ACROSS THE TABLE

ACROSS
THE TABLE
“Partnering for our Future, Inspired by our Past”
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 ACROSS
ACROSS THE
THE TABLE
TABLE

TABLE OF CONTENTS
Vision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Dealer value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Burning platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Across the Table objectives, work streams
Economic foundation
Dealer growth and profitability plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Seizing opportunities, mitigating risks
Networked ERP/data integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
eBusiness transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Distribution aspects of technology-enabled solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Achieving superior economics for Caterpillar and the Dealer
Meet customer future service needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Parts logistics transformation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Global parts pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Rental and used equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Enhancing customer focus
The Playbook - Driving execution in serving the entire portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Customer models
Core models
Traditional customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Retail customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Rental and used customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Account management models
Production-critical equipment customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Cross-territorial customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Mobile customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Original equipment manufacturer (OEM) customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Solutions customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Named accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
A partnership for the 21st century
Mastering the basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Global Dealer S&OP process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Customer sales experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Driving alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Succeeding through governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Acronym Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

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4
 ACROSS THE TABLE

VISION
In 1926, three visionary Caterpillar managers—I.E.Jones, W.H.Gardner, and H.P.Mee—sat down in San Leandro,
California and wrote Across the Table. In it, they outlined the foundational principles for the relationship between
Caterpillar and its Dealers. There is great wisdom in a book that has truly stood the test of time and is as relevant
today as it was in 1926.

Those foundational principles have served us well over the years. But, Jones, Gardner and Mee knew the world wouldn’t
stand still, and in their epilogue to the book stated: “Much of the foregoing discussion will hold good as long as there
is a Caterpillar Tractor Co. and as long as it has Dealers. All of it holds good at the present time, but necessarily, due
to changing conditions and the discovery of improved methods, the various procedures and plans. . . may have to be
modified, enlarged, or even changed entirely with the passage of time.”

The world has changed and today we face the challenges of a new era. The current “one size fits all” model is
insufficient to serve our customers’ diverse requirements. Our distribution model, which has historically delivered
unmatched local support, is increasingly measured on global standards. The competitive business landscape is
also changing.

It’s important to ensure that our distribution model is built to continue to uniquely position us to help customers succeed
into the future. Now is the time for Caterpillar and Cat Dealers to work together to define and implement a strategy that
will address these challenges and build the foundation for our next century of progress. This will require a thoughtful
transformation within the distribution model but not of the principles that define our relationship.

That’s why we launched the Across the Table initiative. One of the outcomes of this effort will be a change to our
fundamental expectations of our Dealers and consequently our expectations of the Caterpillar teams that support them.

We worked closely with our Dealers to develop tools and processes that establish clear expectations of Dealer
capability by industry and drive governance, alignment and performance accountability with portfolio business goals.
Together we have defined and are implementing a strategy that will address the challenges we face and build the
foundation for our next century of progress.

We know that is saying a lot. It’s a bold proposition that will require the continued input, dedication and commitment of
everyone involved, but we have a rich heritage to build upon.

This renewed version of Across the Table builds on the original principles outlined in 1926 and updates them to address
the needs of our customers in 21st century markets.

Since 1925, we’ve built products that are BUILT FOR IT™. Now, together, we are addressing the challenges to ensure
our distribution model is also BUILT FOR IT. Generations of Caterpillar and Dealer employees before us laid the
foundation. It’s up to us to build upon it for the future. As Jones, Gardner and Mee said back in 1926, “If we aim at
nothing, we will hit it.”

- Stu Levenick

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 DEALER VALUE

“We have an advantage our competitors simply

can’t match—our worldwide Dealer network.
It’s the envy of all of them. And it should be,
because together we can serve our customers
better than any competitor.”
- Doug Oberhelman

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 ACROSS THE TABLE

DEALERS PLAY A
CRITICAL ROLE
IN THE CATERPILLAR BUSINESS MODEL AND IN
THE DELIVERY OF THE CAT BRAND PROMISE
The Cat brand is a promise to our customers: “A champion for your enduring success.” We help our customers win.

Caterpillar and Dealers win when we provide our customers with valued, high-quality products, services and solutions
that provide the lowest total owning and operating lifecycle costs.

This value proposition, enabled by our unmatched customer support, creates the largest global field population, highest
customer loyalty and attractive profitability through the business cycle.

Dealers are the critical interface through which this value proposition is delivered to customers. They are at the heart
of the Caterpillar strategy and central to delivering the business model and Cat brand promise.

VISION
2020
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STRATEGIC GOALS
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SUPERIOR GLOBAL BEST

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RESULTS LEADER TEAM

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OPERATING PRINCIPLES
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STRATEGIC SUPPLIER COLLABORATION ACCOUNTABLE

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BUSINESSES FOR RESULTS

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CATERPILLAR
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CUSTOMER FOCUSED PRODUCTION SYSTEM DEEP EXPERTISE

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erv

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VALUED UNMATCHED COMPETITIVE & FLEXIBLE

S
eli

PRODUCTS & SERVICES DEALER SUPPORT COST STRUCTURE

ed
W

OUR VALUES IN ACTION

INTEGRITY • EXCELLENCE • TEAMWORK • COMMITMENT • SUSTAINABILITY

C U S T O M E R S
We take pride in helping our customers succeed.

UNMATCHED
DEALER SUPPORT

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Our Dealer network helps Caterpillar and our customers win around the world. Cat Dealers share our passion, enhance our
competitive edge, and ensure that our customers receive maximum business value from our products and services. Most
Dealers are independently owned, locally operated businesses and benefit from strong, longstanding customer relationships.

This simple yet powerful relationship combines the capabilities of a global technology and manufacturing leader with the
close personal relationships—in local language and culture—of Dealers and customers. It has made us what we are today
and will carry us into the future.

The partnership between Caterpillar and the Dealer begins with a Dealer principal who is locally and personally engaged in
the business. This partnership, which stems from our Values in Action, is the foundation of our strategy.

Our mutual challenge is to deliver the Cat brand promise across all customer segments: from petroleum oil fields to small
owner operators; from gas-powered power plants to emerging market miners; from Cat Certified Used Equipment customers
to global construction contractors. Each customer has the same expectation of Caterpillar and its Dealers: we will deliver the
industry’s benchmark support that helps them succeed in ways others do not and cannot.

As we think about the implications for our business model, more than ever before, we must:

SEED for a lifetime connection with all of our customers

GROW through distinct distribution capabilities for the different customers we serve

HARVEST fully through unmatched customer support over the lifecycle

That’s our challenge. That’s our opportunity. And success demands excellence across all areas of the Dealership.

The Caterpillar Business Model

executed in close partnership with Dealers

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 ACROSS THE TABLE

UNRIVALED
PERFORMANCE
EXCELLENCE
WITHIN THE CAT DEALER MODEL
Dealers are, and will continue to be, Caterpillar’s core path to market.

Our customers have always demanded excellence. By recommitting to our Dealer-based business model, we are also committing
to the profile of the ideal Dealer. We will continue to rely on the Dealer’s personal characteristics, capital, governance and
performance.

Building on our heritage, the ideal profile of a future high-performing Cat Dealer revolves around seven key characteristics:

• Independent, entrepreneurial business leader

• Deep local relationships/community stature from industry leadership
• Partnership with Caterpillar: a deep understanding that our destinies are shared
• Well-capitalized: able to go the distance, take the long view and invest in excellence
• Multigenerational: able to see and serve the interests of future generations of customers
• Big enough to make each customer successful, small enough to make every customer feel important
• Leading performance resulting in competitive advantage in each industry

While the unique characteristics of the Dealer-based model will continue to serve us well, our model must evolve and adapt to
more fully support customers with varied and ever-changing needs profiles. It must also respond to the intensifying competitive
structure across global markets and deliver better, more consistent execution.

The challenge we must accept is to transform the Dealer model to address these market realities while preserving the essential
character of the relationship and aligning the interests of Caterpillar and its Dealers with the interests of end customers—across
geographies and over time.

This edition of Across the Table defines expectations of performance excellence needed to serve customers with common
profiles. For application purposes, these customers are grouped into distribution models to highlight their unique characteristics.

It also documents the capabilities and best practices that will be required to win in the 21st century. It highlights new capabilities,
such as how to support cross-territorial customers, and clarifies the roles we will play to drive growth and execution across the
portfolio. Finally, it serves as a call to action to open our minds, serve different customers better, and align around global best
practices.

As we pursue this renewal and transformation together, Caterpillar and Cat Dealers can look forward to significant growth today,
tomorrow and for generations to come.

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BURNING
PLATFORM

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 ACROSS THE TABLE

BUILDING ON
OUR HERITAGE
THE CASE FOR CHANGE
In its 88th year, the relationship between Caterpillar and Dealers is an outstanding success. Caterpillar has grown from a $20
million company with 80 Dealers to a $56 billion company with 178 Dealers worldwide, and 70 percent of its revenues from
outside the United States.

However, the fact remains that our Dealer-based business model was created to understand and serve the needs of the local
customer when we measured ourselves against the competitor down the street.

Today, competitive advantage is measured on a computer screen every day in real time. Customers are changing, and they can
choose among an increasing array of options.

At the same time, Caterpillar needs continued profitable growth to meet shareholder expectations, reinvest in technology,
products and capacity, and sustain its positions. And Dealers need the same growth to reward their ownership and make
investments that complement and capitalize on those of Caterpillar—all aimed at achieving and sustaining global leadership.

The opportunity for growth remains large, even with existing customers and within existing industry segments. We must focus on
the seed, grow, harvest business model and help our customers win using Cat products.

But the current “one size fits all” business model is insufficient to serve customers’ diverse needs. A renewal and transformation
of our distribution model is required to overcome these challenges and build the capabilities required to succeed.

CHALLENGES
TO THE BUSINESS MODEL
Achieving growth will not be easy. The emergence of new distribution models, changes to the competitive structure of many
global markets, technology-driven disruption and execution issues all pose challenges.

• Globalization

With globalization, customers have far greater regional and global scope. As a result, we face increased pressure to
effectively and consistently serve multi-territory customers, whose equipment travels across geographies, requiring the
support of multiple Dealers.

Much of our sales volume goes to larger customers who deal with multiple Dealers. This exposes gaps in performance,
adds complexity, opens the door for third parties to get between us and our customers, and makes it hard for customers
to do business with us.

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• Disruptive Technology

Technology has made the world smaller and disrupted historical practices, spawning new distribution services tailored to
different customers. Third-party providers offer many of these services, particularly those that are the most software and
information intensive.

Telematics and the revolution in availability of real-time information at low cost have made it possible to acquire and
transmit volumes of data about machine condition, location, load profiles and productivity performance.

Such information can be used to redraw the contract curves between parties in the value chain, shifting responsibility
for who bears what risks, under what conditions and for how long. The same information lowers the costs of exchange
transactions, increases the velocity of exchanges and makes used equipment markets more global and more efficient.

eBusiness has reduced search costs and barriers to entry, making it easier for competitors to disintermediate Dealers
from end customers in select services, also creating price transparency.

• Economic Uncertainty

There is significant economic and political uncertainty in the global markets. This uncertainty, coupled with debt, forces
customers to seek ways to shift risk to free up their balance sheets.

Customers are asking for more sophisticated risk-based solutions. Instead of owning assets, customers increasingly want
to contract with manufacturers and other third parties to provide machine-related services to meet their operational
needs. Rental will continue to grow as a preferred channel to market.

• Focused Competitors

While our Dealer distribution model has grown to be the largest and broadest provider of products and services, narrowly
focused competitors provide more targeted solutions to customers who increasingly want products and solutions tailored
to their unique needs. Some competitors focus on one area, and do it very well. They are fast, consistent and easy to do
business with.

Some focus on streamlined logistics. Large companies focused on global shipping make it cost effective for a host of
after-market competitors to challenge our distribution advantage. Some seek to take over customer fleet management
and get between us and our customers. What these competitors are highlighting, and trying to leverage, are the
weaknesses and the blind spots in our distribution model.

We cannot allow that to happen.

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 ACROSS THE TABLE

ADAPTING AND
IMPROVING
OUR DISTRIBUTION MODEL
We must respond. We must move from acting through a single distribution model to leveraging several models—each one
tailored to meet a particular customer profile. Renewing and transforming the traditional Dealer distribution model will enable
Caterpillar and Dealers to respond to challenges, defend positions and grow profitability.

The new models must be grounded in an explicit understanding of the unique and ever-changing preferences and requirements
of different profile customers. Not all customers want or need the same things. To address this, we have defined eight distinct
distribution capability models required to support the diverse customer needs present within the Caterpillar and Cat Dealer
portfolio.

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 CORE MODELS:
VALUE ADDED AND COST COMPETITIVE
» TRADITIONAL CUSTOMERS DISTRIBUTION MODEL

Traditional customers are expected to remain a core component of the Dealer customer base. They are best served by the
traditional distribution services model. These customers, typically in the mining, quarry, waste, heavy construction, marine and
electric power industries, are accustomed to transacting in the business-to-business model where Cat Dealers excel. Their
purchase criteria will continue to emphasize the lifecycle value proposition, and they will continue to rely on purchases and high-
quality product and service support from Cat Dealers.

» RETAIL CUSTOMERS DISTRIBUTION MODEL

Smaller and retail-oriented customers are mainstays of our Building Construction Products (BCP), retail Electric Power and used
equipment businesses, but they also represent prime opportunities for Global Construction and Infrastructure (GCI). What’s
more, they are an increasingly larger proportion of the industries we serve.

They operate within a single Dealer’s service territory, transact in a retail-like model as opposed to a business-to-business
model. They often value initial price and credit availability more than lifecycle value, and place consideration on operating
costs (parts prices) before making their purchase decision. They value proximity and ease of doing business and are not easily
attracted to Dealer product support solutions.

» RENTAL AND USED CUSTOMERS DISTRIBUTION MODEL

Competitive dynamics in the rental business have evolved over the last few years and the opportunity continues to grow globally.
A significant proportion of customers look for rental options to reduce risk, improve asset returns, and manage capital and
expenses better and more flexibly.

A successfully operated and fully integrated rental and used business is key to industry leadership, with significant opportunities
both for power and machine equipment. As the opportunity grows, it requires our Dealers to bear an increased resource burden.

Rental and used equipment strategies must recognize all of the complexities, risks and opportunities of our unique model. We
must become a reliable supplier to and consistent supporter of Dealer rental. There are opportunities to better stabilize plant
production schedules, support Dealers with technologies and brand support, and clarify our expectations of Dealers in the rental
and used equipment businesses.

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 ACROSS THE TABLE

ACCOUNT
MANAGEMENT MODELS:
BUILDING UPON THE CORE

» PRODUCTION-CRITICAL EQUIPMENT CUSTOMERS

DISTRIBUTION MODEL

Production-critical equipment users rely on their equipment to deliver high utilization (24/7/365) and outstanding reliability (95
percent-plus uptime). Customer equipment can range from a single machine or engine to fleets. Meeting customer expectations
requires Dealers to excel at account management, application knowledge, parts availability, maintenance and repair planning,
condition monitoring, trouble shooting and repair execution. Caterpillar, Cat Dealers and customers must work together—or fail.

» CROSS-TERRITORIAL CUSTOMERS DISTRIBUTION MODEL

Cross-territorial customers have permanent operational footprints that cross Dealer service territories. In addition to needing
consistent, high-quality service everywhere they operate, they also need an integrated approach to the up-front transaction.
They are typically medium to very large businesses that want to leverage their purchasing power.

» MOBILE CUSTOMERS DISTRIBUTION MODEL

Mobile customers have no permanently fixed equipment operations. They purchase equipment in one location and use it in one
or more other locations. They range from contractors moving equipment as they take on new work (petroleum, earthmoving, road
milling) to contractors whose work causes them to span regions (pipeline, marine). Although the needs of these customers are
similar to traditional customers, service needs may need to be coordinated between a set of Dealers and Caterpillar.

» OEM CUSTOMERS DISTRIBUTION MODEL

The OEM (Original Equipment Manufacturer) model refers to companies that buy Cat parts, components or whole machines and
incorporate them into products they sell to their customers. As a result, their customers require varying degrees of customization
and application engineering support from Dealers. OEM customers seek responsive and high-quality product support for their
customers.

» SOLUTIONS CUSTOMERS DISTRIBUTION MODEL

These customers expect specific contractual output and productivity levels for a specified price. Global economic uncertainty and
high levels of debt lead these customers to demand more sophisticated, permanent risk-shifting solutions. Solutions customers
are often large organizations and require consistent, responsive, high-quality service. They transfer assets from their balance
sheets to manufacturers and other third parties under contracts that provide the full suite of equipment-related services to meet
their day-to-day operational needs.

A more detailed look at the eight distribution models is covered in the playbook discussion later in this book.

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KEY ENABLERS AND
GAME-CHANGING
CAPABILITIES
ACROSS DISTRIBUTION MODELS

We must offer consistent and cost-competitive distribution capabilities with absolute commitment to the core models.

But we must also improve performance of a number of key enablers that will provide our customers with unrivaled performance.
This is a collective journey for Dealers and Caterpillar.

