One of the strengths of WWL is that its facilities are on, or very close, to the port. That is why we will work with WWL when we need a PDC either in or near to the port of entry.
Massive pieces of wheeled construction and mining equipment are altogether different products to cars. But for the world’s largest manufacturer of that equipment, US-based Caterpillar Inc, some of the keys to global market success are very similar to those of the car industry.
“Specifically,” says Dan Spellman, Vice President, Caterpillar Logistics Services Inc (Cat Logistics), “those similar factors include the ability to deliver clean, quality-checked machines to purchasers within two weeks of an order being placed, regardless of whereabouts in the world the equipment was originally manufactured, without incurring the huge inventory costs associated with keeping large product stocks at every dealer location.”
In the US – and a growing number of other countries around the world – Cat Logistics is now looking to achieve those objectives through an expanded co-operation with longstanding global business partner Wallenius Wilhelmsen Logistics (WWL) and the implementation of a concept called the Product Distribution Centre (PDC) programme.
“Caterpillar has worked with WWL globally on the ocean transport side for many, many years. In fact, WWL is our largest ocean RoRo capacity provider and its specialisation in accommodating High & Heavy (H&H) equipment is very important because it provides us with tremendous worldwide support when it comes to distributing those products,” says Spellman.
“That alone would make WWL a very significant and valued business partner. What WWL is now also doing is supporting a Cat Logistics strategy which we call Lane One distribution. That is similar to an automobile industry model where you basically have a system which can quickly supply customers with a specific product in a consistent configuration. People talk about the 14-day car. We are developing the same concept for Caterpillar’s H&H equipment.”
That is where the PDCs come in. Those centres, explains Flavio Batista, WWL’s Corporate Account Manager for Caterpillar, are dock-side operations designed to initially process and store imported Caterpillar units arriving on WWL vessels and then manage their onward distribution to dealers as orders come through.
“In the past, Caterpillar used to send all its machines directly through to its dealers, each of which would then be sitting on a large inventory,” continues Batista. “Now, they can hold the machines for a particular geographical market at one location, the PDC, and then quickly forward them to a dealer once an order comes through.”
Ultimately, Cat Logistics is looking to establish 20-24 PDCs spanning the globe. Following the establishment of an initial two such facilities, the first in Melbourne, Australia and the second in Zeebrugge, Belgium, that programme moved up a gear in 2009 with the opening of two more uniquely-designed PDCs at WWL’s High & Heavy vehicle processing centres in the US. One is on the east coast (Baltimore) and the other on the west coast (Tacoma).
“Currently the Baltimore PDC is processing articulated dumper trucks manufactured in northern England and the Tacoma operation is handling Caterpillar 320 excavators coming out of Asia but the PDCs are not product-specific – they could process any Caterpillar construction/mining equipment,” says Spellman. “The idea is to forward deploy inventory at the PDCs so dealers within the catchment area of the centre concerned can have access to a machine within 14 days.”
Services provided by WWL at the PDCs start with the reception of equipment and inbound inspection. They then go on to include post-production quality inspection (PPQI) and rectification; storage; and PDI (pre-delivery inspection).
“The receiving element involves taking the equipment off the ship, manifesting it if necessary and managing any activities relating to relocation,” explains Spellman. “The inspection element is a really important one. It involves checking the machinery for any damage which might have occurred during transit, such as rust, scratches and dents. If the damage is minor, the PDC will remediate it.”
The subsequent PPQI inspection and rectification starts with ensuring that any machines which stand around in storage for a few months are periodically ‘exercised’ to keep liquids moving and ensure seals do not dry out. Prior to being moved on to a dealer, the equipment is then inspected to make sure it is visually sound and work is carried out to remedy any minor mechanical problems, such as leaking liquids.
“The idea with our Lane One distribution programme is that the machines are pre-configured. As a result, we do not need to do much in the way of reconfiguration at the PDC. However, some customers might want their machines painted in a particular colour so there could be work like that to do,” says Spellman.
Caterpillar equipment processed through a PDC is always stored in a segregated, fenced off and secure location, often within the port area.
“One of the strengths of WWL is that its facilities are on, or very close, to the port. That is why we will work with WWL when we need a PDC either in or near to the port of entry,” adds Spellman.
Caterpillar Logistics Services Inc (Cat Logistics) provides world-class supply chain solutions and integrated logistics services to its parent company, Caterpillar Inc, and more than 60 other leading corporations throughout the world. Headquartered in Morton, Illinois, US, Cat Logistics operates more than 130 facilities and offices in 23 countries on six continents.
Since its inception over 80 years ago, US-based Caterpillar Inc has grown to be the world’s largest maker of construction and mining equipment, diesel and natural gas engines, and industrial gas turbines, with a 2008 sales and revenue figure of just over US$51 billion. Caterpillar products and components are manufactured in 50 US facilities and in over 60 other locations, in 23 countries around the globe.