w/6 sigma/training/project charter writing/project charter … cat americas forecasting v6.pdf ·...

W/6_Sigma/Training/Project Charter Writing/Project Charter Lab.ppt

www.forecastpro.com

Case Study: Implementing Forecast Pro

TRAC across Caterpillar America's

Independent Dealer Network

Patrick DeShon,

Dealer Demand Senior Specialist

Page 2 | CATERPILLAR CONFIDENTIAL: RED

Enterprise Alignment

Page 2

Cat® Americas – WORKING TOGETHER TO DELIVER RESULTS

Pat DeShon

Dealer Demand Senior Specialist, Caterpillar Inc.

• Naval Architecture & Marine Engineering BSE, US Coast

Guard Academy

• Systems & Reliability ME, UMD

• Process Improvement & Project Management

• 6 Sigma / Lean Black Belt III, TQM, Baldritch, ISO

• System Architecture & Design

• Cognos, TM1, DB2, Oracle, SQL

US Coast Guard Officer (10 Yrs) – Connecticut, Boston, Wash DC. Congressional Advisory

Committee, United Nations International Maritime Organization (IMO), Society of Naval

Architects &Marine Engineers (SNAME)

Caterpillar Mgmt. ( 16 Yrs) – Large Mining & Off Highway Trucks Technical Development,

Dealer Support, Service Support, BI Systems, Business Development, Sales & Operations Planning



Page 3


Forward-Looking Statements

Certain statements in this Release relate to future events and expectations and are forward-looking statements within the meaning

of the Private Securities Litigation Reform Act of 1995. Words such as “believe,” “estimate,” “will be,” “will,” “would,” “expect,”

“anticipate,” “plan,” “project,” “intend,” “could,” “should” or other similar words or expressions often identify forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including, without limitation,

statements regarding our outlook, projections, forecasts or trend descriptions. These statements do not guarantee future

performance, and we do not undertake to update our forward-looking statements.

Caterpillar’s actual results may differ materially from those described or implied in our forward-looking statements based on a

number of factors, including, but not limited to: (i) global economic conditions and economic conditions in the industries and

markets we serve; (ii) government monetary or fiscal policies and infrastructure spending; (iii) commodity or component price

increases, fluctuations in demand for our products, or limited availability of raw materials and component products, including steel;

(iv) our and our customers’, dealers’ and suppliers’ ability to access and manage liquidity; (v) political and economic risks and

instability, including national or international conflicts and civil unrest; (vi) our and Cat Financial’s ability to: maintain credit ratings, avoid material increases in borrowing costs, and access capital markets; (vii) the financial condition and credit worthiness of Cat

Financial’s customers; (viii) changes in interest rates or market liquidity; (ix) changes in financial services regulation; (x) inability to

realize expected benefits from acquisitions, including ERA Mining Machinery Limited, and divestitures, including the divestiture of

the Bucyrus distribution business to our independent dealers; (xi) international trade and investment policies; (xii) market

acceptance of our products and services; (xiii) changes in the competitive environment, including market share, pricing and

geographic and product mix of sales; (xiv) successful implementation of capacity expansion projects, cost reduction initiatives and

efficiency or productivity initiatives, including the Caterpillar Production System; (xv) inventory management decisions and sourcing

practices of our dealers or original equipment manufacturers; (xvi) compliance with environmental laws and regulations; (xvii)

alleged or actual violations of trade or anti-corruption laws and regulations; (xviii) additional tax expense or exposure; (xix) currency

fluctuations; (xx) our or Cat Financial’s compliance with financial covenants; (xxi) increased pension plan funding obligations; (xxii) union disputes or other labor matters; (xxiii) significant legal proceedings, claims, lawsuits or investigations; (xxiv) compliance

requirements imposed if carbon emissions legislation and/or regulations are adopted; (xxv) changes in accounting standards; (xxvi)

failure or breach of information technology security; (xxvii) adverse effects of natural disasters; and (xxviii) other factors described

in more detail under “Item 1A. Risk Factors” in our Form 10-K filed with the SEC on February 19, 2013 for the year ended

December 31, 2012. This filing is available on our website at www.caterpillar.com/secfilings.



