Finding New Answers in Business: Wednesday August 23, 2006
Finding New Answers in Business: Wednesday August 23, 2006
Finding New Answers in Business: Wednesday August 23, 2006
Cost / Quality session will run 5 - 8 or 8:30 pm and Leadership sessions will run 5- 7 pm
Proposed Curriculum Priority Who Program Session Class Time
1 - High Certification Date Estimate
(min)
Cost Reduction
Purchasing D Opportunities
ata Lo
Data (PDW) ading
Rules Design Factor
CMA
Analysis
Demand CMA Data Mining
Data Loading Rules
Data Data Mart Algorithms Supplier Fit
Feature Analysis
Analytic Work
Products
Cross Functional Team: Determine Root Cause, Best Path to Resolution/Cost Savings
Existing Existing
RFP/RFQ Sourcing
Process Process
Future of CMA Within Caterpillar
The vision for CMA is to make the program available to all customers - - to get it on people’s
desks as a proactive, easy to use tool to lead cross functional teams in the right direction
Identify outliers, and research the root cause
Positions Cat for NPI - help understand the cost drivers
Opportunity identifier for 6 Sigma projects
Initial rollout will be in project form
Currently exploring ways to use CMA models for cost analysis during design
Akoya to work with 2007 engine castings (Mike Menke’s team) on CMA pilot
Should be developing design-for-cost applications for CMA by the end of 2006
AGENDA
• Results
• Process
• Next Steps
AKOYA CMA Opportunity – Benefits
WORKSHOP:- Process
Pre-Workshop Analysis and • Subjective perspective,
Data Gathering • Insight on Suppliers,
1. Purchasing Cost Curves • Parts, demand,
2. CMA Should Cost analysis • Should cost +
3. Best Fit Lower cost • Review of pre-workshop
comparable data using tracking
4. Latest Price and Demand dashboard
projections from various
sources
5. Bottoms up cost rebuild
(product team engr.)
6. CMA Supplier Analysis
7. Replaced part analysis Workshop Product
8. 2006 to 2007 transition 1. Candidates for Re-quote
volumes 2. High Confidence Should Cost
3. Follow up Action Items
• New Quotes needed/volumes
• Design Changes
• Material Changes
• Revised estimates
• Other Ideas
Akoya CMA Opportunity Workshop Process
Preparation
Preparation
Workshop Follow-up
• Best Fit Comparable is useful in finding a comparable (usually in the same family
and material) that is at a lower price point. This can be used as evidence with
supplier and gives a good idea of what is achievable in terms of driving the costs
down.
• Criteria for selecting Best Fit Comparable
1. Annual Demand < 80% of part demand
2. Finished wt within +/- 30% of part wt.
3. Design fit rank > 70 (from CMA analysis)
4. Meets 1-3 and has the least price of all other similar comparables
AKOYA “Should Cost” Opportunity Workshop-Attendees
5/22
Daylong Workshop
Workshop Data Column Format – Color Coding
CHANGE_VERSION_NUMBER
ENGINE_TYPE_CODE
QTY_PER_ENGINE
MATERIAL_CODE
SUPPLIER_NAME
FAMILY_NAME
PART_NAME
PART_NUM
MATERIAL
3406C HOUSINGS GRAY IRON 1E0018 1084744 HOUSING-FLYWHEEL 5 CBS BORING & MACHINE
1 COMPANY INC
C-12 ELBOWS ALUMINUM 1E1540F 2178946 ELBOW 0 CAST TECHNOLOGIES
1 INC
Workshop Data Column Format – Color Coding
RDS_PART_PRICE_USD (May/13/2006)
COMPARABLE_ANNUAL_DEMAND
COMPARABLE_PRICE_PER_KG
QUOTED_ANNUAL_DEMAND
COMPARABLE_PART_NAME
AKOYA_ANNUAL_DEMAND
COMPARABLE_PART_NUM
COMPARABLE_SUPPLIER
AKOYA_SHOULD_COST
COMPARABLE_WT_KG
COMAPRABLE_PRICE
FINISHED_WT_KG
PRICE_PER_KG
(13/May/2006)
FIT_RATING
CBS BORING & MACHINE
2123686COMPANY
HOUSING-FLY
INC $ 292.31 $ 164.39 $ 79.88 $ 162.24 80 42.338 33.801 $ 7.08 $ 2.36 4,632 5,168 4,408 5,000
GIESSEREI ST LEON
2050749
ROT HOUSING-PISTON$ 188.16 $ 161.37 $ 173.02 $ 311.50 76 81.225 62.800 $ 2.32 $ 2.76 4,980 5,403 216 500
QUALITY METAL PRODUCTS,
2428267 ELBOW
INC $ 18.93 $ 11.94 $ 10.34 $ 12.41 92 0.705 0.567 $ 26.21 $ 18.23 15,744 ##### 84 800
REQUOTE
WORKSHOP_SHOULD_COST
WORKSHOP_ANALYZED_IN
WORKSHOP_COMMENTS
COST / ENGINE
ANALYZED
WORKSHOP CONCLUSION
Workshop Data Column Format – Color Coding
OPPORTUNITY
AKOYA CMA Workshop Spreadsheet
• Other 43 (20 in Workshop 4 + 23 in Workshop 6) cost avoidance opportunities were analyzed for non-
reference arrangements for an estimated value of $1,528.12 ($1,146.53+$381.59)
(Adapters, Bases, Bodies, Bonnets, Brackets, Caps, Covers, Elbows, Housings, Hubs, Manifolds, Oil Pans, Pulleys, Supports)
AGENDA
• High Performance
• Good segmentation of application layers.
• High utilization of the Database features.
• Model driven
Walk-Through of of
Key Features CMA Tool
Engagement
• Very collaborative
– Many team recommendation were accepted
as product features and usability
enhancements.
– Worked with customer on setting up IT
operations:
• Help Desk/Support
• Streamline IT processes
– Flexible product features
– Guidance on hosting & vendor mgmt
• Very high customer satisfaction
Walk-Through of CMALearned
Issues & Lessons Tool
• Working with offshore team
– Skill Gap
– Lack of internal focus – one off project
– Difficult to scale
– Teamwork
– Remote project management
– QA processes
– Vendor mgmt
Walk-Through of CMALearned
Issues & Lessons Tool
• Headquartered in Mossville, IL
--CPS/MQ 12005 US $ in
Fix the
Billions
Smaller Supplier Spends – Large & Small
$12
$11
$10.2B = 90% Spend = 750 Parents
$10
$9.1B = 80% Spend = 440 Parents
Chaos
$9
$8
Medium Suppliers – Cat Larger % of Bus.
$7
$5
$4
Large Suppliers – Cat Small % of Bus.
Strategic Relationship $3
Too many
1 501 1001 1501 2001 2501 3001 3501 4001 4501 5001 5501 6001
*Supplier Councils
Schedule Changes
Poor Drawing Quality
*Co-location
Too many suppliers
*Investment Reviews Barriers to
Too many shoppers
achieving
*SRMP ultimate goal Too much source plan non-
compliance
NPI Process
Best NPI Leads to
Best PRODUCT
Tom Nieukirk
Manager
309-472-4458
tnuke@cgn.net