly due to imprecise input, lack of direct and detailed communication or interpretation difficulties, which can result in us doing or offering to do certain aspects of work which the client actually does not want us to do.

Delays in submitting proposals to clients can also occur because we regularly find that clients are not sure of their own strategy, e.g. with regard to the use of IT systems. They may, for example, have two internal systems and need to decide on going forward with just one. In such cases, there are at times significant delays since we are waiting for high-level decisions to be made - this cannot be foreseen and therefore planned for.

How do you overcome these?

We devised a new process for the sales strategy, which has 6 steps, and every new project goes through this process. There is a checklist to follow and if it is not completed we cannot move on to the next step of the strategy. It is a standard process based upon 6Sigma methodology and has standard documentation to ensure we all follow the same steps.

The six steps are:

• Qualification
• Concepting Phase
• Solution Phase
• Negotiation Stage
• Signing Stage
• Implementation

This works really well as it ensures involvement of all areas of the business (what we call Subject Matter Experts) and significantly smoothens project management.

What software packages do you use to assist you with your job?

• CAST NV
• i2 Transportation Modeller
• MS AutoRoute
• MS Office Standard Package

It would in addition be great to have a link between tactical and executional software. We are working on this.

What is your hot tip to others who do a similar job to you?

Understand what the client wants and make sure you obtain detailed client agreement on essential parameters before work begins. You need to be in agreement most importantly regarding:

• scope
• deliverables and timescales

You should always create a proposal timeline based on reasonable parameters. It should be demanding but realistic and take account potential delays.

Ensure you possess good benchmarking tools such as comparable KPI's and market benchmarking; this can be achieved by analysing external figures from consultancies, e.g. from Carlisle. We also use Caterpillar Logistics benchmarks from our other businesses.

Keep up to date with the market and make sure that you are continually attending conferences and updating your knowledge and skills through proper training.