Dealers need to evaluate their current capabilities and evolve to offer best-in-class processes. Caterpillar also needs to
strengthen its capabilities and increase its expertise.

Caterpillar and Cat Dealers worked together to create this Across the Table strategy. It comprises multiple work streams focused
around four key objectives to transform our collective distribution capability.

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 ACROSS THE TABLE

OBJECTIVES WORK STREAMS

Strengthening the Caterpillar and
Dealer Distribution Model • Across the Table

• The Playbook - Driving Execution

Enhancing Customer Focus
in Serving the Entire Portfolio

• Global Parts Pricing Strategy

Achieving Superior Economics • Parts Logistics Transformation
for Caterpillar and the Dealer • Meet Customer Future Service Needs
• Rental and Used Equipment

• Distribution Aspects of
Seizing Opportunities / Technology-Enabled Solutions
Mitigating Risks • eBusiness Transformation
• Networked ERP/Data Integration

Economic Foundation • Dealer Growth & Profitability Plan

Executed in close partnership with our Dealers

In many instances, we are already working on improvements. In other instances, more focused work is needed: our customers
are asking for services, our competition is already offering them, or we simply need to do more.

The following sections provide information on the objectives and work streams that support them. It summarizes our collective
improvement journey.

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ECONOMIC
FOUNDATION

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 ACROSS THE TABLE

WORK STREAM
DEALER GROWTH AND
PROFITABILITY PLAN
It all starts here. The Dealer growth and profitability plan is the economic foundation to support Across the Table initiatives,
which means the foundation is based on parts growth. Around the world, the major contributor to Dealer profitability is after-
market sales. We need to identify new opportunities to grow such sales.

The good news is that existing Dealer-specific plans based on best demonstrated practices can increase the percentage of
parts sales (POPS). The methodology behind this program can be applied to the rest of the business.

At a high level, a growth and profitability plan is based on three goals:

• Growing parts sold through service and over the counter (OTC)
• Focusing on where lost sales are concentrated
• Satisfying six key commercial criteria

Parts are sold to customers one of two ways: with service or without service. Both aspects are important, but for many
Dealers, the OTC sale is the untapped opportunity. Increasing sales to those customers who choose to purchase OTC parts
increases overall POPS, and few Dealers have lost parts sold with service while pursuing OTC sales opportunities.

Focus means identifying the Dealership’s highest opportunity customers for increased parts sales. On average, 70 percent of
the lost opportunity can be traced to roughly 200 customers. The sales force must be deployed to ensure adequate coverage
of top lost-opportunity customers.

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In addition, having a common commercial framework that drives parts demand is important. We have identified
the six commercial criteria that apply to parts sold through service and OTC. Each represents different levels of
opportunity depending on Dealer practices. The criteria, known as the “6 As”, are:

Awareness
Ensuring familiarity with the products and services through adequate visibility
and contact through all channels of communication and sales coverage.
Characteristics:
• Number and type of representatives used for coverage
• Focused sales force on OTC as well as service sales
• Presence and quality of third-tier marketing to cover remaining opportunity

Advice
Providing value-added customer service that differentiates the offer by ensuring a quality,
value-added, consultative relationship that increases the odds of ongoing sales.
Characteristics:
• PSSR, ISR and parts counter training programs
• Advisory sales skills and approaches
• Focus on condition monitoring programs
• Rigor and discipline of sales management process

Availability
Ensuring the right product and service is available at the right time in the right place.
Characteristics:
• Service levels
• Accelerated delivery options
• Number and availability of field technicians and service bays

Access
Through any channel, at any time, the customer seeks to interact with the provider.
Characteristics:
• eBusiness capabilities
• Integrated procurement capabilities
• After-hours options and service facility locations

Attributes
Features of a product and service bundle that differentiates the offer.
Characteristics:
• Product quality/life expectancy
• Bundling initiatives (penetration levels of CSA and EPP programs)
• Use of parts kits to lower PM costs

• Use of financing programs

Affordability
Effective price versus alternative offers of similar value.
Characteristics:
• Purchase options and price ladder (Reman, recondition)
• Use of differential pricing across the product line to reflect the competitive environment
• Customer loyalty programs

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 ACROSS THE TABLE

Caterpillar and Dealers must work together to identify opportunities and adopt changes in our commercial practices. This requires
more than documentation of processes and standards. In effect, improving Dealer performance is about improving the commercial
advising and management skills of both Distribution Services Division (DSD) and Dealer.

The common commercial framework provides a structure to compare common practice to best-demonstrated practice. Based on the
differences between common and best-demonstrated practice, the sources of performance variability become clearer.

We must move aggressively to develop and implement a growth plan and replicate the best-demonstrated practices with the
highest-potential Dealers. If the variability of performance across the network is not addressed, POPS declines will continue.

This effort will result in the adoption of a consistent commercial framework, Dealer-specific strategies reflecting the priorities and
programs needed for each Dealer to maximize POPS in its territory, explicit key-performance metrics and targets for each Dealer to
achieve, and detailed implementation plans and resource requirements for achieving those outcomes.

In addition to capturing near-term POPS improvement, this effort will train the Caterpillar team on the capabilities needed to be an
effective strategic advisor to Dealers and to replicate this effort for all remaining Dealers.

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OBJECTIVE

SEIZING OPPORTUNITIES/
MITIGATING RISKS

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 ACROSS THE TABLE

» We must embrace the change that is required to drive a culture

of continuous innovation and reinvention. We must share
information more freely than ever before. We must not be
afraid to disrupt the status quo. We must be problem solvers,
not just sellers of equipment, even if that means selling less
up front to make customers more successful in the long run. In
short, we must seize the opportunities before us.

When we achieve the Across the Table objective of Seizing Opportunities, we will:

• Grow profitably by applying best demonstrated practices

• Integrate data in a seamless manner and build a smarter connected network
• Lead online and leverage low-cost platforms to reach more customers
• Increase customer loyalty by building a Caterpillar ecosystem within the Internet of Everything

Seizing opportunities in these areas will drive greater levels of revenue, loyalty and profitability.

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WORK STREAM
NETWORKED ERP/
DATA INTEGRATION
Transforming data into intelligence that we can take action on is at the heart of the Networked ERP/Data Integration initiative.
This sets the base from which we can create a competitive advantage. The strength of this foundation rests on the ability to
collect and share data in a standardized way.

With standard data, we can unleash customer value that has been difficult to tap in the past. With standard data collected
from all Dealers and housed in a secure, centralized warehouse, we will be able to:

• Identify new and additional parts sales and service opportunities

• Reduce parts stores across the value chain while meeting customer demands
• Target where future customers will emerge and be ready to capture the business

M AT I O N A N A LY T
FOR IC
IN S

24
 ACROSS THE TABLE

WHY NOW? THE BURNING PLATFORM

Our research shows that our competitors are already doing a good job of sharing and aggregating their data—
and reaping the rewards.

• Focus on the customer has allowed some competitors to achieve a level of customer loyalty that now rivals Caterpillar.
• Customer information flows freely between some competitors and their Dealer networks via web-enabled business
management systems that track customer data and assist competitor Dealerships with inventory planning and
management.
• Some competitors have global, “harmonized” data strategies. Key tenets include a centralized Corporate Data
Warehouse (CDW) to store its commercial data, as well as a process to eradicate root causes and correct data
anomalies.
• Some competitors have integrated various systems, including its online parts store and used equipment portal into its
single system. Reported results include more data integration and enhanced marketing abilities, such as analytics and
mapping, that offer advanced features to their distribution partners.
• Some competitors use a closed-loop lead generation process to communicate with customers, track online behaviors
and distribute sales-ready leads to its Dealer CRM systems.

Customer expectations drive demand for businesses, including Caterpillar and Dealers, to make the information customers
want and need more readily accessible.

• Customers expect and seek information online and offline before contacting sales, which makes information availability
and accuracy more important than ever before.
• Business-to-consumer companies excel in the collection and analysis of customer information, leading to insights
that increase marketing effectiveness and sales. For example, top online retailers use online data to nurture customer
relationships. As customers shop, a “guided selling tool” suggests other items to consider based on their online buying
behavior (items already placed in their cart). The data system’s cross-sell and up-sell features don’t just increase
average order size, they result in a better purchase experience.
• Research from the Marketing Leadership Council tells us that business-to-business customers make more than half of
their purchasing decisions before talking to a company’s sales force, which increases the importance of information
accuracy in earlier parts of the sales funnel.

25
DATA SHARING OUR RESPONSIBILITIES

The durability of this foundation requires attention and unwavering commitment to build a strong but flexible technology base
that uses industry standard technologies to protect Dealer, customer and Caterpillar data. Data from any number of systems can
be collected in a standardized way and analyzed to deliver actionable intelligence.

With complete and accurate data we can make better decisions, which means more relevant, timely and actionable information
to enhance the value of Dealerships. Complete and accurate data will help us develop closer relationships with our customers,
realize revenue growth across our businesses, and greater profitability for everyone.

This success relies on trust: Dealer trust in what Caterpillar will do.

Dealers can trust Caterpillar will:

• Become the industry leader in analytics
• Be easy to work with
• Lead data standards development and interface technology implementation
• Enable systems choice at the Dealer level
• Provide responsible data governance
But Dealers must commit to:

• Data sharing
• Working with Caterpillar to integrate into the Dealer Data Staging Warehouse
• Adopting the interface technologies Caterpillar recommends

26
 ACROSS THE TABLE

WHAT ARE THE ADVANTAGES? CAPITALIZING ON DATA SHARING

The Caterpillar Marketing Information Services (MIS) group implements and oversees the Dealer data warehouse—a secure
system that operates under strict data access policies. Caterpillar application groups use that data to provide Dealers with
customer behavior insights and alerts, which help Dealers better service and sell. With these objectives in mind, we can
capitalize on the aggregation of shared data which will enable us to:

• Save time and money through a shared strategy and clear process ownership
• Capitalize on our new Dealer Data Staging Warehouse to drive efficiency and data reliability
• Reduce data silos, creating one pipeline of data
• Develop predictive sales packages including financing and insurance options by Cat Financial
• Promote the reuse of information and cut down on duplicate efforts, reducing cycle time and costs

Strong governance processes are built into MIS to:

• Oversee how Caterpillar acquires, transmits, cleanses, stores and accesses data coming from Dealers
• Ensure the security and privacy of Dealer data

27
KEY DEALER AND CUSTOMER BENEFITS FROM DATA SHARING

KEY DEALER BENEFITS KEY CUSTOMER BENEFITS

Knows location, performance and condition of the

Identifies assets “in/out of territory”
equipment via Product Link™

Receives more targeted, personalized offers aligned

Finds “lost iron” customers to create new sales leads
with their needs and fleet makeup

Helps Dealers nurture customer relationships more effectively Gains access to relevant, targeted content and
via eBusiness’ Marketing Automation tool time-saving tools

Learns more about bundled products and services that

Opens up cross-selling and up-selling opportunities
span segments or product lines

Receives multiple price point options (rental and used to

Identifies maintenance and operating opportunities complement new equipment purchases) to match a customers’
unique market segment requirements and budget

Gets assistance with planning, analysis and forecasting

Leads to better customer service support throughout
because we know more about customer buying patterns,
the product lifecycle
purchase cycles and financing needs

Views accurate fleet data; predictive alerts to

Reduces data acquisition costs through leveraged data asset
machine health and safety alerts

Improves customer reporting, metrics accuracy Remains apprised of new/changing services and benefits
and consistency they are eligible for but not claiming

Reduces analysis efforts, time and costs to understand Receives more consistent service across Dealerships
customer insights and product offerings

Improves marketing, targeting and pricing opportunities Reduces processing time for purchasing and financing

Minimizes the risk of sending safety service letters

Gets the important safety information they need
to the wrong parties

Ensures visibility to customer preferences related Receives financing and insurance offers aligned with
to financing and insurance their equipment or engine purchase

28
 ACROSS THE TABLE

Global Technology
Parts Enabled
Pricing Solutions

Parts eBusiness
Logistics BUILT TO
Transformation CONNECT
NEW DATA
CAPABILITIES
Dealer
The Future Growth and
of Service Profitability

Rental
and Used Playbook

Big data is changing paradigms. Information from shared data will become our “basis of competitive advantage.” Other
Across the Table projects are dependent on our ability to share and use data effectively. Our challenge is recognizing the
collective value of seizing and acting on this data—and realizing its full value.

Data sharing, data integrity and standards are foundational to the success of most Across the Table initiatives. The payoff will
be significant for Caterpillar and Dealers if we can turn the data into actionable market and operational intelligence. Success
hinges on strong collaboration: sharing data seamlessly and securely to seize the opportunity.

29
WORK STREAM
eBUSINESS
TRANSFORMATION:
BUILT TO CONNECT
BURNING PLATFORM AND VISION

Creating Cat Moments

This is the Age of the Customer. Never before have customers been better informed or more empowered. They look for what
they want, research extensively to make sure it’s what they need, and buy how, where and when they want—whether that’s
online or at a brick-and-mortar store, including Cat Dealerships.

Today’s customer is in command of the buying experience at an unprecedented level, from awareness through purchase. That
includes our construction customers, with over 80 percent beginning their purchasing process online, which means the end of
any notion we may have had of “owning the customer.”

However, we can and must own each moment they experience with us, making each moment a Cat moment at every stage
in the customer lifecycle. To own each moment, we need to get there first, before any competitor, with the right solutions at
the right time and place. We also need to ensure seamless integration across channels, both online and off, to build customer
confidence and brand loyalty.

Together, we will build

a premium, consistent
customer experience to
powerfully extend our
physical footprint.

30
 ACROSS THE TABLE

UNDERSTAND THE ONLINE COMPETITIVE LANDSCAPE

If we lack the full set of capabilities required to deliver on our customers’ online expectations, we risk losing PINS and POPS. We
also increase the risk of losing loyal customers to competitors who are investing aggressively in online capabilities.

Some of our competitors use the Web to understand and engage their customers and have taken the leadership position away
from Caterpillar for certain online capabilities.

Other competitors provide parts to Cat machine owners. They have become expert at making it easy for online buyers to pur-
chase parts. They give customers the buying experience they expect.

MEETING eBUSINESS OBJECTIVES

• Define our vision for leading online using digital capabilities to augment and transform our customers’ business processes
• Grow and retain more customers by building a fully integrated customer marketing, sales and support coverage model
• Implement our strategy across all business units and Dealerships in phases
• Adhere to governance plan for ongoing investment and to prioritize implementation of online solutions

DELIVERING ON OUR VISION

We will deliver the Cat brand promise to customers by creating a premium, consistent and differentiated online experience at
each step of the customer lifecycle. Every Cat moment a customer experiences will deliver the best and most complete solution
in a highly personalized way at just the right time and place. In doing so, we will create exceptional value for our customers that
drives brand loyalty and accelerates growth.

Our world-class digital marketing, sales and support capabilities will powerfully and cost-effectively extend the reach and
effectiveness of our physical footprint to ensure unmatched customer coverage. Through our ongoing, innovative leadership
online, we will continue to transform our business and the markets we serve, creating a sustainable competitive advantage for
Caterpillar and Cat Dealers globally.

31
 Reach
Maximum Visibility & Visits

EMAIL
MARKETING SYNDICATION

Engage
DIGITAL
Assess
SOCIAL
PROMOTION ADVERTISING

Optimize Online Experience SEARCH Deliver Compelling Content

CUSTOMER
CONTENT DATA
MARKETING ALER SITES EXPERTISE
ANALYTICS DE
WEB
ANALYTICS CAMPAIGNS
CAT.COM
B2B PRODUCTS
TARGETING & SERVICES
SOCIAL THOUGHT
LISTENING LEADERSHIP
CUSTOMER
M O BILE USER-
GENERATED
ANALYTICS CONTENT
LEAD GEN
& NURTURE

RENTAL eCOMMERCE
& USED
CRM/LEAD
MANAGEMENT LIFECYCLE
SUPPORT

Convert
Drive Revenue & Loyalty

Executing our eBusiness transformation strategy will establish and sustain online leadership for the Cat brand. It will help us
reach, assess, engage and convert customers using the most relevant, local digital technologies and content while extending
and enhancing offline interactions. By intensifying our online focus on predictive marketing, solution selling, expert support,
end-to-end transactions and a common experience, this strategy will affect each key area of customer interaction, providing:
• Marketing that is highly targeted and shaped by customer behaviors and needs
• Expanded sales coverage with shortened sales cycles and reduced cost per lead
• Proactive after-sales support accessible 24 hours/day, 365 days/year

CALL TO ACTION
As we continue to roll out our new eBusiness capabilities, Dealers have a bigger role to play to deliver a premium, consistent
and fully integrated customer experience. Dealer success and commitment to implement world-class online capabilities to serve
customers better will determine the ultimate success of the strategy.

Our customers increasingly expect and deserve the best from the Cat brand online. Our competitors are marketing aggressively
and improving their abilities to rapidly and conveniently transact online as well.

As we use our world-class digital marketing and sales and support capabilities, we will extend the reach and effectiveness of our
physical footprint and ensure unmatched, cost-effective customer coverage around the world.

