Caterpillar Logistics Services, Inc.

Cat Logistics

01/26/20 Maureen Healy

Miami DC

Overview
Cat Logistics heritage Caterpillar culture Cat Logistics overview
Cat Distribution Services Manufacturing Logistics Transportation External Client Business

Miami DC Overview Data Files Review of Concepts

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Cat Logistics Heritage

Logistics Part of Caterpillars Heritage

Producing and supporting high-value, durable goods working in timesensitive, critical environments around the world
Caterpillar manufactures more than 500 products to serve construction, mining, forestry and power generation applications More than 170 manufacturing facilities and thousands of suppliers around the world Distributes products in more than 190 countries

World-class logistics increases customer loyalty and improves shareholder value

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

The Differentiator
What sets Caterpillar apart? Superior customer service through 180 Dealers 1,890 Dealer branch stores 1,467 Dealer rental outlets Enabled by world class parts distribution Cat Logistics distributes more than 750,000 unique Caterpillar part numbers, with worldwide parts availability of 99.7% Caterpillars ability to get the right part in the right place at the right time separates us from the competition

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Caterpillar Culture

Our Values in Action

Documents high ethical standards our company has upheld for more than 80 years First published in 1974 Global company with global standards and expectations Living Our Values in Action is an individual choice

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Our Values in Action and Leadership

Through living Our Values in Action, Caterpillar Production System (CPS) will be an enabler for Caterpillar to achieve its Vision 2020 and business strategy
Leadership imperatives Leaders building leaders Making great leaders Employee Opinion Survey (EOS) and action planning

LEAD

BUILD

with values

Integrity Excellence Teamwork Commitment

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

high expectations

SET

customer focus

DELIVER

inspire and engage

8

DEVELOP

results

CPS and Three Systems

The Caterpillar Production System is the common Order-to-Delivery process being implemented enterprise-wide to achieve our Safety, Quality and Velocity goals for 2010 and beyond

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

CPS and Eight Wastes

The ultimate goal of CPS is the elimination of waste. Waste is any activity that consumes resources, but creates no value for the customer

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

10

Cat Logistics

Caterpillars Supply Chain

Supply Chain

Supplier

Manufacturing

Distribution

Dealer / Retail

Consumer

Supply Chain is the flow of materials, information, and finances as they move in a process from the origin point to the end consumer
Logistics involves all of the planning, execution & control required to successfully deliver the product to the end consumer The goal is to optimize this flow to achieve low cost and high customer service

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

12

Supply Chain Excellence

Cat Distribution Services
MORTON
MOSCOW GRIMBERGEN SHANGHAI SINGAPORE PIRACICABA JOHANNESBURG MELBOURNE

Manufacturing Logistics

Transportation

External Client Business

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

13

Caterpillar Distribution Services

80+ year history of providing Caterpillar machine & engine owners efficient and effective global logistics support through Cat parts distribution network 22 facilities in 9 countries MOSCOW Serving Cat dealers world wide MORTON GRIMBERGEN SHANGHAI Modernized Cat Parts Network (MCPN):
Americas, EAME and AP Multi-functional facilities Located closer to dealers and suppliers
SINGAPORE PIRACICABA JOHANNESBURG MELBOURNE

Service Parts Management (SPM) software / processes Strategically placed inventory 24 x 7 x 365 operations
14

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Manufacturing Logistics
Parts entering manufacturing facilities (inbound logistics) Inbound Logistics Centers (ILCs):
Only hand-weight items (<35lbs or <16kgs / part) Warehousing, inventory management, sequencing, assembly processing, kitting and sub-assembly 2 ILCs supporting 130 facilities (Belgium and Illinois)

Logistics Service Centers (LSCs):

Consolidating demand, planning, ordering, staging & sequencing and storing Quick (overnight) delivery to geographically proximal manufacturing plant(s) / Points of Use (POU) 19 LSCs supporting 21 manufacturing facilities

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Suppliers

Regional Inbound Logistics Center (ILC)

15

Logistics Service Center (LSC)

Manufacturing Plant

Transportation
Transportation of finished products and parts across all modes truck, rail, ocean and air Caterpillar and external clients One of the largest freight movers in the world:
Transportation spend managed $1.8 billion Carriers providing service 600 Country to country lanes managed 900

Track and trace tool enhancing visibility Sustainable development strategy Product Distribution Centers (PDCs):
Supporting Caterpillars finished goods multi-lane distribution strategy of product configuration simplification and increased availability Strategically located PDCs (Australia, Belgium and UAE) Product examples wheel loaders, excavators, tracktype tractors, wheel loaders and skid steers Modeling, implementation and operations

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

16

The External Logistics Business

Leveraging our Core Competency

In 1987, Cat Logistics was formed as a wholly-owned subsidiary to offer logistics services to external clients Providing logistics solutions to clients with needs similar to Caterpillarstime-sensitive, service-critical, unpredictable demand leverages our capabilities and represents a significant growth opportunity Today, Cat Logistics is one of the fastest growing divisions within Caterpillar
15% CAGR 2002 2008 3X growth projected from 2000 2010 More than 80% of our growth is with current clients

Logistics knowledge gained by serving 60+ clients has allowed us to constantly improve the logistics solutions and competitive advantage for all our clients
18

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Significant Growth & Long Term Relationships