Page 4


More than 3 million units around the world

Data based on year-end 2014

Cat® equipment is at work for our customers on highways, rail lines, oceans and rivers, in forests, quarries and oil fields


www.forecastpro.com



Page 6


Our Industries

Construction Industries -Helping our customers build what the world needs

Energy & Power Systems - Focused on meeting the world’s increased energy needs through a variety of solutions and applications across multiple industries

Resource Industries - Making it possible for customers to mine and harvest resources, such as coal, iron ore and lumber, in a profitable and sustainable way



Page 7

Cat® Americas – WORKING TOGETHER TO DELIVER RESULTSData based on year-end 2012

Our Dealers– Primary distribution through 177

independent dealers– Cat® branded parts and customer

service– Dealers develop and support lifelong

relationships with customers

Our Supply Chain: – More than 28,000 Suppliers

– Located in 182 Countries

Our Team

Page 8

For more Caterpillar information, visit

www.caterpillar.com


www.forecastpro.com

Page 9

83 Dealers40 Countries16 Million Square Miles

Cat® Americas

We are…

One team.



Page 10


Forecasting Myths

“I need a statistician to use statistical forecasting”

“Dealers can’t forecast beyond 3 months”

“I just need to know my leading indicators”

“Small Dealers can’t forecast”

“It’s just another tool from Corporate”

“Caterpillar should do it for me”

Cat® Americas

Page 11

Extend the Planning Horizon

1

1 to 3

Month

4 to 6

Month

7 to 12 Month 13 to 18 Month

Availability

Window

Touch + Statistics + Econ Outlook Statistics + Econ

Outlook

Line of Sight

(Touch)

• Improved Demand Signal

for Supply Planning

• Better Signal to CAT

Cat® Americas

Page 12

Business Impact

1

Benefits determined using

standard DuPont Chart

planning model0.1 Turns improvement equates to approximately a 6% Accuracy improvement(% improvements in Accuracy have roughly

2:1 linear correlation ratio with Turns)

Remove Bias

Example Benefit


www.forecastpro.com



Page 13


Executive

Board S&OP

Supply

Review

Performance

Measurement

Pre

S&OP

Demand

Review

1

2

4

SAP

Unconstrained

Forecast

SAP Constrained

Sales Plan

3

Dealer Sales & Operations Planning (S&OP) Process

– Forecast InformationSAP is not a SFM or a Statistical

Forecasting tool.

Each Dealer may acquire and/or

develop their own tools and

processes in order to generate the

Forecasting information that will be

loaded to SAP.

SFM and Statistical Forecast

information should be

collected/generated during the

S&OP Process and before the SAP

inputs (Unconstrained Demand

Forecast and Constrained Sales

Plan)

Dealers are currently using different

solutions to implement SFM and

Statistical Forecasting tools, varying

from simple Excel spreadsheets to

sophisticated and expensive solutions.

Forecast Accuracy

Order Accuracy



Page 14


Challenges

• Low-volume and high-dollar Products

• Independent Dealer network

• Inconsistent expertise

• Lack of leading economic indicators

• Short Customer planning horizon

• Complex New Product Introduction (NPI)

• “Group of experts”

• Spreadsheets

• High Variation

• Measurement not improvement

• Need to align bottom-up dealer-generated forecasts with corporate forecasts

• Existing forecast “process” focused on collecting data rather than helping to create

the actual forecast



Page 15


“Our focus during these challenging

times is on operational execution and

customer success, while also investing

in tomorrow through new technologies,

innovation and data analytics.”

Doug Oberhelman, Chairman and CEO

Cat® Americas

Page 16

FPro Demand Management Process Overview

1

$

Closed

Proposal

Development

Qual ification

Identification

$$

ClosedClosed

ProposalProposal

DevelopmentDevelopment

Qual ificationQual ification

IdentificationIdentification

Cognos Data SAPSTU Monthly Frcst / PINS Projection

Touch / Judgment

10,000 Planning Points

per Dealer

each month

STU

SAP Const

ADN $

.csvIND Item

Report

• STU• IND• SAP Const• ADN$

Cognos

(Data Update)