To continue to lead in the marketplace, we must also lead online.

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 ACROSS THE TABLE

WORK STREAM
DISTRIBUTION ASPECTS OF
TECHNOLOGY-ENABLED
SOLUTIONS
BURNING PLATFORM

In every industry we serve, customers are adopting technology at an exponential rate. This changes the fundamentals of our
business. We need to understand and embrace the challenges and opportunities of technology. We need to accelerate, intensify
and innovate.

Non-traditional competitors are using technology to connect to our equipment and disintermediate us from our customers.
Disruptive business models are being created through combinations of data, technology and services. Traditional Caterpillar
OEM competitors are leveraging technology to challenge our “lowest owning and operating costs” position and overcome their
distribution shortcomings.

Those are the threats, but there are plenty of opportunities. Customers are struggling to find talent to help them manage com-
plexity. They are asking for our help to convert Big Data into actionable business insights. They want mixed-fleet solutions,
consistent delivery of service across Dealers, productivity solutions, information security, ease of doing business and technology
that is easy to implement and works reliably.

We believe that our global footprint, leading Dealer network and technology-enabled solutions will equal a sustainable competi-
tive advantage. Connected customers who are professionally served are more loyal, which means significantly higher PINS
and POPS.

STRATEGY
Caterpillar has developed a technology-enabled solutions strategy to organize roles and responsibilities within the enterprise.
It is organized by industry and by commonalities across industries and is focused on delivering customer-centric offerings that
leverage technology and bring value to our customers’ businesses and jobsites.

At the basic level, these solutions drive value through connectivity to our customers’ equipment for equipment management,
productivity, sustainability and safety. In their most advanced states, they deliver long-term commercial customer relationships
and include elements of risk and reward for Caterpillar and/or Dealers.

This will drive changes in the relationship and expectations between Caterpillar and Dealers—and between us and
our customers.

Critical to this success is the ability of Caterpillar and Dealers to become consultative partners to customers. We can help them
adopt technology and progress towards truly connected assets with demonstrated value to their businesses.

33
 EQUIPMENT
PRODUCTIVITY SAFETY SUSTAINABILITY
MANAGEMENT

COLLABORATIVE Long-term, commercial relationship with shared risk and reward

SOLUTIONS Job site solutions, MARC

CONNECTED Additional value-added benefits enabled by technology products

SERVICES Condition monitoring, CSAs, job site assessments, safety evaluations

TECHNOLOGY Electronic, Wireless and Software

PRODUCTS PL, Cat Grade Control, VisionLink™, Terrain, Detect, PL Web, Cat Inspect

SERVICES
Additional value-added benefits
Traditional dealer service, financing, rental, insurance, operator training

PRODUCTS
Physical products themselves
Machines, engines, parts

COMMERCIALIZATION

Caterpillar and Dealers must work together to evolve our product-centric business toward a services-and-solutions business
model. Equipment management, productivity, safety and sustainability are key areas of customer value in this strategy.

We need to fully understand our customers’ business in these areas, be nimble enough to deliver high-impact technologies and
services, and prove the value to customers.

We must define what we will commercialize in the technology-enabled solutions space. Our offerings will start at the most
basic level with technology products. These enable machines and engines to connect and drive valuable data to Caterpillar and
Dealers. Product Link, Cat Grade Control and Terrain are a few examples of technology products.

We create connected services when we couple technology products with Caterpillar and Dealer expertise. Connected services
include condition monitoring, job site assessments and safety evaluations. We will also offer collaborative solutions, such as
job-site solutions, to a select set of customers ready to work closely with Caterpillar and Dealers, and with elements of shared
risk and reward.

34
 ACROSS THE TABLE

DISTRIBUTION

Maintaining our distribution leadership is critical and requires a deeper and more integrated relationship between Caterpillar and
Dealers. Sometimes Caterpillar will be required to play a more central role, for example, with complex, cross-territorial customer
demands or when customer expectations exceed local Dealer capabilities.

Dealers must be technology savvy, consultative partners to customers. They must drive adoption of technology and connected
assets while demonstrating the value this brings to their business.

CRITICAL IMPERATIVES

Technology products will be the key differentiators Caterpillar and Cat Dealers will use to connect with customers and feed the
seed, grow, harvest business model.

• They are the first step in moving us from product-centric to services-and-solutions centric, which expands our focus beyond
the iron to customer business processes
• They drive the need for Cat Dealers to serve mixed-fleet customer technology requirements with aftermarket/retrofit
technology products
• Caterpillar will continue to increase the amount of factory-fit technology products on Cat equipment, requiring Dealers to
be able to sell and support these technology products and features
• Caterpillar and Dealers will need to converge on one IT ecosystem to aggregate, analyze and convert Big Data into value
for cross-territorial customers, Dealers and Caterpillar

Our organizations must continually focus on understanding customer needs, competitor moves, technology developments
and market economics to discern opportunities and risks. This includes identifying changes in the external market and, more
importantly, understanding what those changes mean to our business.

Caterpillar and the Dealers will need to develop a services culture.

• Being a champion for our customers’ enduring success is the primary reason for entering the services and solutions
business; At times, the goal will be to protect our business model
• Caterpillar will develop a scalable technology-enabled services-and-solutions menu to serve mixed fleets in the areas of
equipment management, productivity, safety and sustainability
• Dealers will be expected to offer this menu as defined by Caterpillar; Example: Cat EMSolutions Level 1 to 5
• Dealers will be assessed to determine if they can to deliver these services and solutions consistently across Dealer
territories
• Caterpillar will support those Dealers with limited capability to ensure services consistency, up to working with the Dealer
and customer to provide these services
• For customers that operate across territories, Caterpillar’s role will depend upon level of risk and contractual complexity
• Caterpillar will play a central role in the development and delivery of solutions, working closely with the Dealer to ensure
contractual elements and risk management procedures are in place
• Customer operational metrics must be incorporated to ensure alignment to their business objectives

35
OBJECTIVE
ACHIEVING SUPERIOR
ECONOMICS FOR CATERPILLAR
AND THE DEALER

36
 ACROSS THE TABLE

» We must embrace the change that is required to achieve

superior economics for Caterpillar, Dealers, and most importantly,
customers. To do this, we must have a deep understanding of the
needs and expectations of our customers. We must be willing to work
together to leverage the connected “power of one,” even if it means
giving up some independence or autonomy. We must align our
collective capabilities to meet the needs of our customers. The
initiatives described in this section address these challenges and
are foundational to achieving superior economics.

WORK STREAM
MEET CUSTOMER
FUTURE SERVICE NEEDS
The parts and service business is the key driver of Dealer profits. But this business is at risk. Why? Simple—we face more
competitors, and our customers have more service options. The customer service strategy for Caterpillar and Dealers only works
if we win in service. It is time to rebuild the fundamentals of the service business, become more customer-centric and reclaim the
customer service model for Caterpillar and Dealers as the premiere customer service provider.

VISION

Delivering a consistent and exceptional service experience through operational excellence and enhanced customer value result-
ing in Cat Dealers being the customers’ preferred service providers.

Our customers want a consistent customer experience from Dealer to Dealer globally. They deserve an exceptional, personalized
customer experience. At the same time, operational excellence means delivering customer value as efficiently as possible. We
deliver value when we help customers be successful. To become their preferred services provider, we must support customers
the way they want to be supported—and that means increasing, improving and innovating our capabilities.

37
TO ACHIEVE THE VISION, WE MUST ACHIEVE SEVEN CRITICAL SUCCESS FACTORS:

Align Component Enhance Prepare PEOPLE Consistent &

Rebuild Strategy Collaboration for Tomorrow Exceptional Services
Operational
Excellence
BE BRILLIANT IN THE BASICS
Customer Value

Leverage Data PREFERRED

Manage Cross-fleet Grow Value-
and Technology to SERVICE
and Platform Support added Services
Enable Services PROVIDER

• Be brilliant in the basics. The fundamentals of delivering an excellent customer experience are timeless. Collectively we
must be exceptional in the basics that deliver customer satisfaction, Dealer effectiveness, efficiency and profitability. We
want our service brand to be recognized and regarded as the first call from the customers.
• Prepare people for tomorrow. Cat Dealers need to have talent that will enhance the customer preference for Dealer
support. A robust manpower recruitment and development program ultimately will reduce risks and costs while building a
stronger, more valued and competent workforce. This program will address advanced product technology and appropriate
technical skills, the need for high-level analytic experts for data management and proactive prognostics, soft skill training
for everyone to be customer-centric and a higher emphasis on leadership development to create the right culture in an
effectively managed business environment.
• Enhance collaboration. This is Dealers learning from Dealers, Dealers learning from Caterpillar and Caterpillar learning
from Dealers. Dealers will include customers in this network of learning collaboration. This is an area of rich potential.
• Align component rebuild strategy. Component rebuild is a core Dealer competency. All Dealers need the capability to
perform major component repair/rebuild. Caterpillar will support Dealers to grow this business with technical and service
training, repair and salvage processes, and a full line of competitive Cat Reman parts offerings. Standard jobs must be
developed and maintained within the Dealership and used whenever possible. A Dealer-defined rebuild philosophy/tactical
methodology is essential to consistent delivery.
• Leverage technology and data. Customers want one-stop proactive service for all their assets. Leveraging technology
and data is an absolute must to meet this growing and evolving customer demand. We must be able to share data in real
time so Dealers can learn from each other on troubleshooting and repair, reducing field service response time, improving
standard times and technician efficiency. (Think one-trip field service.)
• Value-added services. Customers want consultative services that mitigate risk, drive efficiency, reduce cost and enable
them to become more competitive. These services, which include customer portals, extending service agreements to new
industries, training customers and sharing technical information with them, go well beyond traditional repair.
• Manage cross-fleet/platform support. Customer pull for total fleet management is increasing. This is an aspirational
factor that includes everything from establishing strategic and financial options to defining success for each fleet and
establishing sources for competitors’ parts and services to handle our competitors’ assets. To provide cross-fleet services,
Caterpillar and Cat Dealers must continue to enhance and implement Cat EMSolutions and position themselves as total
system integrators.

Staying the same is simply not an option when everything around us is changing. The competition is moving in quickly,
expanding their capabilities, improving existing offerings and innovating every day to meet the service needs of our customers.
Our customers are expecting more from us and we must invest to meet those needs. Together, Caterpillar and Cat Dealers will
execute a strategy with fresh, new ideas that will position our Dealers as their customers’ preferred services provider.

38
 ACROSS THE TABLE

WORK STREAM
PARTS LOGISTICS
TRANSFORMATION

Parts availability is the single largest differentiator for customer success and loyalty—and a fundamental driver of growth
and profitability for Caterpillar and its Dealers. Industry-leading parts availability fuels our business model. It allows us to
harvest our aftermarket opportunity, seed more product sales and grow our population. Throughout our history, Caterpillar
and its Dealers have jointly outperformed OEM and parts competitors by delivering best-in-class parts distribution
performance to our customers.

As our machine population grows, so does the appetite of our parts competitors for the profitable harvest opportunities
our brand creates. Moreover, globalization and the information age have made our customers more global, capable
and demanding. Our traditional local support is increasingly measured by global standards and customer expectations.
Customers demand that we consistently deliver on the brand promise, regardless of industry or region.

39
THE BURNING PLATFORM

Today’s Cat brand experience for parts availability is inconsistent across Dealers and industries, resulting in lost opportunity and
inefficient asset utilization across the extended enterprise.

• Dealers have diverse approaches to deliver parts availability to customers, resulting in an inconsistent customer experience.
Recent analysis reveals that some Dealers maximize branch fill, while others maximize network fill, and all things equal, some
Dealers are more reliant on Caterpillar to fill customer orders than others. As expected, this varies by region and industry, by
branch store within a Dealer’s network and by product or part class. Over the counter (OTC) customers feel this pain most
sharply.
• Lack of supply chain visibility and collaboration causes Caterpillar and Dealers to manage service parts inventories and
network assets in isolation. Under these conditions, both Caterpillar and Dealer assets are underutilized, which negatively
affects customer satisfaction and stockholder returns. More precisely, Caterpillar and Dealers have duplicated the depth
of fast-moving inventories with too little breadth positioned downstream for OTC sales. In addition, Dealers suffer from
relatively few options to relieve underperforming inventory.

VISION

We leverage one integrated parts distribution network to deliver consistently premium parts availability to our customers.
We lead the industry in distribution cost effectiveness and inventory turns.

The parts logistics transformation vision is an integrated parts distribution network, comprising Caterpillar and Dealers, focused
on providing consistent, premium parts availability to customers. Customer success will be measured through customer parts
availability, with the long-term goal of “on time in full” parts-order fulfillment. In achieving this vision, we will increase POPS and
maximize shareholder returns. In addition, we will deliver industry-leading cost efficiency and asset utilization by leveraging proven
Caterpillar Production System guiding principles and providing parts operations expertise across the Caterpillar and Dealer network.

SOLUTION

Through data sharing and inventory collaboration, we will deliver a consistent, premium service to our customers.

• Data sharing: Caterpillar’s visibility to Dealer inventories and customer transactional data is required to plan inventory
toward customer-centric metrics. Data transmission is also required for Caterpillar to send Dealers recommended orders.
• Inventory collaboration: With visibility to system-wide inventories and customer demand, Caterpillar can plan the entire
network’s parts inventories toward consistent parts availability to customers. This ensures optimal breadth and depth are
established at all levels of the network.
• Supply chain capability: With data sharing and inventory collaboration in focus, the foundational elements to improve our
service to the customer is built on shared supply chain knowledge and leveraging existing capabilities across all functions of
the supply chain, including sourcing, distribution, transportation and operations.
• Supply chain capacity: We will continue to build on the multi-year investment that Caterpillar has been making in
distribution asset expansion and best in class supply chain software. The integrated parts network of Caterpillar and Dealers
and our supply chain capacity will be evaluated holistically to make sure the needed supply chain components are in place
prior to the market need.

Achieving full benefits requires certain foundational capabilities are in place for Caterpillar and Dealers. Satisfying these
foundational capabilities will be a prerequisite to solution deployment.

40
 ACROSS THE TABLE

WE ARE READY

Caterpillar and Cat Dealers are uniquely positioned to achieve this vision. The reach of our collective network offers an unmatched
competitive advantage. Caterpillar is committed to delivering the foundational investments with additional distribution centers
integrated with the ERP platform. This parts distribution network and our Dealers will be ready for the next level of integration
to deliver for our customers. Inspired by our past, we will strengthen our relationship for the future and raise the bar in delivering
unprecedented parts availability to our customers.

WORK STREAM
GLOBAL PARTS PRICING
The most common complaint from customers in our parts and service survey generally centers on transaction-price inconsistency
and unexplainable differences customers experience as they do business with Cat Dealers.

All customer sizes are affected. Fleet and large customers frequently request help to understand price variation from Dealer to
Dealer. The issue represents a potential hurdle to our largest opportunity for growth (Do It Myself). Mobile and cross-territorial
customers have been especially vocal about their dissatisfaction with unexplained parts price variation as they work with Dealers
around the world.

An analysis of 2012 transaction prices for 20 Cat Dealers (about 20 million records) around the world concluded:
• There is extreme transaction price variation across all regions for most parts products and almost all customer sizes
(large Mining is an exception).
• Caterpillar has not provided adequate suggested consumer price (SCP) guidance to most Dealers.
• Where Caterpillar and Dealers have shared information and taken appropriate action jointly (Undercarriage, Ground-
Engaging Tools), suggested list prices are better positioned relative to the industry.
• Data suggests price variability is an impediment to POPS growth.

Price variability, while only one element of the total value equation, is negatively correlated to POPS across all parts product
categories. Addressing this variability, along with making progress on other Caterpillar and Dealer initiatives, is critical to future
POPS performance and Dealer viability.

The most sophisticated OEMs have taken actions in the past 5 to 10 years to understand end-user price transactions and work
with their distributors and/or Dealers to better manage the customer experience. This presents a competitive threat to Caterpillar
and Dealer ability to maintain/grow PINS and POPS. Additionally, will-fit parts competitors, traders and low-cost manufacturers
are putting downward price pressure on the industry.

Caterpillar and its Dealers cannot effectively make progress on improving price/value relationships by working independently.
Transparency from end customer back to the OEM of transaction prices for both Caterpillar Dealer sales and competitive sales
(where we have them) is critical to optimizing the price offering to the business going forward.

Benchmarking across automotive, industrial and consumer goods industries shows that similarly situated companies with
independent Dealers are moving toward understanding market pricing at a local level.

Parts pricing is a component of Affordability, one of the six commercial offer improvements identified in the initial work done as
part of the Dealer Growth and Profitability (DGAP) study of Dealers around the world.

41
OUR STRATEGY

We will establish price zone suggested consumer price (SCP) lists. Price variations between price zones will be based on a
variety of existing, commonly available country and regional economic and business risk factors that will allow Dealers and
Caterpillar to provide reasonable and consistent explanations of price variability to our customers.

The buildup of the price zone SCP has been defined along with explainable categories of additional charges that Dealers can use
for reasonable, value-based price variability (freight, duty, disposal fees).