AUTOMOTIVE INDUSTRIAL

MAINTENANCE, REPAIR & OPERATIONS (MRO) (Mining, Oil & Gas)

OTHER SERVICE PARTS (Aerospace & Defense, Technology, and Consumer Durables)

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

19

Provide Our Competitive Advantage

80 years of global product support heritage
Globally integrated aftermarket approach with sound, proven business practices

Empathy we live what our customers live

We are the only major 3PL that has origins in manufacturing and prime product support

Solution leader

Service Parts Management

Co-developer of state-of-the-art flexible supply chain IT system built by market-leader SAP

Talented people and proven processes

Subject matter expertise and years of experience in the many facets of supply chain management

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

20

Cat Logistics Global Network

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

21

Cat Logistics Today

Americas

Europe, Africa, Middle East & CIS

6 Continents 23 Countries 20 Languages 130 Facilities & Offices Shipping to 190+ Countries 12,000+ Employees 29M+ Sq. Ft. 160M+ Orders/Yr 21B lbs. Of Freight/Yr $1.8B Transportation Purchased/Yr 18M SKUs Serviced/Yr
42 Locations 4,600 Employees

Asia-Pacific

76 Locations 7,000 Employees

12 Locations 800 Employees

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

22

Miami DC Overview

Miami Lakes, Florida

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

23

Miami DC History
The first Miami area facility opened in 1956 The current Miami Lakes facility opened in 1976 Facility expanded (C1) in 1997 Facility expanded (C2) in 2002 Yard Expansion Completed in 2007 Opened Off-Site facility in 2008 (17,000 sq. ft)
Yard Expansion (Not Shown) 2007 C2 Building 2002

C1 Building 1997

C Building 1976

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

24

Miami DC Overview
Facility Overview
441,000 sq. ft. under roof, 44,000 sq ft. yard, 17,000 sq. ft. under roof off-site 229,000 stocked parts / 264,000 locations 230+ employees, 3 shift operation (M-F) + Weekend Shift

Volume Overview
12,000 Outbound lines/day 65% stock orders processed on 3rd and 1st shift
35% emergency orders processed on 1st and 2nd shift

3,000-3,500 inbound lines/day 500 cross dock cases/day

Customers
Facing facility for 1 Florida Dealer and export to over 33 other dealers Secondary facility in search tables for other dealers Ship to over 1,200 Destinations 55% of outbound is shipped in Ocean containers to facing dealers 43% of outbound is air or LTL to facing dealers 2% of outbound is shipped to non facing dealers

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

25

Problem Statement
Need to develop 5 year space solution for facility with implementable plan to achieve 85% maximum utilization. Plan for 5,000 additional parts to store each year across all concepts. In scope: Improved use of current concepts, new storage concepts, off-site Out of scope: Facility expansion, Yard Current Utilization by Concept
TYPE CTL ELG FLR GLS GSK HRK HVR MZB RCK YRD FULL 2068 12780 1778 610 2265 1607 10734 191549 11508 4102 EMPTY 54 1002 118 12 17 2 434 21599 2268 364 TOTAL 2122 13782 1896 622 2282 1609 11168 213148 13776 4466 PCNT_FULL 97.46% 92.73% 93.78% 98.07% 99.26% 99.88% 96.11% 89.87% 83.54% 91.85%

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

26

Facility Layout

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

27

Facility Process Areas

Inbound Material Flow (Red)

Maint.

Inbound / Inbound Sort

Office

Staging Bays Pack Lanes

Loading Docks

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

Outbound Material Flow (Blue)

28

Facility Storage Areas

YRD FLR ELG ELG/GLS

FLR CTL HRK HRK

FLR

RCK
FLR

RCK

MZB

YRD

RCK

FLR

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

29

Data Files
Item Master (Parts Stocked in Miami) Part Number Recommended Storage Quantity (RSQ) Bin Map Location Part # (if occupied) Country of Origin Location Storage Quantity (LSQ) Facility Stock Available (FSA) Concept type (CAT term for slot) Concept size (slot size) Concept sector Sales History Part Number Country of Origin MR Qty Customer Code Pack With ID Order Class Weight Volume Required Completion Date

Min
Max Pieces per entry Forecast annual demand Forecast annual entries (lines) Package Quantity Weight Length Width Height

Picks (Impact of package quantities)

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

30

MZB (Mezzanine/Bins)

Full quantity in one location Parts under 30 lbs Hand picked onto carts
2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

31

RCK

Parts may have multiple locations Parts under 50 lbs Hand picked using order picker

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

32

CTL (Cantilever)

Crated and uncrated parts Heavy parts Parts may have multiple locations Machine picked with reach truck
2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

33

ELG (Elongated)

Elongated parts Hand picked using order picker Difficult to store and pick Slower moving parts

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

34

FLR (Floor)

Large Crates, Filters, and Rollers Primarily picked with reach truck or hoist Mix of commodities

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

35

GLS (Glass)

Fragile items Stored vertically 80% Hand picked 20% Palletized picked with reach truck

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

36

GSK (Gasket)

Long narrow commodity Hand Picked with order picker Fragile items

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

37

HRK (Heavy Rack)

Machine picked with reach truck Mixed commodities

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

38

YRD

Weather Resistant Items Most items >50lbs

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

39

QUESTIONS?

2010 Caterpillar Logistics Services, Inc. Caterpillar: Non Confidential

40