Within rapid advances in modern society, there is a number of global companies that define the development and overall dimension of the business scene. Caterpillar is the prominent American corporation that contributes “construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives” (Mannheim 2017). It operates through its three core product segments, such as Construction Industries, Resource Industries, and Energy & Transportation. Besides, the company includes Financial Products segment, which implies financing and associated services. Considering its leadership position, it is essential to examine Caterpillar’s business lean processes that aim at innovation and the company’s efficiency for both the company and its clients.
Lean Remanufacturing in Caterpillar
Caterpillar is the original equipment manufacturer (OEM), as well as the leading remanufacturer that attains 30 years of proficiency. According to Pawlik, Ijomah, and Corney (2016), this enterprise recycles and remanufactures over 50,000 tons of used products annually involving 17 remanufacturing facilities. As the OEM, the company can access the technical information of every element along with managing the after-sales and intellectual property.
Hence, the Caterpillar’s team consists of particularly devoted to remanufacturing process personnel that provides an excellent work performance. The lean manufacturing at Caterpillar is currently implemented on a larger scale compared with the start-up methodology. With that said, one of the innovative strategies is the value stream mapping as the basis for better comprehension of the remanufacturing process and mentioned wastes.
As described by Pawlik, Ijomah, and Corney (2016), the map includes “all the processes, inventory, flow of information” and other components as part of the remanufacturing facility (p. 185). As a result, such informational awareness disclosed the actual large numbers of waste and the possible resolutions for the improvement of the company’s performance. Besides, this innovation considerably changed the plant’s layout.
Taking into account the very essence of the remanufacturing process and the relevance of the correct assessment, the visual strategy includes an inspection step together with machining and assembly areas. Therefore, each of the components’ sustainability can be tested at work instruction, which also might function as a reminder for operators of the quality value. Furthermore, visual management displays are applied to control the most critical areas within the facility by giving clear information about their functioning.
The display consists of the section boards and facility boards to “measure, communicate, and control” the key metrics, such as “people, quality, speed, and cost” (Pawlik, Ijomah, and Corney, 2016, p. 186). Moreover, the section metrics boards include the ten core most common defects. Thus, these visual displays facilitate the better performance of machine operators in the lean process and emphasize the predominant quality issues in the formation of general communications.
Caterpillar implements a standard work for all the operations concerning the remanufacturing process, both general and specific to the particular product. This is also applied for other processes, such as machine maintenance and daily operator checks. In addition, the total productive maintenance (TPM) is implemented for critical machines, as the employees are engaged in the maintenance routine, improvement strategies, and simple repair work.
For the equipment’s efficiency, the overall equipment effectiveness (OEE) is applied. The described improvements implemented by Caterpillar enterprise have the following outcomes: “reduced work in process, increased production control, and improved service for the enhanced ability to meet deadlines” (Pawlik, Ijomah, and Corney, 2016, p. 187). Ultimately, the lean remanufacturing strategy demonstrated a beneficial impact on the company’s efficiency by providing long-lasting results and engaging employees with the overall business culture.
The Industry 4.0 Strategy
The basic concept of Industry 4.0 involves the close linkage between industrial production and current information with communication technology. Considering the dynamic business environment, it is crucial for enterprises to develop and introduce new products and effective processes that result in innovative business models (Mannheim, 2017). As a result, the digital plant controls that facilitate power plants’ cogeneration, Caterpillar Energy Solutions exposed the ability to enhance the work and process organization according to Industry 4.0 standards.
As described by Shaefer, Walker, and Flynn (2017), Industry 4.0 implies the “creation of cyber-physical systems for production engineering and implementation of smart factories of the future” (p. 245). In the correlation with the business models, this strategy provides new forms of value creation that needs to be implemented. Such an approach is caused by the rapidly evolving business chain, together with its critical elements that lead to increased pressure on global companies, including Caterpillar.
The right strategy is essential for the company to position itself as the leading one in the marketplace. Shaefer, Walker, and Flynn (2017) classify the critical functions for the efficient business model in terms of Industry 4.0, such as “value proposition, market segment’s identification, the structure of the value chain, cost structure, profit potential, value network, and competitive strategy” (p. 246). Hence, Caterpillar serves as a positive role model to analyze its data-driven business model. Caterpillar proclaimed its dominant position by implementing the recent developments that diversify apart from the construction and cover mining and logging industry. The company’s readiness to integrate data-driven products and services into the corporate policy was announced in 2015.
According to the group’s president, Charter, the large amount of incoming data will be transformed into valuable information for their customers and suppliers (Shaefer, Walker, and Flynn, 2017). The innovative strategy involves using data from built-in sensors to notify a new maintenance schedule of the source of income that uses analysis of data to extend the productivity of deployed equipment. In 2016, Caterpillar opened a Data Innovation Lab at the University of Illinois to support such improvement and transform customer and market data into valuable information for the company’s rapid growth.
The Industry 4.0 standards led to the digital plant control that, in turn, increased efficiency and security of gas-powered cogeneration power plants. According to Mannheim (2017), this strategy resulted in “reduced product and process costs, improved security standards, and flexibility in energy supply” (par. 4).
This includes the self-optimizing support systems, hardware, and software solutions designed by Caterpillar Energy Solutions to manage CHP plants with better planning security and accelerated reaction to changes and operating conditions, and minimized errors prevalence. Besides, the qualification was identified as a success factor of this industrial revolution, as it productively transforms the overall labor world. To conclude, the use of state-of-the-art technology by Caterpillar facilitates the development of practical competencies that closely correspond to the labor market requirements of Industry 4.0.
Conclusion
As a target company, Caterpillar is considered a market leader in the manufacturing sector. By analyzing its two exemplary lean processes that require a constant search for innovations and improvements, one may conclude that Caterpillar deservedly takes the leading position in today’s business arena. The lean remanufacturing strategy proved its beneficial outcomes for the company’s effectiveness due to long-lasting results, and employees united with the overall business culture. Besides, the newest technologies implemented by Caterpillar according to the labor market requirements of Industry 4.0 led to the development of practical competencies, as well as improved metrics of the financial sector, security standards, and energy supply.
References
Mannheim. (2017). Industry 4.0 Readiness through Digital Plant Control Boosts Efficiency and Security of Gas-Powered Cogeneration Power Plants. Web.
Pawlik E., Ijomah W., and Corney J. (2016). Lean remanufacturing. In T. Netland, & D. Powell (Eds), The Routledge companion to lean management (pp. 179–187). New York, NY: Routledge.
Shaefer D., Walker J., and Flynn J. (2017). A data-driven business model framework for value capture in Industry 4.0. In J. Gao, M. Souri, & S. Keates (Eds), Advances in manufacturing technology XXXI (pp. 245–250). Amsterdam, NL: Ios Press.