During the initial stages of rollout, the price zone SCP will be provided to Dealers. Caterpillar reserves the right to publish this to
select customers. Named accounts may receive additional communication in terms of initial price list communication.
A small, select group of customers will still receive list pricing information, and Caterpillar will be more proactive in discussing
regional variation and list prices with other named account customers.

VARIABLE INCENTIVE
SUGGESTED PROGRAM
GROSS
MARGIN
INFORMATION
SHARING

SIMPLIFIED
MARKET-BACK SCP SALES
VARIANCE

SYSTEMS & PROCESSES

Going forward, success will be measured through Dealer excellence metrics, which involve leveraging transaction price and
competitive data provided by the Dealer in conjunction with Dealer-specific POPS and customer satisfaction survey results.
Caterpillar will offer incentives to Dealers who do not exceed the regional SCP by certain percentages and achieve pre-estab-
lished goals on the other selected Dealer excellence metrics.

Our independent Dealers best understand their customers and will continue to be responsible for determining the price at which
they sell our products to their customers. The price zone SCP is intended to be a tool for Dealers to use to better determine
competitive market pricing. Dealers are free to deviate from price zone SCP, but merchandising support may be conditioned on
Dealer alignment with zone SCP or other targeted resale prices.

ECONOMIC BENEFITS

In addition to POPS improvements, customer loyalty from mobile and cross-territorial named accounts is enhanced by a global
solution where variation in prices across price zones can be explained by economic factors and Dealer value add.

Thus, for this type of customer, the price zone SCP should position Dealers to be able to better provide competitive pricing and
explain the value that the Dealers provide. A market-based price zone SCP will allow Caterpillar and Cat Dealers to be more
competitive and better react to the market.

42
 ACROSS THE TABLE

BEST IN CLASS

Best-in-class Dealers clearly understand their local, regional, mobile and cross-territorial customer needs and competitive
threats. Their segmentation strategy and transaction price management is focused on balancing profitability and POPS.
Continued Dealer concentration on customer segmentation will be key to our joint success.

Best-in-class Dealers will collect and share with Caterpillar data that will be critical to improving Dealer and Caterpillar
practices. Communicating point-of-sale transaction data to Caterpillar will become an ongoing expectation.

THE ROADMAP

Given that there will be much groundwork to prepare, the first phase of implementation for many elements will occur in
January 2015. Implementation for named account customers could come sooner.

Over time, better pricing systems will allow Dealers the ability to view and analyze their transaction price information and to
better segment their customer solutions, enhancing customer service and Dealer profitability. An improved competitive data
system will allow Caterpillar and Cat Dealers to develop better parts price strategies and offer more competitive prices
to customers.

WORK STREAM
RENTAL AND USED EQUIPMENT
Today, more and more customers value “usership” over “ownership.” Customers are increasingly seeking options to own-
ership. Demand for rental and used options are growing around the world because customers are increasingly concerned
about the risk of owning. The opportunities in both the rental and used markets are tremendous.

USED

The used market is big—roughly $50 billion for construction equipment every year. We think the market for Cat equipment is
about $20 billion per year. However, we participate in only about a quarter of those sales, and much of the used equipment
Dealers sell is from their rental fleet.

Every Dealer has opportunity in used equipment. Some Dealers do a great job in this market; others don’t participate at all.
Caterpillar needs all Dealers to participate in the retail used business because there is strong linkage between success in
used equipment and higher POPS. Dealers need to increase their used sales by capturing a larger portion of the Cat used
business, specifically, in the early- and mid-life segments. Used customer requirements are: equipment availability, market
priced offerings, a range of price points, financing options, reputable supplier and quality inspection information.

RENTAL

Competitive dynamics in the rental market have evolved. Rental penetration has grown from less than 5 percent to nearly
30 percent of the global industry in less than 20 years, creating what is now a $28 billion market (machines sold to rental).
It is also expected to grow at a faster pace than the rest of the industry. This market growth is driven by our customers’
desire to reduce risk, improve return on assets and to better and more flexibly manage capital and expenses.

Dealers must invest heavily in their rental fleets to remain in line with industry growth and rental penetration. They will
need to adopt strong rental operations to secure attractive returns.

43
Historically, Cat Dealers are the leaders in North American rental power, though the competition is strong and growing. Globally,
Dealers have pockets of strength, but they have low Percentage of Industry Sales (PINS) overall as many have not engaged in
the rental power business.

We believe rental will evolve in all territories. We also believe we cannot be the global leader in construction equipment and
power generation without successfully executing the rental business.

However, our organizations, and more importantly, our cultures, often are not able to take full advantage of this market. Rental
customers value availability and services more than product features and benefits. And we tend to be very product and sales
oriented.

We have two distinct rental business models: rent to sell and rental services.

Rent to sell is closely related to the Dealer’s sales efforts. Typically, more than half of the total revenue realized comes from the
equipment rollout. The ultimate goal is to sell machines to build and then harvest the population. Rent-to-sell fleets include larger
Building Construction Products (BCP) and GCI models rented for longer periods. These machines have a lower rental rate as a
percent of acquisition cost, so it is critical to keep time utilization high and employ strong process disciplines.

In the rental services model, most revenue comes from rental. This model is used by Dealers to provide customers with short-
term rental options for smaller products. A healthy mix of smaller Cat and allied products, which has a higher rental rate as a
percent of acquisition cost, is important to meet customer needs and drive profitability.

DEVELOPING NEW DISTRIBUTION CAPABILITIES

+60%
New, Used, Rent to Sell are
minimum requirements for Dealers Third Party
ASSCs
Customers transfer ownership and risks to Dealers and Cat

To be defined by territory Multi- Partners

Channel Industry Specialist

Job Site
Rental Penetration

Solutions
Rental Services/ Dealer Rental
Rental Power

Rent to Sell

Used

New
0%

44
 ACROSS THE TABLE

There is a progression with our rental and used strategy as rental penetration increases.

First, Dealers must have effective used equipment operations before they enter into rental.

As demand for rental starts to grow, most Dealers enter rental with a rent to sell or rental purchase option approach. As
customers demand broader and shorter-term rental options, Dealers add rental services and depot rental to their offerings,
and continue to execute rent to sell.

In areas where rental penetration is high, many Dealers have found alternatives to offset the risks of owning bigger and
bigger rental fleets. Cat Financial has competitive finance solutions to augment traditional rental fleet funding sources.
Having a third party carry some rental assets reduces the overall risk profile.

SUMMARY

Rental and used offerings contribute to our seed, grow, harvest business model. They also help build a working and
connected field population. Rental fleets create various price points. Returns are optimized through the equipment lifecycle.
Dealers who win maximize total Dealer returns.

As rental penetration grows, Dealers must continuously improve their distribution capabilities by offering new, used, rent to
sell, rental services/rental power and job-site solutions. In some territories and for utility products or specific applications,
Dealers may need to adopt complementary distribution channels such as authorized sales and service centers (ASSCs),
rental or used partners and industry specialists.

What Dealers must do:

• Meet machine PINS (in line with industry rental penetration), power and used targets
• Grow and adopt rental, used, new (RUN) operating principles
• Align with Across the Table winner profiles, and deliver on customer experience
• Develop and execute rental and used growth plans

What Caterpillar must do:

• Support Dealers so they can achieve attractive returns through the life cycle
• Offer fleet financing and risk solutions
• Support differentiated used and online capabilities
• Develop rental products and velocity solutions

GOVERNANCE AND NEXT STEPS

Growth plans will be established to ensure long-term growth and support; the plan may involve significant distribution
changes in the Dealer strategy to meet long-term goals. Growth plans will align all parties: Dealers, industries and
distribution. An effective, comprehensive enterprise rental and used strategy, executed with necessary regional
adjustments, will further improve the Caterpillar and Cat Dealer competitive advantage for years to come.

45
OBJECTIVE
ENHANCING CUSTOMER
FOCUS
46
 ACROSS THE TABLE

» The most basic truth for any business is that the customer
is the boss. Only by focusing on customer needs can we survive
and grow. We must work together to collectively enhance
our customer focus. This means we have to be willing to adapt
to compete in a changing world and meet evolving
customer expectations.

In practical terms, we need leading Dealer capabilities beyond traditional distribution in retail and rental. We must
be willing to transition our focus from traditional “brick and mortar” storefronts to leading in a virtual world. In this
modern world, we need consistency within territories, across branches and within regions or internationally, across
Dealers.

Customers are asking us to help them improve their performance and demanding leading solutions to do that, from
technology to financial services.

The playbook dives deeper into these areas and lays out the framework for the strategic work that must take place
to ensure that we truly deliver a differentiated customer experience for the customers of the 21st century.

47
WORK STREAM
THE PLAYBOOK–
DRIVING EXECUTION IN
SERVING THE ENTIRE PORTFOLIO
Eighty-eight years ago, the statement, “Our business must serve all customers equally well and seek to exceed expectations,”
applied to narrow product range offered to a limited number of industries. Today, we offer over 300 products to 18 industries and
yet that statement is more important than ever. As we face numerous competitors, coverage is even more critical.

Cat Dealers translate product focus into customer focus. And when we tailor distribution models to better meet the needs
of different customers, we improve that focus. We win. Dealers that have deployed multiple coverage models within their
territories enjoy improved results, with increased:

• Customer Loyalty
• Industry Leadership
• Dealer Profitability

After benchmarking best-in-class Dealers against customer needs, we identified eight distribution models that reshape front-end
capabilities, increase performance standards and truly differentiate the customer experience. The following section provides an
overview of each model. It also includes best practices and best-in-class performance observed across the world—the winner’s
profile for each model.

Each winner’s profile will help drive excellence across six metrics that will become the top-level measures of our
distribution system:

• Customer Loyalty
• Retail PINS (Retail percentage of industry sales)
• Rental Growth (Rental percentage of industry sales)
• POPS (Percentage of Parts Sales)
• PODD (Percent of Dealer deliveries financed by or through Caterpillar Financial Services Corporation)
• Dealer Profitability

In the following pages, we will review what we mean in terms of the customers served within each distribution model.

48
 ACROSS THE TABLE

THE IMPORTANCE AND PROFITABILITY OF THE BUSINESS MODEL

The seed, grow, harvest business model is the key to delivering valued, high-quality products, services and solutions to our
customers. It helps us deliver unmatched customer support.

How we plant the seed matters. To achieve the maximum benefit from the full portfolio of products and services, Dealers
must focus on an integrated sales approach that reaches across business units and leverages the full value of the solutions
within our business model.

A “sell the house” approach should be favored at all times to increase the sales of bundled services per equipment sale.
Increased customer loyalty will be earned by providing the more comprehensive solutions that customers are seeking. It also
includes ensuring connectness of the sold assets to track and capture lifecycle product support revenues.

Also, executing across the business model is critical for growth and profitability. In a typical Dealership, 90 percent of the profit
potential resides in products and services beyond the initial sale, including rental, used and product support (parts and services).
This underscores the importance of maintaining a balanced and optimal business mix.

To help assess whether a balanced business model is in place, the following typical and simple questions can be asked:

• What is the balance of revenues across new, used, rental, parts and service?
• What is the profit percentage of each of the revenue streams?
• Are teams measured and held accountable for creating new customer relationships?
• What is the proportion of equipment sold with other value streams (financed, extended warranty, Customer Service
Agreements, extended service coverage, work tools, VisionLink)?
• Is the cost of sales tracked through all revenue streams?
• Is the cost of sales benchmarked against the competition within the local service territory?
• Is there a focus on the cost of distribution with efficient and lean seed, grow, harvest processes appropriate to the
distribution model?

49
SEEKING EFFICIENCY AND LEAN PROCESSES

Dealers should apply lean processes and approaches to all channel costs, especially to engine and equipment pre-sales
preparation and up-fit costs. This ensures a competitive cost of goods sold and helps Dealers manage the total cost of serving
customers by segment and distribution model.

To capture more business with customers who do not perform service with a Cat Dealer (classified as Do It Myself customers),
Dealers must be more effective in providing advice and selling parts in the absence of direct labor. Promoting condition
monitoring and appropriate preventive maintenance will help convert some Do It Myself customers into becoming Do It With Me
customers.

When service is involved, Dealers must use the most cost-efficient and profitable practices. Remote monitoring, for instance,
allows repair before failure. With the information generated by remote monitoring, technicians enter the field fully equipped with
the necessary parts and tools, maximizing their efficiency and making profitable one-trip field repair a reality.

50
 ACROSS THE TABLE

CORE MODELS
VALUE ADDED AND
COST COMPETITIVE

51
TRADITIONAL
CUSTOMERS
“Cat needs to evolve faster. Help us bring our costs down
and increase equipment reliability and performance.
Unless we remain competitive, we can’t stay in business.”

52
 Traditional customers, big or small, typically purchase and operate in a single
territory. They see the Dealer as a consultant who understands their business and
the solutions that support success. They understand the benefits and up-front costs
of the lifecycle value proposition. High numbers of traditional customers work in
mining, construction, quarry, waste, marine and electric power industries.

WINNER’S PROFILE
» LOYALTY DRIVERS
• Deliver customer value tailored to customers’ business needs
• Be a trusted advisor with deep understanding of the customers’ business

» CUSTOMER-FACING SUCCESS FACTORS

• Order-to-Delivery Experience (measured through Initial Purchase survey)
• Productivity and Performance (measured through Product Use survey)
• Total Cost of Ownership (will differ per customer based on expectations)
• Uptime (based on customers’ own measurement)

» CRITICAL CAPABILITIES AND METRICS

PEOPLE I N D U S T R Y U N D E R S TA N D I N G
Sales Training Certification Visible in the Industries We Serve
Individual learning plan for all Trade associations, shows, events, journals
reps and technicians
Train-the-Trainer Capabilities Local Competitive Battlefield
Leverage internal skill sets for PINS/Sales by family vs. key competitors
knowledge transfer Deep intelligence on local competitive tactics

SALES AND MARKE TING PRODUCT SUPPORT

Participation and Closure Rate
Timely, accurate reporting across all industries
Harvest Enablers
Drive POCA (Percent of Connected Assets), VL (VisionLink)
and Cat EMSolutions (Equipment Management)
Service Excellence
Achieve recommended status by established year
Delivered On Time in Full (OTIF) %
Parts orders completely filled by customer required date

L E A D E R S H I P A C C O U N TA B I L I T Y O P E R AT I O N A L E F F I C I E N C Y
Excellence in People Development Distribution Cost
Long-term workforce development strategy Lowest-cost structure that delights customers

Excellence in Foundational Capabilities Revenue and Gross Margin Balance

Accountable people for measuring and improving Across New, Used, Rental, Parts, Service

53
 IDENTIFYING TRAITS
Traditional customers value productivity and safety solutions and seek to reduce
their costs. They also value a business partner who can help them achieve greater
efficiency. They are concerned about downtime and the parts and labor costs of
scheduled and unscheduled maintenance.

Relationships are high-engagement, face-to-face and business-to-business.

» AT ACQUISITION, TRADITIONAL CUSTOMERS NEED

• Responsive sales and technical staffs

• Easy access to information
• Help navigating complicated regulations
• Detailed quotes
• Easy access to finance offerings with simple credit processes, for acquisition of equipment, parts,
service and working capital financing
• Equipment performance and reliability
• On-time delivery and training
• Fully enabled equipment monitoring

» FOR PRODUCT SUPPORT, TRADITIONAL CUSTOMERS NEED

• Trained technicians
• Preventive maintenance
• Customer Service Agreements and extended Warranties
• Competitive pricing based on purchase volumes
• Flexible parts solutions
• Fair trade-in value

Consistent product support includes on-shelf parts availability, parts kits for Do It Myself customers, repair before failure,
same-day, on-site diagnosis, no-charge loaners and fast handling of “outside warranty” issues.

54
 ACROSS THE TABLE

HOW WE WIN WITH

TRADITIONAL
CUSTOMERS
INDUSTRY UNDERSTANDING

Best-in-class Dealers understand the market because they are involved in the businesses their customers serve. They know their
customers as well as the products that help their customers achieve success. As a result, customers see best-in-class Dealers as
trusted partners, not suppliers.

Best-in-class practices
• Active participation in trade associations
• Subscribing to industry trade journals
• Using focus groups and town halls
• Participating in and sponsoring local trade shows
• Hosting industry-focused events rather than product-focused events
• Interacting with customers through social media
• Creating in-territory customer advocates
• Publishing articles in local trade magazines

Additional Power Systems best practices include

• Identifying and maintaining relations with key electrical consultants and contractors
• Mapping and understanding key industry groups of potential customers
• Using query responses and seminars to help electrical consultants satisfy their customers

55
SALES AND MARKETING EFFECTIVENESS

Best-in-class Dealers assign account managers and sales people to act as the single point of contact and accountability across
the full Cat machine portfolio. Managers and sales people know the key products that drive their industry locally and have the
expertise to pull together a complete solution, whether it involves GCI, BCP, Power Systems, product support, CFSC (Caterpillar
Financial Services Corporation) or CFIS (Caterpillar Financial Insurance Services Corporation). On the Power Systems side,
customers require specialized knowledge by sales people who deliver solutions for their unique power needs.