• IND FPro Project• STU FPro Project• Econometrics• Sales Funnel

FPro(Forecast Update)

• Unconstrained STU• Rental Load Plan• Constrained Sales Plan (MOS, TR, DlrAvail)

SAP

(Supply Plan)

External Data

SF

Econ

IND


www.forecastpro.com



Page 17


Solution Elements

• Standardized projects, conformed data

• Automated data updates

• Enable Independent business decisions

• Integration with SAP supply planning tool

• Customized training

• Flexible and Scalable

– Rental channel planning

– MegaDealer

Cat® Americas

Page 18

Automatic Data Updates

1

Schedule delivery of data updates

through Cognos 10 portal

Cat® Americas

Page 19

Update Unconstrained Demand Forecast in SAP

1

9

Upload into SAP

Cat® Americas

Page 20

FPro Implementation Roadmap

2

Month 0 Baseline Familiarity

Month 1 Data FlowSAP

Month 2 ManipulationOngoing Process

Ongoing

Tracking Review

QuarterlyWebinars Connections

~ 8-10 hours training

+ Software cost

High Skill Mod Skill Avg Skill

Early Adopters Pilot / Wave 1 Wave 1 / 2 After Wave 2

Imitators Wave 1 / 2 After Wave 2 After Wave 3

Resistors After Wave 3 After Wave 4 After Wave 4

6 Waves, 2 Workshops

100+ Participants at >45 Dealers

>30 Dealers Purchased


www.forecastpro.com



Page 21


MegaDealer Forecast System

Adjust IND as

group in Kickoff

Mtg. Phase II –

IND Super Proj

Corp

Planners

IND Item

Report

IND Data

STU $

Secondary

Data

DDVS Const

Ext Data

STU GEO

Data

STU

Data

DDVS

STU Input

STU Input

PM

DDVS STU

Input Region

PM STU

Projects

RP STU

Projects

PM STU

Super

Project

RP STU

Super

Project

STU GEO

Input Region

IND

Project

STU

Super

Project

Corp

Planners

Manual Process

Batch Process

Imp

ort O

ve

rride

s

S&OP

Team

DDVS STU

Input PM

Corp

Planners

DDVS STU

Hotlist

Region

IND Numeric

Report

IND GEO

Input Region

Prod

Mgrs

RPs

RP Super

Item Report

DDVS STU

Hotlist

Region

DDVS

Manual

Models

DDVS ABP

Data



Page 22


The Value

� More frequent Industry forecasts

� 18 Month Market Share Forecast

� NPI Model Transition

� Forecast Accuracy

� Integration to SAP system

� Simplify Annual Business Plan

� Built-in Continuous Improvement

� Extend planning horizon - 4-6 mo, 6-12 mo, 12-18 mo

� Save time – “Set It and Forget It”

– Manage by exception,

– Automatic data updates

– Out of Box reports

– Document assumptions

2

2



Page 23


Key Enablers to Success

• Low point of entry - Aimed at Business Users - Don’t need to be a

statistician

• Makes Job easier - Easy Data

• Beats their own process

• Standard Work Playbook

• Active Support from Caterpillar (training videos)

• TOPDOWN Forecasting

• New Product Forecasting

• Peer Support

• Integration to SAP Supply Planning System

• Flexibility to accommodate business needs – from family level down to

Sales Model

• Growth Platform



Page 24


They Did it! FIRST TIME EVER!

Point of Sale Forecast Beat Macro Forecast

• Reduced planning cycle, simplified Annual Business Plan

• Improved visibility and understanding of the data and decisions driving change

– Loading SAP Unconstrained forecast 18 months

– Loading SAP Constrained forecast 4-18 months

• Improved accuracy

– Beat existing local statistical methods

– Passing the “Show Me” tests

– Early Dealer results show twice the Accy gains (10% avg) for Dealers using Forecast Pro

• New ability to plan

– Retail business

– Forecasting Industry demand /Sales Funnel Marketing

– Forecasting Market Share

– Geographic regions


www.forecastpro.com



Page 25


What’s Next

� Supporting and growing a community of Dealer forecasters

� Documenting successes and testimonials

� Tableau Reporting

Page 26

Thank YouYour feedback is important!

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