Best-in-class practices

• Implementing a robust competitive intelligence process

• Using an automated, synchronized CRM (Customer Relationship Management) process integrating new,
used, rental and product support
• Using e-marketing to help customers quickly access information at the start of the buying process
• Conducting regular sales team meetings, driven by real-time CRM data
• Involving product support and rental in sales meetings
• Ensuring management access to all customers in the CRM system
• Planning the customer experience beyond the initial sale
• Using a structured, visible resolution process to delight customers
• Defining budget and personnel for Power Systems marketing initiatives
• Developing product and industry experts to support sales and service representatives
• Integrating products and existing systems into a seamless solution
• Training staff to sell to smaller B2B (Business-to-Business) and B2C (Business-to-Customer) accounts
before moving them to more complex accounts
• Forming alliances with suppliers of complementary equipment
• Coordinating Customer Service Agreements / Extended Service Coverage experts and sales representatives
• Pulling managers from CFSC and CFIS groups to help develop solutions. Finance and insurance solutions are
among the most frequently used tools to help sell our products

Additional Power Systems best-in-class practices

Best-in-class Dealers are increasingly delivering projects, not simply products. Delivering projects helps Dealers compete strongly
against low-cost competition without the necessary expertise. It also helps align their margins with the increased risk.

• Employing sales and sales support personnel skilled in contract negotiations

• Using detailed pre- and post-sales application engineering to ensure trouble-free operation
• Employing a strong risk assessment process
• Clearly defining milestones and handoffs
• Using a strong project execution team to handle engineering, customer interface, purchasing delivery,
site installation, commissioning and hand-over

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 ACROSS THE TABLE

PRODUCT SUPPORT EFFECTIVENESS

Product support depends on strong parts distribution networks, on-site responsiveness, highly-skilled technicians and the use
of technology-enabled solutions to maximize uptime and minimize cost.
Most power equipment requires a seamless interface with existing customer-supplied equipment. Therefore, knowing interface
requirements and being able to troubleshoot these issues are a key area of expertise. Customer equipment-usage analysis
makes Dealers more competitive. Condition-based monitoring may lead to solutions including remanufactured or classic parts.

Best-in-class practices

• Investing in daily deliveries from a central warehouse to satellite branches

• Staffing technicians and parts specialists 24/7
• Investing in on-site technicians for a goal of 100 percent uptime for critical machines on large projects
(construction) or key processes (steel mill)
• Investing in on-site consignment stock for major components
• Registering all customers for PartStore the day they make their first purchase of parts or machines, providing
a credit toward the first on-line parts purchase, and for customers who do not perform the service of their equipment
through a Cat Dealer (Do It Myself customers), filling their “order basket” when maintenance is due
• Partnering with local educational and training institutions to develop a pipeline of qualified apprentices to
become Cat Certified Technicians
• Training technicians to engage and interact with customers on-site through all phases of the seed,
grow, harvest business model
• Enabling equipment management, productivity, safety and sustainability solutions for all new,
used and rental machines
• Expanding the CRM system to capture customer analytics generated via Product Link
• Investing in consulting services to help customers reduce waste at the shop, site and enterprise levels
• Investing in advanced electrical services experts to resolve interface issues
• Optimizing customer costs through condition-based equipment servicing and
parts replacement options— including remanufactured and classic parts

OPERATIONAL EFFICIENCY

In comparison to retail customers, traditional customers are willing to pay more for relationships. However, cost discipline
remains important because it is hard to calculate a relationship’s return on investment.
The Dealer’s ability to keep traditional customers happy is proportional to the Dealer’s ability to effectively execute solutions
across the lifecycle. Many solutions—including Certified Rebuild and condition monitoring centers—require significant capital
investments, which can only be generated by a profitable business.

57
RETAIL
CUSTOMERS
“I’m not big enough to be an important customer.”

58
 Retail customers operate within a single Dealer’s territory and look for a retail, not
business-to-business, experience. They value proximity and ease of doing business.
They are not easily attracted to Dealer product support solutions. They are often more
influenced by initial price and credit availability than lifecycle value.

High numbers of retail customers are found in construction and quarry, industrial and
waste, agriculture and retail Electric Power. They can be found using BCP, used and GCI
equipment.

WINNER’S PROFILE
» LOYALTY DRIVERS
• Willingness to refer Caterpillar and its Cat Dealer

» CUSTOMER-FACING SUCCESS FACTORS

• Product availability
• Ease of financing
• Cost of service

» CRITICAL CAPABILITIES AND METRICS

PEOPLE I N D U S T R Y UNDE RS TA NDING
Soft skills and product training plan Understanding of competitive environment
and benchmark

S A L E S A ND M A RK E T ING P RODU C T SU P P O R T
Participation and closure rate Standard job utilization
Revenue from new customers Flat rate variance
Used to new sales ratio Sales and margin mix

L E A DE RSHIP AC C OUN TA BIL I T Y O P E R AT ION A L E F F ICIE NC Y

Segment leader with foundational capability Direct and indirect expenses
Separate business financials, viewed holistically Gross margin and cost of sale

59
 IDENTIFYING TRAITS
Retail customers are extremely price sensitive and focused on cash flow. They use
equipment for multiple tasks and often perform their own service or use a third-party
service provider. While loyal during the warranty period, they believe Cat Dealer product
support solutions are not within their budgets and that they are not important customers
to their Cat Dealers.

They tend to be owner-operators, and they are spread over a wide geographical area. Retail
customers are more likely to find us than we are to find them. Easy access to high quality
information (on-line) is critical.

» AT ACQUISITION, RETAIL CUSTOMERS NEED

• A welcoming retail presence and menu of solutions options

• “Pay as you go” solutions
• Simple, accurate and unassisted online product research and quotation solutions
• Monthly payments, credit and assurance of low operating costs, reliability, versatility, safety and ease of use
• Accurate and timely product delivery and handover
• Access to training, including operator, safety training, or improving the financial performance of their business

» FOR PRODUCT SUPPORT, RETAIL CUSTOMERS NEED

• Tiered, cost-competitive solutions

• Easily accessed retail parts channels and parts kits
• Short-term, non-contractual preventive maintenance solutions
• Fixed-price repair solutions
• Fully inclusive warranty solutions
• Dealer-provided procedures and notifications to guide preventive maintenance
• Product support that is on time, predictable, on budget and right the first time

60
 ACROSS THE TABLE

HOW WE WIN WITH

RETAIL
CUSTOMERS
ACCOUNTABLE LEADERSHIP
Best-in-class Dealers have a clear retail strategy that is communicated to the entire organization. They employ a holistic
approach to the business, combining the benefits of new, used, rental and parts and service.

Best-in-class practices

• Using a dedicated, retail-focused sales organization empowered to “sell the house”

• Encouraging a culture of establishing and maintaining personal customer relationships
• Generating separate financial statements that clarify the contributions and profitability of retail
• Setting up a separate legal entity or division with a retail focus

61
SALES EFFECTIVENESS

Best-in-class Dealers create customer “pull” in a cost-effective and targeted manner. The retail model cannot profitably support
traditional direct sales prospecting alone. Instead, Dealers create pull by complementing traditional sales methods with:

• Internal telephone sales team for prospecting, qualifying and identifying

• Industry trade events
• Regular customer events to encourage Dealer and customer interaction
• Web, social media presence and tools to track lead generation
• Monthly newsletters with product news and offers

Best-in-class practices

• Same-day response to queries, lead-generation results

• Solutions-focused sales force, as opposed to product-focused
• Tracking all customer interactions, including technical support
• Driving lead generation using information from industry associations, government reports and purchased lists,
and employing a robust follow up process
• Commitment to CRM/lead management systems

COVERAGE

High coverage—locations and sales—is important. Retail customers don’t travel far. Build a strong sales funnel with
the right number and frequency of sales calls. Participate in all sales opportunities.

Best-in-class practices

• Several branches, one telephone contact center

• Retail-friendly facilities with trained sales staff
• Clear, direct and helpful product materials
• Diversified product offerings—new, used, rental, work tools—and varied purchase offerings
• Easily accessed or co-located rental business
• Rental/retail combination representatives in rural areas to increase coverage
• Simplified credit application, fast response
• Competing on product availability through quick delivery and sufficient inventory
• Rolling inventory pipeline
• Improving inventory forecasting and management—identifying fastest moving products
• Using authorized sales and service centers to complement the Dealer’s footprint

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 ACROSS THE TABLE

PRODUCT SUPPORT EFFECTIVENESS

Use a retail orientation in product support as well as sales. Best-in-class Dealers have effective pre-delivery processes to
introduce the customer to their support organization. Support contracts are pre-determined, parts availability is best in class
and customer inquiries are handled quickly and tracked in the Dealer’s CRM system.

Best-in-class practices
• Continually researching and adapting to the needs of the industry
• Employee training for the retail environment
• Having a dedicated technical support line
• Reviewing, improving and promoting flat-rated service and installation packages
• Showing commitment to servicing small equipment in a timely manner
• Focusing on Do It Myself and over the counter customers with a clear retail parts marketing strategy

OPERATIONAL EFFICIENCY

Running a lean operation ensures Dealers maximize profits. Retail requires low overhead— and achieving economies
of scale.
Best-in-class Dealers work to sell the house with each customer interaction. Service shop financials are focused on
flat rates, rather than time and materials. Dedicated leadership focuses on affordability while driving key actions to
grow the business.

63
RENTAL
AND USED
CUSTOMERS
“I was not sure what I needed to complete my job.
They found the most efficient way to do it.”

» “

64
 As they seek to reduce overhead and risk and improve their operating costs,
customers that rent look for consistent local solutions across a wide range of
products and configurations. At the same time, changing economics and escalating
new equipment acquisition costs are driving other customers to increasingly look for
used equipment solutions.

WINNER’S PROFILE
» LOYALTY DRIVERS
• Wide selection of rental options; knowledgeable customer staff; accuracy and timeliness of invoice
• For used, condition of equipment “as agreed” when delivered and ease of doing business

» CUSTOMER-FACING SUCCESS FACTORS

• For rental, net loyalty score (% of loyal customers - % at risk)
• For used, new customer acquisitions from promotion and sales of used equipment

» CRITICAL CAPABILITIES AND METRICS

PEOPLE
Percent of rental workforce trained on rental program;
each key position has its specific training with
certification
For used, ongoing training of used workforce
I N D U S T R Y UNDE RS TA NDING
For rental, country market study to get rental penetra-
tion ($); bi-yearly rental rates survey/benchmarking;
segmented rental marketing plan based on VOC
For used, segmented used marketing plans; used
prices tracked and supported

S A L E S A ND M A RK E T ING
For rental, percent of customer base covered
(coverage study); growth of customer base
(Active – Inactive/Dormant + New)
For used, # used sales to new customers;
percent differentiated used vs. total used sales
P RODU C T SU P P O R T
Rental fleet POCA; POPS from rental channels
For used, # of new customers from mid-life used
equipment transactions; percent of used sales
connected (Product Link)

L E A DE RSHIP AC C OUN TA BIL I T Y O P E R AT ION A L E F F ICIE NC Y

For rental, PINS contribution in line with country
rental penetration ($) for BCP, GCI, GP, MIN;
percent of rental industry revenue for Power
For used, Dealer used revenue; used sales to new
sales ratio ($)
Rental & used operational excellence certification
of five stars
For machine and rental power: ROFA (Return on Fleet
Assets), EBITDA, ROCE (Return on Capital Employed),
P&L + B/S (recommended)
Used inventory turns

65
 IDENTIFYING TRAITS
Rental and used customers can be small or large. Customers who rent may use rental as
a primary or supplementary solution. They are economically better off renting, but they
may own other Cat equipment. Customers in the used market are knowledgeable, perform
significant research and are comfortable trading used assets.

High numbers of used customers are found throughout the entire machine (resources
industries/mining, construction and quarry, agriculture, paving, on-highway truck) and power
system portfolio (with the exception of marine pleasure craft).

» RENTAL CUSTOMERS NEED

• Flexibility and responsiveness

• Consultation on proper equipment application
• Equipment availability and on-time delivery
• Best value for the money
• Equipment reliability/replacement equipment provided immediately

Adapt rental solutions to rental market penetration

Low penetration (<20%)
New, used
Finance lease, operating lease
Rental-purchase-options (RPO)
Rent to sell
Medium penetration (20-40%)
All of the above, plus:
Rental services (be the first mover)
Rental power
High penetration (>40%)
All of the above, plus:
Specialized rental services, Cat and allied products
Rental power, temperature control, compressed air

» USED CUSTOMERS NEED

• Solutions to manage cash flow

• Financing options
• Equipment availability
• Quality inspection information
• Market-priced offerings
• A range of price points

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 ACROSS THE TABLE

» MARKET TRENDS

Competitive dynamics in the rental business have evolved over the last few years. The rental penetration grew from less than
5 percent to nearly 30 percent of the global industry in less than 20 years, creating what is now a $28 billion market (machines
sold to rental). Rental Power also represents a significant opportunity of $8 billion annually. It is also expected to grow at a faster
pace than the rest of the industry. This growth is driven by our customers’ desire to reduce risk, improve return on assets, and
to better and more flexibly manage capital and expenses. When renting equipment, customers expect ease of doing business,
product availability, proximity and awareness. Customers also look for used options to reduce their acquisition cost.

The used market is estimated at $50 billion. When looking for used, customers expect: ease of doing business, speed of
pursuing opportunities to buy and sell, brand reputation, specific hours/age availability, machine information, internet presence,
trustworthiness and price positioning.

» COMPETITIVE DEVELOPMENTS
Our customers’ demand for acquisition options is met by a wide variety of solutions that vary from region to region. There are
sophisticated, large national rental companies, local “mom and pop” rental companies, OEM Dealers and even contractors who
subcontract themselves by the day, by the yard or by the job. Some competitive OEMs have developed solutions tailored to rental
companies’ specific needs and participate in the rental industry by delivering products and solutions to the rental channels. Other
competitive OEMs are offering rental solutions directly to customers.

Auctions and brokers dominate the used equipment business in some regions.

» CATERPILLAR AND CAT DEALER CURRENT STATE

As the business grows, our Dealers bear an increased resource burden. Rental fleets are rapidly becoming the largest asset class
at Dealers. Historically, when well-managed, they could produce good returns. However, the large rental fleets necessary to
support business demand must be actively managed in an economic downturn. Caterpillar and Dealers will not be able to achieve
and sustain PINS leadership without effectively participating in the rental and used equipment businesses.

» BURNING PLATFORM

To remain in line with the industry growth and rental penetration, Dealers must invest heavily in their rental fleets. They will
need to adopt strong rental operations to secure attractive returns. At the same time, Dealers will need to triple used sales by
capturing a larger portion of the Cat used business, specifically in the early—and mid-life segments. To achieve this growth,
Caterpillar needs to invest in Dealer distribution capabilities by offering attractive returns through growth plans, products and
financial solutions as well as strong leadership and expertise in rental and used.

» CATERPILLAR MODELS FOR RENTAL AND USED

Rental and used equipment contributes to the Caterpillar business model. It helps build a working and connected field population.
Rental fleets create various price points. Returns are optimized through the equipment lifecycle. Dealers who win maximize total
Dealer returns.

As rental penetration grows, Dealers must improve their distribution capabilities by offering new, used, rent to sell, rental
services/rental power and job site solutions. In some territories and for utility products or specific applications, Dealers may need
to adopt complementary distribution channels such as authorized sales and service centers, rental or used partners, and industry
specialists.

67
» WHAT DEALERS MUST DO

• Meet machine PINS (in line with industry rental penetration), power and used targets
• Adopt seed, grow, harvest principles and models
• Align with winner’s profiles and deliver on customer experience
• Develop and execute rental and used growth plans

» WHAT CATERPILLAR MUST DO

• Allow Dealer to earn attractive returns through the life cycle

• Offer fleet financing and risk sharing solutions
• Support differentiated used and on-line capabilities globally
• Develop rental products and velocity solutions

» GOVERNANCE AND NEXT STEPS

Growth plans will be established to ensure ongoing growth and support; the plan may involve significant changes in the Dealer
strategy to meet the long-term goals. Growth plans will create alignment among all parties (Dealers, Caterpillar industries,
Distribution Services Divisions - DSDs, Caterpillar Financial Services Corporation (CFSC), Caterpillar Financial Insurance Services
Corporation (CFIS). An effective, comprehensive enterprise rental and used strategy, executed with necessary regional adjustments,
will help further improve the Caterpillar and Dealer competitive advantage for years to come.

68
 ACROSS THE TABLE

ACCOUNT
MANAGEMENT MODELS
BUILDING UPON THE CORE

69 69
PRODUCTION-
CRITICAL
EQUIPMENT
CUSTOMERS
“This equipment is critical to our business.
We simply cannot afford unplanned downtime. Period.”

» “

70
 Production-critical equipment customers include regional and global companies and state-
owned enterprises. They seek a collaborative relationship with Caterpillar and multiple
Cat Dealers. They expect 24/7 runtime. Unplanned downtime hurts their productivity and
can halt production at their operations. High numbers of production-critical equipment
customers work in mining, petroleum and commercial marine industries.

Production-critical equipment is essential to the customers’ operation. Examples: the prime

power in a ship/drill rig, the loading tool for a fleet of trucks, a dragline or a longwall
or continuous miner.
 

WINNER’S PROFILE
» LOYALTY DRIVERS
• Physical availability
• Low total cost of ownership
• Productivity

» CUSTOMER-FACING SUCCESS FACTORS

• Fleet uptime/availability (based on customers’ own measurement)
• Time to service (Mean Time Between Failure, Repair, Shutdowns)
• Parts availability (delivered on time in full)
• Fleet total cost of ownership (measured by customer vs. expectations)

» CRITICAL CAPABILITIES AND METRICS

PEOPLE I N D U S T R Y UNDE RS TA NDING
Safety performance (RIF: Recordable Injury Frequency) Loyalty index
Capacity and capability Forecasting accuracy—parts and prime product

S A L E S A ND M A RK E T ING P RODU C T SU P P O R T
Value selling capability (TCO: total cost of ownership) On-site response time
Account strategy and management Diagnose right the first time
Equipment application and operation Parts availability on time in full
Specialized sales consultants (drills/data center) Rebuild project management/planning/scheduling

L E A DE RSHIP AC C OUN TA BIL I T Y O P E R AT ION A L E F F ICIE NC Y

Rapid decision making to remove delays Profitability solutions (MARC, Equipment Care Advisor)
Emphasis on customer communication Deliver lowest total cost of ownership

71
 IDENTIFYING TRAITS
Production-critical equipment customers pay close attention to lifecycle cost, not just the
purchase price. They place a high value on productivity, reliability, mean time between
failure, mean time to repair, mean time between shutdowns and operating costs. They
understand our lifecycle value proposition.

They seek a customized, consultative approach from Caterpillar and Cat Dealers, justifying
the higher cost to serve when compared to retail customers. A large percentage of them
attend trade shows like MINExpo and CONEXPO.

» AT ACQUISITION,
PRODUCTION-CRITICAL EQUIPMENT CUSTOMERS NEED

• New, application-specific equipment with great longevity, often customized

• Solutions optimized for the job site
• High performance and productivity
• Lowest owning and operating costs over the lifecycle

» FOR PRODUCT SUPPORT,

PRODUCTION-CRITICAL EQUIPMENT CUSTOMERS NEED

• High-quality support over the equipment lifecycle

• An emphasis on preventive maintenance
• Maintenance and Repair Planning and Project Management Capability
• Accountable business partners able to make rapid decisions
• Rapid troubleshooting and repair
• High-dollar, low-turn parts
• Market-based pricing

The parts side of the business includes long lead times, MARC (Maintenance and Repair Contracts) agreements, service
exchange/rebuild components, product upgrades over the lifecycle and on-time parts delivery. Maintenance must be planned
in advance around production and supported by skilled technicians with specific skill sets.
 

72
 ACROSS THE TABLE

HOW WE WIN WITH

PRODUCTION-
CRITICAL EQUIPMENT
CUSTOMERS
INDUSTRY UNDERSTANDING

Best-in-class Dealers understand the market because they are involved in the industries their customers serve. They understand
their customers’ needs as well as the equipment they use. And they are ready to support equipment with a lifespan of 25 to 40
years, acting as trusted partners of their customers, not as suppliers.

Best-in-class practices

• Active participation in trade associations

• Subscribing to industry trade journals
• Using focus groups and town halls
• Participating in local and global trade shows
• Hosting industry-focused events rather than product-focused events
• Interacting with customers through social media
• Creating in-territory customer advocates
• Publishing articles in local trade magazines

73
On the power systems side, best practices include
•
Identifying and maintaining relations with key electrical consultants and contractors
•
Mapping and understanding key industry groups of potential customers
•
Using query responses and seminars to help electrical consultants satisfy their customers

SALES AND MARKETING EFFECTIVENESS

Best-in-class Dealers assign account managers to act as a single point of contact and accountability. Managers know the key
products that drive their industry locally and have the expertise to pull together a complete solution, whether it involves CGM,
GCI, BCP, Power Systems, product support, CFSC or CFIS.

Best-in-class practices
• Using an automated, synchronized CRM process integrating new, used, rental and product support
• Conducting regular sales team meetings, driven by real-time CRM data
• Involving product support in sales meetings
• Ensuring management access to all customers in the CRM system
• Planning the customer experience beyond the initial sale
• Using a structured, visible resolution process to delight customers

Delivering overall value

• Developing and maintaining a pool of product and industry specialists to help sales representatives
• Investing in an in-house training department
• Training staff to sell to smaller B2B and B2C accounts before moving them to more complex accounts
• Attending Big Iron University or product support training

PRODUCT SUPPORT EFFECTIVENESS

Product support depends on strong parts distribution networks, on-site responsiveness, highly skilled technicians, labor for peak
shaving and large projects, specialty tooling and the use of technology-enabled solutions to maximize uptime and minimize cost.
Supporting production-critical equipment in the shop and field takes strong project management skills.

Best-in-class practices
• Investing in daily deliveries from a central warehouse to satellite branches
• Staffing technicians and parts specialists 24/7
• Investing in on-site technicians for 100 percent uptime
• Inventory in off-the-shelf or on-site remanufactured and exchange inventory
• Registering all customers for PartStore the day they make their first purchase of parts or machines, providing a credit
toward the first on-line parts purchase, and (for Do It Myself customers only) filling their “order basket” when
maintenance is due
• Partnering with local educational and training institutions to develop a pipeline of qualified apprentices to become
Cat Certified Technicians
• Training technicians to engage and interact with customers on-site through all phases of the seed, grow, harvest
business model

74
 ACROSS THE TABLE

•
Training personnel to support machine assemblies and outages that can vary in length from one day to two years
•
Support governmental and local regulatory certified mechanical, electrical and machining crews
•
Employing electrical technicians with troubleshooting and controls knowledge of high-voltage AC and DC equipment
• Investing upfront to connect all new, used and rental Cat machines to enable Equipment Management, Productivity,
Safety and Sustainability solutions
•
Capturing customer analytics generated by Product Link in CRM system
•
Investing in consulting services that reduce waste from customers’ businesses—at shop, site and enterprise levels
•
MARC contracts and site performance projects

OPERATIONAL EFFICIENCY

Compared to retail customers, production-critical equipment customers are willing to recognize the costs involved and the
investments required for supporting their production. However, cost discipline remains vitally important alongside regular
provision of KPI (Key Performance Indicator) reporting on service levels to the customer.

Unlike support equipment, the loss of production-critical equipment can shut down an operation. The Dealer’s ability to keep
production-critical equipment customers happy is proportional to their ability to effectively execute solutions across the lifecycle.
Many solutions—including Certified Rebuild and condition monitoring centers and certified crews—require significant capital
expenditures, which can only be generated by a profitable business.

75
CROSS-
TERRITORIAL
CUSTOMERS
“I expect Caterpillar to be easier to do business with.
Why must our experience in every territory be different?”

76
 With permanent operational footprints that span across several Dealer service
territories, these customers require consistency in their day-to-day experience with the
Dealer network and an integrated approach to acquisitions.
 

WINNER’S PROFILE
» LOYALTY DRIVERS
• Caterpillar and Cat Dealer network’s ability to deliver consistent, tangible value in a non-complicated manner,
across all aspects of relationship

» CUSTOMER-FACING SUCCESS FACTORS

• Dedicated account manager (Caterpillar and Cat Dealer)
• Account profile and strategy (understood by all in-scope Cat Dealers)
• Service letter completion (measured at customer level—uptime enabler)
• Fleet uptime/availability (based on customers’ own measurement)
• Fleet total cost of ownership (measured by customer vs. expectations)

» CRITICAL CAPABILITIES AND METRICS

PEOPLE I N D U S T R Y UNDE RS TA NDING
Account coverage Account awareness
Account manager and PSSR assigned 100% of account’s local sites are covered
Account communication Voice of customer
Engaged in critical path strategies process and utilizing CRM 100% captured and communicated to Caterpillar

S A L E S A ND M A RK E T ING
Awareness, participation and closure
Timely, accurate reporting at account level
Harvest enablers
Drive POCA (Percent of Connected Assets), VL (Vision Link)
P RODU C T SU P P O R T
Sales response time
Tailored to customers’ specific needs
Delivered On Time in Full (OTIF) %
Parts orders completely filled by customer required date

L E A DE RSHIP AC C OUN TA BIL I T Y O P E R AT ION A L E F F ICIE NC Y

Ease of doing business Local performance reviews
Consistent execution of customer agreements, Caterpillar, Cat Dealer and customer
commercial terms and standards
Account loyalty
Customer value survey (CVS) for each account

77
 IDENTIFYING TRAITS
Cross-territorial customers can be state-owned enterprises or regional and global businesses.
Equipment is negotiated in the customers’ home territory, but used in other Dealer service
territories. They prefer a single point of contact, and they buy equipment and lifecycle
services and solutions. They buy parts globally and use them locally.

They require consistent sales and product support capabilities across service territories.
Cross-territorial customers tend to be medium- to large-sized organizations.

» AT ACQUISITION, CROSS-TERRITORIAL CUSTOMERS NEED

• Equipment performance
• Competitive operating and ownership costs
• Competitive acquisition cost
• Equipment reliability
• Finance coordination
• Global reach and capabilities
• Power Systems: pre-sales support, including project engineering and project management
• Single point of contact with selling Dealer, OEM or Caterpillar (if required) to leverage purchasing power
• Assurance that Dealers will work together with OEM or Caterpillar (if required) to support equipment
across all service territories
• Work with local Dealers for product support plan

» FOR PRODUCT SUPPORT, CROSS-TERRITORIAL CUSTOMERS NEED

• Global collaborative team with regional contacts to facilitate consistent product support across service territories
• Track and monitor all equipment remotely across territories
• Up to date product knowledge (and tools)
• Scheduling (speed of response and completion of work)
• Accuracy of work (correct first time)
• Parts availability (within 24 hours—all parts types)
• Fair prices and consistent terms and conditions (only small variations expected across regions)
• Availability of added-value services (such as S•O•S™ - Scheduled Oil Sampling)
• Warranty claims honored
• Customer PM (Preventive Maintenance) contracts fulfilled
• Priority treatment during unscheduled repairs irrespective of relationship with local Dealer
• Professionalism/appearance of technicians (specifically, pleasure craft)

78
 ACROSS THE TABLE

HOW WE WIN WITH

CROSS-TERRITORIAL
CUSTOMERS
Customers increasingly transact across territories and regions, although they may have fixed operations in each territory
or region. Cross-territorial customers desire a consistent experience across the purchase cycle (pre-sales, sales and post-
sales) as well as ease of doing business. Serving these customers effectively and satisfactorily wherever they operate is
essential to increasing share of wallet and to ensuring loyalty to the Cat brand. As such, winning these customers requires
us to change our traditional approach while building on aspects that have worked well in the past.

The named accounts strategy is the recommended coverage model for cross-territorial customers.

79
MOBILE
CUSTOMERS
“I need to know that no matter where we are in the world the local
Dealers will deliver the same level of support.”

80
 Mobile customers use equipment outside of the service territory where it was
purchased, but do not have permanent operational footprints in any territory. They
need a coordinated and consistent product support performance across Dealer
service territories, regionally and globally.

WINNER’S PROFILE
» LOYALTY DRIVERS
• Caterpillar and Cat Dealer network’s ability to deliver consistent, tangible value in a non-complicated manner,
across all aspects of the relations
• Caterpillar and Cat Dealer network’s ability to embrace and support the customers’ need to move equipment
all around the world

» CUSTOMER-FACING SUCCESS FACTORS

• Order-to-delivery experience (from initial specification to final delivery)
• Availability of parts and service (what they need, wherever they go)
• Total cost of ownership/lifecycle cost (to help their bottom line)
• Uptime (works when they need it)

» CRITICAL CAPABILITIES AND METRICS

PEOPLE I N D U S T R Y UNDE RS TA NDING
Account coverage Account awareness
Account manager and PSSR assigned 100% of account’s local sites are covered
Account communication Voice of customer
Engaged in critical path strategies process 100% captured and communicated to Caterpillar

S A L E S A ND M A RK E T ING P RODU C T SU P P O R T
Awareness, participation and closure Service response time
Timely, accurate reporting at account level Tailored to customers’ specific needs
Harvest enablers Delivered On Time in Full (OTIF) %
Drive POCA (Percent of Connected Assets), VL (Vision Link) Parts orders completely filled by customer required date
usage and Cat EMSolutions

L E A DE RSHIP AC C OUN TA BIL I T Y O P E R AT ION A L E F F ICIE NC Y

Ease of doing business Local performance reviews
Consistent execution of customer agreements, Caterpillar, Cat Dealer and customer
commercial terms and standards
Account loyalty
Customer value survey (CVS) for each account

81
 IDENTIFYING TRAITS
Mobile customers include a high number of contractors. Most are medium to very large
organizations with the exception of pleasure craft customers, which are usually small
businesses or privately owned. They tend to purchase in one service territory and use in a
different one. They have no fixed operations; equipment moves across territories because of
the nature of the business (marine) or new business (resources).

They buy Cat equipment from the Dealer or as part of OEM product. Some customers have
no relationship with local Dealers. High numbers of mobile customers are found in resources
industries/mining, construction and quarry, global pipeline, on highway truck, petroleum,
marine commercial and marine pleasure craft.

» AT ACQUISITION, MOBILE CUSTOMERS NEED

• Equipment performance
• Operating and ownership costs
• Equipment reliability
• Global Dealer network
• Assurance that Dealers will work together with OEM or Caterpillar (if required)
to support equipment across all service territories
• Single point of contact with selling Dealer (or OEM) to leverage purchasing power
• Demonstrated global collaborative team with regional contacts to facilitate consistent
product support across service territories
• Finance coordination

» FOR PRODUCT SUPPORT, MOBILE CUSTOMERS NEED

• Local Dealers for product support

• Servicing Dealer to be informed that equipment is entering their service territory
• Consistent product support performance across all service territories
• Up-to-date product knowledge (and tools)
• Scheduling (speed of response and completion of work)
• Accuracy of work (correct first time)
• Parts availability (within 24 hours—all parts types)
• Fair prices and consistent terms and conditions (only small variations expected across regions)
• Availability of added-value services (such as S•O•S)
• Warranty claims honored
• Customer preventative maintenance contracts fulfilled
• Priority treatment during unscheduled repairs irrespective of relationship with local Dealer
• Professionalism/appearance of technicians (specifically, pleasure craft)

82
 ACROSS THE TABLE

HOW WE WIN WITH

MOBILE CUSTOMERS
Mobile customers purchase their equipment in one location and use it one or multiple other locations. These customers
require a similar consistency of experience and ease of doing business—just like cross-territorial customers. In addition,
given that the equipment can be operated in other than the purchase location, mobile customers expect consistent Dealer
service and support wherever they operate.

Winning with mobile customers thus requires a model that ensures and enables consistency of the customer experience.
The named accounts strategy was developed with this need in mind and is the recommended coverage model for mobile
customers.

83
OEM
CUSTOMERS
“I need to know I can count on Caterpillar to be a trusted supplier
delivering value in my process and that my customers can count
on your global footprint for support”

84
 This model primarily concerns the relationship to the OEM, but it is also relevant
to end users who buy the OEM’s product. OEMs need a flexible supplier that adds
value at acquisition (customization and risk sharing) and provides product support
to both the OEM and end users, anywhere in the world.

WINNER’S PROFILE
» LOYALTY DRIVERS
• Caterpillar and Cat Dealers recognize the OEM’s equipment and brand—and that our product is just one
component within the OEM’s integrated offering
• Caterpillar and Cat Dealers provide timely, consistent technical and operational support to OEM’s design
and manufacturing activities

» CUSTOMER-FACING SUCCESS FACTORS

• Order-to-delivery experience (their experience up to taking delivery)
• Technical information (easily accessible and collaborative)
• Local support (in line with our brand promise where OEM has Dealer network)
• Superior Cat product features (value add to the OEM’s integrated offering)

» CRITICAL CAPABILITIES AND METRICS

PEOPLE I N D U S T R Y UNDE RS TA NDING
Account coverage Account awareness
Account manager and PSSR assigned 100% of account’s local sites are covered
Account communication Voice of customer
Engaged in critical path strategies process 100% captured and communicated to Caterpillar

S A L E S A ND M A RK E T ING
Awareness, participation and closure
Timely, accurate reporting at account level
Harvest enablers
Drive POCA (Percent of Connected Assets) and
population tracking
P RODU C T SU P P O R T
Service response time
Tailored to meet customers’ requirements
Delivered On Time in Full (OTIF) %
Parts orders completely filled by customer required date

L E A DE RSHIP AC C OUN TA BIL I T Y O P E R AT ION A L E F F ICIE NC Y

Ease of doing business Local performance reviews
Consistent execution of customer agreements, Caterpillar, Cat Dealer and customer
commercial terms and standards
Top supplier
Consistently rated top tier by OEM

85
 IDENTIFYING TRAITS
OEMs package, build or integrate components into larger systems and sell them to end
users. The OEMs are large, influential organizations with regional/national operations. Their
customers are small to large organizations found across other coverage models. OEMs are
more likely to have direct relationships with Caterpillar than Dealers. Some OEMs have their
own Dealer network and may aspire to provide all post-sales and product support.

OEMs tend to be found in high numbers in the petroleum and industrial businesses.
Caterpillar and Dealers are frequently unaware of OEM products in service territories.

» AT ACQUISITION, OEM CUSTOMERS NEED

• Production performance
• Equipment performance, uptime and lowest operating cost
• Global Dealer network
• Decision rights on components sourcing
• Customization and application engineering support from Dealers and Caterpillar
• Accurate and on-time prime product delivery
• Proactive product and solution co-development
• Complete and up-to-date technical reports and specifications in dynamic format

» FOR PRODUCT SUPPORT, OEM CUSTOMERS NEED

• Cat Dealers to support the OEM Dealer network

• Cat Dealers to educate OEM staff on product support practices for Cat components (including tools)
• Cat Dealers to treat OEM end users on a par with their own customers
• The ability to work with other third-party providers
• Consistent product support performance across all territories
• Up-to-date product knowledge and tools
• Speed of diagnosis
• Rapidly honored warranty claims
• Diagnostic ability­— between Cat and OEM components

86
 ACROSS THE TABLE

HOW WE WIN WITH

OEM CUSTOMERS
OEM customers package, build or assemble Cat products into larger systems for sale to end users. They need a flexible
supplier that can add value at acquisition (customization and risk sharing). They often have a direct relationship or prefer a
direct relationship with Caterpillar.

Winning with OEM customers thus requires a model that ensures that Dealers have the capabilities and risk appetite
that these customers desire. The named accounts strategy was developed to accommodate this requirement and is the
recommended coverage model for OEM customers.

87
 SOLUTIONS
CUSTOMERS
“Guarantees, peace of mind, no surprises—that’s what I am
after. I am not looking for a product. I want a solution to my
challenges. I am ready to pay for no hassle.”

» TANGIBLE BENEFITS
98.0% Fleet Availability ($$ Avoided)
28,398 Gal Fuel ($89K) Saved
937 Man Hours ($35K) Saved
580 Hours Idle Time ($45K) Saved

INTANGIBLE BENEFITS
192 Hours Safety Training
8% Smaller Fleet and Less Traffic
Tier 4 Emissions Carbon Footprint
Environmental Compliance (Dust)
Operator Engagement Increased

88
 Solutions customers seek to reduce risks by using various outsourcing models.
Economic uncertainty, debt expenses and cash flow are leading them to demand
more sophisticated, permanent risk-shifting/sharing solutions. They are looking for a
partner to help them succeed.

WINNER’S PROFILE
» LOYALTY DRIVERS
• Customer business performance improvement metrics met

» CUSTOMER-FACING SUCCESS FACTORS

• Customer loyalty
• Contract terms met or exceeded
• Repeat buy/contract renewal

» CRITICAL CAPABILITIES AND METRICS

LE ADERSHIP ACCOUNTABILIT Y SERVICE AND SOLUTION STRATEGY
Investment Documented industry/account strategy
Communications SMART goals and incentives

INNO VAT ION P RO C E S S ORG A NI Z AT ION

Customer involvement Dedicated roles and P&L
Common service development process Deep industry expertise and experience
Consultative selling capability

ME T RIC S C U LT U RE
Percent of revenue from solutions contracts Contracts sold at a profit
Contract profitability Customer focus, regardless of brand

89
 IDENTIFYING TRAITS
Solutions customers can be any size. In general, they seek performance-based agreements
and consultative partners to manage business-related services. They want a long-term
commercial relationship in which the provider contractually delivers against performance
metrics, measures economic value and includes elements of risk and reward shared among
all parties. Some customers may desire a transfer of assets to the provider’s balance sheet.

Growing numbers of solutions customers may be found in resources industries/mining,

construction and quarry and electric power investor, rental and gas segments.

» AT ACQUISITION, SOLUTIONS CUSTOMERS NEED

• Guaranteed costs of operations

• Fleet performance/availability
• Risk management
• Finance coordination
• Product support performance
• Regulatory reporting
• Deep understanding of customers’ critical operations
• Sophisticated solutions that optimize operations and minimize customer risk
• Delivery of contractually based output and productivity levels for a specified price, not just prime product or parts
• A seamless billing process
• Equipment monitoring that optimizes availability with real-time reporting
• On-site expertise to optimize productivity, asset management and safety across full portfolio

» FOR PRODUCT SUPPORT, SOLUTIONS CUSTOMERS NEED

• Extended warranty and service contract options

• Frequent communication on contract performance and recommendations for operational changes
• High-quality, consistent and responsive support performance
• Proactive repair and rebuild scheduling that adapts to site needs
• Fast and accurate diagnosis
• Responsiveness and completion of work
• Accuracy of work (correct first time)
• Priority treatment (unscheduled repairs)

90
 ACROSS THE TABLE

HOW WE WIN
SOLUTIONS
HOW WE WIN WITH
SOLUTIONS
CUSTOMERS
CUSTOMERS
Given the fledgling state of solutions capabilities across most Cat Dealers, best practices are drawn from a small pool of
Dealers and competitor benchmarking.

INDUSTRY KNOWLEDGE

Identifying opportunities and risks requires continuous focus on understanding customer needs, competitor strategies and
business economics. Top Dealer performers work with Caterpillar to both proactively identify solutions opportunities and respond
quickly to customer requests for risk mitigation

Best-in-class practices

• Regularly performing voice of the customer to understand shifting needs

• Developing stream maps and customer economic models that can explain potential areas of value generation
for the customer
• Market research departments that systematically collect and record current and future
needs of customers
• Participating in all higher level service opportunities related to Cat brand and mixed fleet equipment in
their service territory

91
SALES AND MARKETING EFFECTIVENESS

Solutions selling requires a distinct set of salesperson capabilities. Best-in-class Dealers develop and hone a consultative selling
capability in which sales staff works collaboratively with the customer to co-create a customized service solution over a longer,
more complex business engagement process.

The Caterpillar Solutions Group has outlined a solutions commercial manager (SCM) role at the Dealer and Caterpillar level to
coordinate support from other parts of the organization as needed—and an account executive role to identify opportunities
where solutions can provide a competitive advantage and then bring in the SCM.

Best-in-class practices

• Extensive sales team training

• Portfolio solutions/performance guarantees
• Range of technological products
• Accounting/balance sheet implications of solutions
• Consultative sales process
• Contract development and legal terminology
• Cross-functional team
• Driving adoption of technological solutions
• Targeting small and large customers
• Strong cost-forecasting
• Finance coordination

PRODUCT SUPPORT EFFECTIVENESS

Technicians require both industry expertise and business acumen to deliver on the commitments of each solutions contract. The
Caterpillar Solutions Group has outlined a solutions delivery manager (SDM) role to handle contract execution. The SDM is the
single point of contact, with strong technical and business expertise.

Best-in-class practices

• Extensive technician training

• Ability to access and manage tracking technologies, condition monitoring systems
and machine information platforms
• Ability to run advanced analytics and systems
• Data mining capabilities

OPERATIONAL EFFICIENCY
• Dealers must have a strong balance sheet to take on risk and carry additional assets on their books
• The focus of product support operations has to shift from revenue generation to cost management while
meeting customer needs

92
 ACROSS THE TABLE

TOGETHER…
DELIVERING ON THE
GLOBAL NEEDS OF
NAMED ACCOUNTS

93
Many of Caterpillar’s best customers increasingly operate across service territories and regions. These customers
have a set of common needs:

• They seek ease of doing business

• They want fair pricing and consistent terms and conditions regardless of where they are buying
• They expect their suppliers to value their business based on total volume, even though their purchases
may vary widely from one territory to another
• They seek consistent product support performance from one territory to another
• They seek new solutions for managing operational and financial risk (partnering, outsourcing)
Our competitors have targeted these customers because they believe it is more difficult for Caterpillar to provide a consistent
experience because of the differences created by our independent Dealer network.

The named accounts strategy is intended to counter these competitive advances by more directly and effectively addressing the
needs of such customers and providing them with the ease of doing business, recognition and consistency of experience that
they desire.

The preferred mode of serving our customers will continue to be through Dealers.

The named accounts strategy will be employed in those cases where 1) a current customers’ potential (our “share of wallet”) is
not fully being captured as a result of the challenges created by our independent Dealer network or 2) a potential customer is
currently not being served.

THREE KEY ELEMENTS OF NAMED ACCOUNTS STRATEGY

• Maintaining a list of customers by industry that may need to be served through this model
• Assessing the right solution for each named account
• Implementing a governance process to ensure the success of the strategy

IDENTIFYING THE NAMED ACCOUNTS

Each Caterpillar industry group, including CFSC and DSDs, will select eligible customers based on parameters that can vary by
industry. We expect the total number of customers that meet the criteria to range between 600 and 700.

After being selected, each customer will have its own named account customer profile and be entitled to one or more benefits,
such as improved parts availability, product delivery priority and price discounts based on loyalty programs, as permissible.

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ASSESSING THE RIGHT SOLUTION

Customers that have been selected as named accounts will be assigned a dedicated Caterpillar named
account manager responsible for:

• Ensuring the timely resolution of named account customer requests and concerns
• Understanding the customers’ business, needs and opportunities
• Driving consistency of services across territories
• Ensuring alignment across the extended enterprise and maintaining a “lead with solutions” mindset
• Holding regular business reviews with all named account stakeholders
• Enhancing Caterpillar’s value proposition by positioning value-added packages
• Increasing Caterpillar’s revenues and PINS, POPS, Finance and Equipment Protection Plan (EPP)
• PODD by “selling the house”
• Protecting Caterpillar’s core product profitability and avoiding commoditization using CRM systems and
maintaining an accurate view of the customers’ project pipeline

Business with the named account customer may continue as is (transacting through one or more Dealers but with the named
account manager serving as a resource in the background). Or, at the other end of the Caterpillar involvement spectrum, a
framework agreement may be set in place between the customer and Caterpillar.

Dealers will be invited to participate in the agreement based on certain criteria including the Dealer’s existing relationship
with the customer and the capabilities of a Dealer to serve a particular type of customer.

As independent third parties, Dealers are free to opt in or out of the agreement. If a Dealer chooses not to participate,
Caterpillar may invite others with the required capabilities to participate in the agreement. If a Dealer opts in, it must abide by
the conditions established in the framework agreement.

Capability gaps and required actions will be identified by the Dealer, the named account manager and the district manager.

IMPLEMENTING A GOVERNANCE PROCESS

A clear issue resolution process involving account managers, industry groups and DSDs will help ensure the success of the
strategy and provide the desired customer experience.

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A PARTNERSHIP FOR
THE 21st CENTURY

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 ACROSS THE TABLE

MASTERING
THE BASICS
To deliver on the Cat brand promise to our customers in the future means excelling at the basics today and these foundational
capabilities have been reviewed and updated for the 21st century to enable Caterpillar representatives, district managers and
Dealers to collaborate in the assessment, identification and closing of gaps.

CATEGORIES OF FOUNDATIONAL CAPABILITIES

• Values, ethics and compliance
• Human resource development capabilities and operational effectiveness
• Strategic planning, continuous improvement and project management
• Brand
• Marketing capabilities
• Digital capability and technology adoption
• Dealer sales and operations planning (S&OP)
• Selling capabilities – Sell the House (Finance, CSA, Extended Warranty, Work Tools, Technology, etc.)
• Parts sales and operations
• Service operations/capacity and capabilities
• Technology-enabled solutions (connectivity and EMSolutions)
• Rental operations
• Used operations
• Dealer management systems
Consistent standards, definitions and expectations have been set for Dealers worldwide to ensure that the extended enterprise
aligns around “excelling at the basics.”

BUILDING CUSTOMER LOYALTY THROUGH CUSTOMER EXPERIENCE MANAGEMENT

Customer loyalty results from great customer experiences. Customer experience management is about delivering on our brand
promise every day. It’s about creating lasting positive impressions.

Customer loyalty is a leading indicator of PINS performance. Loyal customers are more likely to buy more products, parts and
service, resulting in higher POPS and service DCAL.

Managing the customer experience means successfully managing operational excellence and people’s behaviors and attitudes.
Operational excellence involves repeatable processes. Behaviors and attitudes come into play when processes are executed. Our
people differentiate us in the marketplace and can turn customer issues into opportunities. Our culture should not be left
to chance.

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A great customer culture results from the implementation of a disciplined and consistently executed program, championed by
management, and that encompasses all of the following categories:

• Strategy: We have a clear vision of the experience customers want and use it to guide activities and resources.
• Customer Understanding: We maintain a clear, consistent and accurate picture of target customers and the experiences
they want and need.
• Design: We translate customer understanding into digital and physical experiences that meet or exceed customer
expectations.
• Measurement: We quantify and qualify the quality of the customer experience on an ongoing basis and use the data to
drive continuous improvement.
• Governance: We monitor and manage customer experience quality proactively as part of the multichannel governance
effort with clear roles and responsibilities.
• Culture: We create, grow and maintain a culture in which knowing the customer and delivering a great customer
experience is embedded in our enterprise and Dealer DNA.
Source: Inspired by Forrester Research

We expect a top-level customer loyalty metric to be tracked at the highest level in the Dealership, with genuine engagement
from executive management to follow and act on demonstrated trends.

CUSTOMER RELATIONSHIP MANAGEMENT (CRM) AND ENGAGED CUSTOMERS

CRM is more than an information technology solution; it is a comprehensive tool for managing interactions with current and
future customers. A system must be in place to chronicle historical outreach and contact customers based on past activity.

The CRM process must be consistently used and visible to all departments that interact with customers to integrate new, used,
rental and product support solutions. The CRM Assessment and Guidebook, created by Caterpillar, shares Dealer best practices
and, for those Dealers with less experience in using CRM for product support, a deployment roadmap.

Top-level CRM process for all sales channels includes:

• Business planning
• Customer knowledge management
• Sales planning
• System support
• Lead, opportunity and quotation generation
• Sales funnel management
• Sales performance management

Dealers must encourage internal collaboration between sales and marketing to systematically identify, track and manage sales
opportunities through the stages of opportunity identification, qualification, development, quote and closure. They must provide
comprehensive governance and management of all opportunity coverage with appropriate call rate frequency and a highly
effective professional call process.

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GLOBAL DEALER
S&OP PROCESS
Caterpillar relies on Dealer forecasts

A consistent, disciplined and robust Dealer S&OP process is critical to improving a Dealer’s overall performance and profitability
through ongoing management of machine and engine forecasting, orders and inventory. This process provides Caterpillar with
the Dealer’s demand signal that is used as input in establishing Caterpillar’s internal sales forecast and building plans for the next
several months to enable an improved supply chain and stabilized availability.

Because the process helps to ensure on-time delivery, it is critical to customer satisfaction.

Caterpillar’s internal S&OP process is linked to the Dealer’s S&OP process through a set of common objectives and velocity
metrics that promote alignment and enable a true end-to-end process. This connectivity allows for inventory optimization across
the entire value chain, from supplier, to factory, to Dealer.

The need for formal monthly Dealer S&OP meetings to be conducted

Several success factors are key to ensuring the credibility, accuracy and robustness of a market-driven S&OP process:

1. Formal monthly (at minimum) meetings led by the Dealership, with all four key Dealer S&OP process steps completed
(demand review, supply review, financial review and executive consensus process)
2. Dealer leadership team present and participate actively in the review
3. Key representatives from Caterpillar field teams present and participate actively in the review

Dealer & District Velocity Solution (DDVS) tool must reflect decisions made during Dealer S&OP meetings.

Caterpillar relies on the input provided by Dealers in DDVS to determine build plans. It is therefore critical that the DDVS tool be
accurately updated, on time for Caterpillar’s internal S&OP process.

Dealer DDVS tool must be updated each month by the 17th accounting day

Based on the decisions made during the Dealer S&OP meeting, the DDVS tool needs to be updated for the following:

• Sales to users forecast, Months of Sales (MOS) Inventory Target, and Lane 1 Take Rate Target
Based on these updates, and the most recent lane availability service levels (LASLs), a new forecast of “recommended orders”
will be calculated within the tool. Until the next formal Dealer S&OP meeting, actual orders are continuously reviewed against
“recommended orders” to ensure alignment.

Dealer Machine Velocity Metrics must be managed

Dealers must continuously monitor their performance against specific (and linked) velocity metrics and targets to
ensure alignment:
• Forecast accuracy / Bias • Dealer MOS / Inventory turns • Lane 1 take rate
• Aged inventory • Recommended orders alignment
A process of continuous improvement must be in place for the benefit of Dealers, Caterpillar and ultimately, customers. It is critical that
performance gaps be identified and reviewed internally, with respective distribution services division and industry group owners.

The plan is to expand the Dealer S&OP process, with Phase 1 adding work tools in late 2014 and Phase 2 adding power systems
beginning with pilots in 2015.

Only by adhering, improving and eventually excelling at this process can we bridge across the extended enterprise and provide
enhanced availability for the benefit of our customers, Dealers and Caterpillar.

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CUSTOMER
SALES EXPERIENCE
To meet or exceed our long-term business growth objectives, Caterpillar and its Dealer network must have a strong sales brand
reputation with customers. A strong sales brand is obtained through the consistent delivery of a positive sales experience in
which customers feel that the value they receive meets or exceeds the price of the goods and/or services.

We want customers to deal with an empowered salesperson who acts as a trusted consultant—someone who effectively
represents the value of our products and services. However, a strong sales brand cannot be achieved if there are significant
shortcomings in product value design, product or distribution cost, distribution sales capability, training, market intelligence,
customer knowledge, speed or transactional support processes.

Three major components have the largest impact on the customers’ sales experience:
1. Product strategy, cost and value
2. Tactical pricing and support processes
3. Local execution (Dealer capability and performance)
In order to ensure consistent delivery of positive sales experiences for our customers, Caterpillar and Dealers must collaborate
across these components.

PRODUCT STRATEGY, COST AND VALUE

Product strategy begins with understanding customer requirements within Caterpillar’s customer applications framework—our
Lifecycle Performance, Lifecycle Value and Utility segments. Product features and performance must be optimized to match the
customer needs and economics of each segment. This means delivering products that are differentiated from the competition in
ways that add customer value.

We must start with an understanding of customer economics and market segmentation at a global level generally and for given
regions specifically. Early in the product development stage, Caterpillar’s NPI programs must establish the optimal balance
of features, customer value and costs to serve a global marketplace with products having wide price bands and that meet
regulatory requirements.

The 313GC and 950GC projects are examples of this approach within the Lifecycle Value segment. Another example: the Rental,
Used and New (RUN) model, which matches machines with service hours to price points that customers are willing to pay.

Beyond product strategy, Caterpillar’s Low Cost Producer (LCP) process is focused on improving the cost-versus-value equation of
our existing products over the competition. That process has now been expanded to look for additional savings in the extended
value chain, everything from sourcing and localization to manufacturability and logistics—both inbound and outbound.

Caterpillar product groups have committed to specific LCP targets by model and source plant through 2015.

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TACTICAL PRICING AND SUPPORT PROCESSES

This component includes the systems and processes needed to secure our status as a strong sales brand. Today, many of
the tools we use to sell our value are dated. Quoting tools are disparate and cumbersome. The systems we use to analyze
competitive transaction prices, participation and closure and sales variance lack consistency, reliability and connectivity.

Our vision for Caterpillar and Dealers is an integrated pricing toolbox, which will align and integrate value-selling tools, pricing
analytics and merchandising, and Dealer/customer quoting solutions. The goal is to help our independent Dealers make faster
local decisions based on more complete information that reflects market and competitive environments, price trends, product
value and local execution.

Another key element in an efficient sales process: our Dealers making independent pricing decisions as close to the market as
possible to assure speed and a positive customer experience. Dealers need flexibility and an empowered Caterpillar field team
that can provide appropriate support when the company needs to be involved.

The growth plan process will help empower Dealers and simplify processes by using performance-based merchandising support.
By using performance-based merchandising, support administration and complexity will decrease further as Dealers achieve
higher levels of performance as defined in their growth plans and overall targets.

Significant strides have been made (and will continue) in automating our claims process and minimizing Dealer paperwork. In
addition, more emphasis is needed on the use of value-selling tools and enhanced training so Dealers and Caterpillar field team
can make informed decisions, articulate the price/value message and provide valuable insights using pricing analytics. Lastly,
lead-generation efforts will help Dealers significantly improve their participation in the business.

LOCAL EXECUTION (Dealer CAPABILITY AND PERFORMANCE)

Dealers play a critical role in delivering a strong Caterpillar sales brand experience. Dealer employees represent the Caterpillar
brand every day as they interact with customers from the most basic to complex levels of sales, service and solutions delivery.

Dealer capability and performance requirements are covered extensively by the Across The Table initiative, as summarized
in this book. Execution of Dealer requirements must be achieved in order for customers to realize appropriate levels of value
commensurate to price offered and/or paid for products, services and solutions.

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DRIVING ALIGNMENT
ASSESSING
PROFITABLE GROWTH
OPPORTUNITIES

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 ACROSS THE TABLE

The overall improvement opportunity in a Dealer service territory has two components:
1) improving the parts and service opportunity from the installed base (harvest performance)
and 2) growing the installed base (seed and grow performance).

1. Improving harvest performance

Parts are a primary profit driver and source of competitive advantage for Caterpillar and its Dealers. Healthy POPS
numbers ensure the health and financial viability of our business system.

As described in the game-changing section of this book titled “Improving our harvesting performance,” we must replicate
our experience with pilot Dealers and implement a common commercial framework, replicate best practices at the highest
potential Dealers, establish Dealer-specific strategies to maximize POPS and establish implementation plans, resource
plans and explicit performance metrics and targets for each Dealer to achieve.
2. Improving seed and grow performance
As markets change and new distribution models become more critical to serving customers, so does market opportunity
assessment, awareness and participation. This will be a four-part process: 1) Understanding market opportunity. 2)
Measuring and identifying Dealer performance versus best-in-class. 3) Identifying growth opportunities and critical
success factors. 4) Developing improvement roadmaps and growth plans in collaboration with Caterpillar.

DEVELOPING GROWTH PLANS

Growth and development plans are planning documents established between Caterpillar and the Dealer to drive the growth
and improvement agenda. They are formally updated regularly to reconfirm or redefine scope and direction.

There are up to six categories of growth plans which will be prioritized and developed in agreement with Dealers,
districts managers and industry teams.

• Resource Industries/Mining
• GCI, Paving, Diversified
• BCP
• Power Systems
• Rental
• Parts

The portfolio of plans is administered by the district manager. Signatories include the Dealer principal or executive leader,
DSD region manager/district manager, industry sales manager/regional sales manager/district sales manager and optional
signatories on an as-needed basis.

Caterpillar and the Dealer measure performance at the end of the period covered by the growth plan. We either move to
maintain the gain or create a new plan to ensure long-term success.

GOVERNANCE OF GROWTH PLANS

Monthly or quarterly governance meetings with key Dealer and Caterpillar stakeholders are recommended. To ensure success for
all, meetings should be attended by team members who are accountable for the results, such as the Dealer business manager,
the DSD district manager, the industry sales manager, CFSC and CFIS representatives.

Meeting best practices include scheduling well in advance, providing an advance copy of the agenda, maintaining an online
dashboard, keeping minutes, tracking action items, assigning accountable owners and completion dates for agreed actions and
assigning overall accountability for the plan to one person.  

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SUCCEEDING THROUGH
GOVERNANCE
DEALER PROFILE

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 ACROSS THE TABLE

The Dealer profile provides a yearly summary of overall performance, key results and areas of improvement in every Dealer
service territory. It must be aligned with the assessment of the customer-centric distribution models, aligned with and reflective
of results assessed in the Dealer scorecard, and it must integrate the governance of growth plans.

The profile is developed in full alignment with the Dealer principal and the Dealership organization and formally reviewed at least
once a year with the Dealer principal.

The profile has been updated to reflect Across the Table principles and will include six sections for introduction in 2015:

• Overall Dealer service territory description

• Market leadership (industries and parts)
• Distribution model capabilities
• Financials
• Identification of missing foundational capabilities
• Alignment with Caterpillar, Dealer continuity and succession planning

WORLDWIDE Dealer SCORECARD

There will be a Dealer scorecard for Power Systems and Machines to measure and recognize Dealer performance across the
business model. The new programs will be aligned to the Across the Table goals and introduced in January 2015, with the best
Dealers in each trisphere recognized within the “Circle of Excellence” program.  

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ACKNOWLEDGEMENTS

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An undertaking like Across the Table requires a monumental effort. Before it’s finished, literally thousands of people—both
Caterpillar and Dealer personnel­—from around the world will play a role in making this transformation a success. We want to
say THANK YOU to everyone who was involved. We would especially like to recognize two groups who played a vital role—our
Dealer Advisory Group and the core team members for each project initiative.

DEALER ADVISORY GROUP

Americas North Dealer Advisors EAME Dealer Advisors
Monty Boyd . . . . . . . . . . . . . WhayneWalker Machinery Co. Issam Al Bahar . . . . . . . . . . Al Bahar
Dan Butler . . . . . . . . . . . . . . Butler Machinery Co. Michael Heidemann . . . . . . Zeppelin
Jay Cleveland . . . . . . . . . . . Cleveland Brothers Clive Thomson . . . . . . . . . . Barloworld Equipment
Peter Holt . . . . . . . . . . . . . . Holt Machinery Agah Ugur . . . . . . . . . . . . . Borusan
Tom Kirchhoff . . . . . . . . . . . Cleveland Brothers Bruce Wagner . . . . . . . . . . . Wagner International
Jim Parker . . . . . . . . . . . . . . Carter Machinery Co., Inc.
Jeff Whiteman . . . . . . . . . . Empire Machinery

Americas South Dealer Advisors Asia Pacific Dealer Advisors

Oscar Espinosa . . . . . . . . .
Jim Fenton . . . . . . . . . . . . .
Miguel Gomez Sr. . . . . . . . .
Alejandro Gómez . . . . . . . .
Carlao Orberg . . . . . . . . . . .
Ferreyros Scott Cameron . . . . . . . . . . Hastings Deering
General De Equipos de Colombia H. Jayaram . . . . . . . . . . . . . Gmmco Limited
Nicaragua Machinery Co. Lawrence Poh . . . . . . . . . . . Lei Shing Hong Machinery
Tracsa Robert Stevenson . . . . . . . . Phu Thai Industries
Sotreq

ACROSS THE TABLE SPONSORS

Overall Initiative Sponsor:
Stu Levenick
Individual Project Sponsors:
Bill Finerty Jim Johnson
Greg Folley Pablo Koziner
Steve Gosselin Nigel Lewis
Doug Hoerr

CORE TEAM MEMBERS

Enterprise Vision for Comprehensive Caterpillar + Dealer Distribution Transformation
and Enhanced Value Proposition
Jay Aussieker Jennie Forcum Whye Chee Peng
Jonathan Bugman Scott Miller Steve Richards
Stu Errion Becky Morgan Brian Shung
Brendon Davis Theresa Nelson Brian Tomsovic

Playbook - Driving Execution in Serving the Entire Portfolio

Mark Bainbridge Arnaud Lamassiaude David Picard
Jeremy Canham Hamid Lavassani Renee Richardson
Courtney Dean Guillermo Levy Marcos Sallowicz
Quentin DeWarlincourt Michael Lisowski Steve Schoening
Dave Faber Max Martin Ronald Schultz
Kristin Girard Christine Miller Maureen Sluga
George Hart Steven Niehaus Mark Teel
John Jasinski Nigel Parkinson Thomas Zihlmann
Paul Knollmaier Simone Peter

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ACROSS THE TABLE CORE TEAM MEMBERS CONTINUED
Global Parts Pricing
Bryan Argo Chris Hathaway Kirk Miller
Sandra Ghattas Brundler David Holt Amanda Petersen
Larissa Campbell Brett Hoyle Sreenivas Ramanujam
Dave DeFreitas Samuel Joslin Nathan Rohlf
Nathan Englehardt Sean Koors Joe Van Wassenhove
Don Fleck Patrick Kozlowski Jeremiah Wille
John Galloway Yen Chun Lee Antonio Zavanela
Chad Ghere Ricgo Mak
Jon Harayda Paul Mauschbaugh

Parts Logistics Transformation

Zachary Ament Faisal Hasan Genda Saletzki
Bryan Argo Barb Hodel Meiyappan Sethuraman
Brian Babb Jason Hofer Terry Sherman
Paul Beckman Jane Huggins Ben Smidt
Richard Britton Tina Jacobs Lawrence Stefanski Jr.
Rick Burritt Tom Jennings Jared Steinmetz
Stephanie Bussey Don Jones Matthew Storti
Andre Christophe Kurt Kallina Darin Suarez
Phillip Conley Shannon Kleehammer Ian Sutherland
Susie Conley Mark Kumpf Holly Teig
Tara Danner Connie Mason Keith Thach
Brian Devine Mark Miller Kelly Thelen
Olivier Dutruy Kelly Moran Fred Vrijdagh
Dan Flynn Glenn Morrison Phillip Weingart
Jeff Garrett Kevin Nelson Shai Wong
Jan Goos Rick Picl Ryan Young
Tim Gryl Dwaine Relph
Peggy Harris Michael Roling

Meet Customer Future Service Needs

Zachary Ament Cameron Ferguson Ruud Kronenburg
Heather Armstrong William Fusco Dean Mock
Roger Baker Natalie George Richard Quilty
Chuck Boen Simon Griffiths Lynn Sheets
Tara Cox Brittany Korth Mark Stratton

Rental and Used Equipment Strategy

Richard Baer Christopher Gustafson Dave Picard
Laetitia Baudrion Paul Knollmaier Rick Rathe
Steven Brown Max Martin Yves-Alain Tschirren
Brendon Davis Ronald Antoine Massee Pierre Verdon
Jerome Guilford Jr. Pierre-Alain Masson Kristina Watson
Kristin Girard Kimberly Neible
Nicolas Guigon Craig Olmstead

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Distribution Delivery of Technology Enabled Solutions

Sanjeev Addala Desmond Chan Hamid Lavassani
Isidro Arosemena Warren Cox Terri Lewis
Chaille Becker Jeffrey Fitch Brent Losey
Leslie Bell Al Frese Bart Mol
Michael Blount Federico Henkel Holger Pietzsch
Walt Bradbury Frederic Istas Brent Steffen
Thomas Bucklar Steven Janda John Thomas
John Carpenter Farzin Khorasanizadeh Jocelyn Van Wassenhove
Dawn Carson Richard Lambie

eBusiness Transformation
Sanjeev Addala Tony Johnson Todd Philbee
Jeff Bowman Farzin Khorasanizadeh Phillip Pollock
Andrea Campbell Paul Knollmaier Renee Richardson
Brendon Davis Mark Kumpf Mark Smith
Eric Hermann Judy Mathews John Swanson
Barb Hodel Nicolas Mollard Judith Swanson
Frederic Istas Kimberly Neible

Network ERP Data Integration

Sanjeev Addala Chad Fouts Mark Smith
Rich Baer Mark Freeman Janet Storms
Joshua Edwards Sean Maher
Jill Ernst Stephen Spitzer

Dealer Product Support Growth & Profitability Plan

Bryan Argo John Jasinski David Picard
Michael Blount Steven Knecht Christophe Schonenberger
Quentin DeWarlincourt Paul Knollmaier Kristina Watson
Doug Hoerr Ricgo Mak
Frederic Istas Scott Miller

Worldwide Dealer Meeting Coordination & Execution

Christopher Anderson Tyler Courtright Mary Koeppel
Troy Avery Mike Dimmick Matt Shepherd
John Brophy Steve Koch Tom Schmidt

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ACRONYM GUIDE

The introduction of new processes and new distribution models requires careful integration with existing products, services and
organizations. To make all the connections, please refer to this list whenever you encounter an unknown acronym while reading
Across the Table.

BCP Building Construction Products

CDW Caterpillar Data Warehouse
CFIS Caterpillar Financial Insurance Services Corporation
CFSC Caterpillar Financial Services Corporation
CRM Customer Relationship Management
CSA Customer Service Agreement
CVS Customer Value Survey
DCAL Dealer Customer Acceptance Level
DDVS Dealer & District Velocity Solution
DGAP Dealer Growth and Profitability
DIM Do It Myself
DSD Distribution Services Division
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization
EPP Equipment Protection Plan
GCI Global Construction and Infrastructure
GET Ground Engaging Tools
ISR Inside Sales Representative
KPI Key Performance Indicator
LASL Lane Availability Service Levels
LCP Low Cost Producer
MARC Maintenance and Repair Contract
MOS Months of Sales
OEM Original Equipment Manufacturer
OTC Over the Counter
OTIF On Time in Full
PINS Percentage of Industry Sales
POCA Percent of Connected Assets
PODD Percentage of Dealer Deliveries
POPS Percentage of Parts Sales
PSSR Parts and Service Sales Representative
PM Preventative Maintenance
RIF Recordable Injury Frequency
ROCE Return on Capital Employed
ROFA Return on Fleet Assets
RPO Rental Purchase Options
RUN Rental Used New
S&OP Sales & Operations Planning
SAP Systems, Applications, and Products in Data Processing
SCP Suggested Consumer Price
S•O•S Scheduled Oil Sampling
TCO Total Cost of Ownership
UC Undercarriage
VOC Voice of the Customer
VL VisionLink

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AEXQ1283
© 2014 Caterpillar • All Rights Reserved • Printed in USA
CAT, CATERPILLAR, BUILT FOR IT, their respective logos, “Caterpillar Yellow,” the “Power Edge”trade dress as well as
corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.
VisionLink is a trademark of Trimble Navigation Limited, registered in the United States and in other countries.